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.
-(Scenario: Japan and the United States) Refer to the scenario Japan and the United States. As a result:
A) capital will flow from Japan to the United States.
B) capital will flow from the United States to Japan.
C) capital will not flow between Japan and the United States.
D) Japan will export more goods to the United States.
Correct Answer:
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