Under the assumption of perfect international capital mobility, which type of differential primarily influences the movement of international funds?

Choose the correct answer

Explanation

When capital mobility is perfect, investors respond mainly to interest rate differences across countries, as these determine the potential returns on investments. Other factors like current account balances, taxes, or price levels have less direct impact on the flow of international funds.

Under the assumption of perfect international capita… — Macroeconomic Issues and Analysis | PakQuizHub