In an economy with perfect capital mobility, if domestic interest rate
In an economy with perfect capital mobility, if domestic interest rates are above world interest rates then
a. capital outflows will drive domestic interest rates down.
b. capital inflows will drive domestic interest rates down.
c. current account deficits will drive domestic interest rates down.
d. the central bank will have to intervene even if exchange rates are floating.
ANSWER
B
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.