Countries A and B trade freely with each other. Suppose interest rates in the loanable funds market in country A are lower than in the country B. This means:
A) funds will flow from country A to country B.
B) this interest rate differential will persist as long as citizens view domestic assets as substitutes for foreign assets.
C) funds will flow from country B to country A.
D) interest rate differentials cannot be changed.
Correct Answer:
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