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Assume that a small open economy has a domestic interest rate of 6 per cent, and the foreign rate of interest (in a large economy)

Assume that a small open economy has a domestic interest rate of 6 per cent, and the foreign rate of interest (in a large economy) is 3 per cent. The small economy has no restrictions on capital mobility.why the interest rates in these two economies are different by applying/relating to one theory

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