In the global loanable funds market,

Question

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In the global loanable funds market, loans of equal risk will have equal interest rates. This is because borrowers in the market are competing for funds from lenders, and lenders will require a higher return for loans that are riskier than loans with lower risk. Therefore, in order for borrowers to attract lenders, they must offer interest rates that are commensurate with the perceived risk of the loan. As a result, loans of equal risk will have equal interest rates.

In the Global Loanable Funds Market