If real interest rates were 6% in country A and 4% in country B, the real interest rate in both countries will move toward 5%.

Question

Quizplus · Accepted Answer

In order to achieve equilibrium, the real interest rate in both countries will tend to converge to a similar level. As a result, the real interest rates in both countries will move towards the average of 6% and 4%, which is 5%. Therefore, the statement is true.

If Real Interest Rates Were 6% in Country a and 4