Figure 5.4 Suppose the World Consists of Two Large Open Economies, Canada

Multiple Choice

Figure 5.4

Suppose the world consists of two large open economies, Canada and the rest of the world. The figures above represent loanable funds graphs for these two economies.
-Refer to Figure 5.4.At an interest rate of 7%,

A) foreign borrowers have an incentive to offer lenders in Canada an interest rate greater than 7%.
B) foreign lenders have an incentive to offer borrowers in Canada an interest rate less than 7%.
C) Canadian lenders have an incentive to offer borrowers in the rest of the world an interest rate of 7%.
D) Canadian borrowers have an incentive to offer Canadian lenders an interest rate greater than 7%.