If the Canadian real interest rate exceeds the world real interest rate, what would Canadian savers most likely do?
A) Canadian savers would prefer to buy foreign assets.
B) Canadian savers would prefer to wait until the real interest rate falls to equal the world interest rate.
C) Canadian savers would sell their Canadian assets and buy foreign assets instead.
D) Canadian savers would sell their foreign assets and buy Canadian assets instead.

Question

Quizplus · Accepted Answer

If the Canadian real interest rate is higher than the world real interest rate, Canadian savers would be incentivized to sell their foreign assets and buy Canadian assets to take advantage of the higher returns available domestically.

If the Canadian Real Interest Rate Exceeds the World Real