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.The international capital market will be in equilibrium when the real interest rate in Canada is ________ and the real interest rate in the rest of the world is ________.

A) 7%; 3%
B) 5%; 7%
C) 9%; 3%
D) 5%; 5%