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What Is the Implication of Perfect Capital Mobility for a Small

Question 171

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What is the implication of perfect capital mobility for a small open economy like Canada's?


A) The real interest rate in Canada should exceed the real interest rate prevailing in world financial markets.
B) The real interest rate in Canada should equal the real interest rate prevailing in world financial markets.
C) The real interest rate in Canada should be less than the real interest rate prevailing in world financial markets.
D) The real interest rate is irrelevant for capital mobility.

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