As a country begins to liberalize its capital account (become more financially open), 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? Group of answer choices get smaller stay the same exponential divergence it depends on the existing exchange rate. get larger

Get smaller.

Explanation:

This process is easily explained by relaxing of the economy towards the the private sector. In some countries emerging markets, it provides new opportunities for investors to increase their diversification and profit. Economic liberalization refers to a country "opening up" to the rest of the world with regards to trade, regulations, taxation and other areas that generally affect business in the country.

As a general rule, you can determine to what degree a country is liberalized economically by how easy it is to invest and do business in the country.