6. Suppose that in Canada and in the United States, the interest rates on government bonds of...

Question:

6. Suppose that in Canada and in the United States, the interest rates on government bonds of identical matu- rity and risk are 8% and 6%, respectively. Assuming savers are indifferent between owning Canadian or U.S. bonds, what would we expect to happen to the interest rates on these bonds? Explain how this would happen.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics Plus Myeconlab With Pearson Global Edition

ISBN: 377221

9th Canadian Edition

Authors: Andrew B. Abel ,Ben Bernanke ,Dean Croushore

Question Posted: