Multiple Choice
Assume Canada is a small open economy with perfect capital mobility.If the interest rate is 8 percent in Canada and 6 percent in China,and if the exchange rate is stable at 6 Chinese yuan for one Canadian dollar,what would happen?
A) Canadian investors want to invest in China,and Chinese investors want to invest in Canada.
B) Both Canadian and Chinese investors want to invest in Canada.
C) Canadian investors want to invest in Canada,and Chinese investors want to invest in China.
D) Both Canadian and Chinese investors want to invest in China.
Correct Answer:
Verified
Correct Answer:
Verified
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