With Greater Capital Mobility, the Real U

Multiple Choice

With greater capital mobility, the real U.S. and foreign interest rates will tend to be equalized if

A) the differences between U.S. and foreign inflation rates are zero
B) the differences between U.S. and foreign inflation rates are positive
C) after differences in expected inflation and expected changes in exchange rates and the uncertainty of these changes have been taken into account
D) Both a and b are correct.