Consider a small economy that does not permit international borrowing or lending. The country's autarky real interest rate is greater than the world real interest rate. Now suppose the economy removed capital controls. Which of the following is true? There is an excess supply of capital in the domestic economy and capital flows in There is an excess demand for capital in the domestic economy and capital flows out There is an excess demand for capital in the domestic economy and capital flows in There is an excess supply of capital in the domestic economy and capital flows out

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