When real interest rates are determined by the global supply and demand for funds,we claim that it is an example of
A)capital market integration
B)capital market segmentation
C)a real interest rate differential
D)a nominal interest rate differential

Question

Quizplus · Accepted Answer

When the global supply and demand for funds determine real interest rates, it suggests that capital markets are integrated across countries. It means that investors from different countries can invest in the same markets, and their investments influence interest rates. This concept highlights the interconnectivity of the global economy, where capital flows freely between countries, and market participants react to global economic events.

When Real Interest Rates Are Determined by the Global Supply