Scenario: Japan and the United States Suppose That the Interest

Scenario: Japan and the United States Suppose that the interest rate in the United States is 4%, in Japan it is 7%, and financial assets in the two countries are equal in risk. Assuming that loans in Japan and the United States carry equal risk, this implies that:

A) U.S. lenders will lend to borrowers in Japan.
B) Japanese lenders will lend to U.S. borrowers.
C) the interest rate in Japan will increase further as compared to the U.S. interest rate.
D) the central bank of Japan has adopted a more expansionary monetary policy.