33 As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets? get smaller B stay the same © exponential divergence It depends on the existing exchange rate. E get larger

Brief Principles of Macroeconomics (MindTap Course List)
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ISBN:9781337091985
Author:N. Gregory Mankiw
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Chapter14: A Macroeconomic Theory Of The Open Economy
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33 As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets?
get smaller
stay the same
exponential divergence
D
It depends on the existing exchange rate.
E get larger
Transcribed Image Text:33 As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets? get smaller stay the same exponential divergence D It depends on the existing exchange rate. E get larger
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