Honduras is a small economy in central america. it keeps a fixed exchange rate with the us. capital is perfectly mobile. you may assume that interest rates are three percent in the us and six percent in honduras Required:
What explains the difference in interest rates? State your assumptions clearly.

Given that Honduras is a small economy in Central America, and it keeps a fixed exchange rate with the US, and capital is perfectly mobile, but interest rates are three percent in the US and six percent in Honduras, the explanation of the difference in these interest rates are as follows:

Honduras has a higher interest rate, meaning that its sovereign bonds pay higher values than the American ones, as well as its banks also pay higher interests on their investments compared to American banks.

This is so for a double reason: on the one hand, because the Honduran economy is less reliable than the American economy, which is larger and therefore more solvent and capable of overcoming eventual crises, with which the risk of default is less.

On the other hand, the Honduran economy is more dependent on foreign investment, so it must offer higher interest rates to attract such investments.

ans.

heterothermic organisms include those organisms that can switch between homeothermic (having body temperature higher than environment) and poikilothermic (having variation in internal body temperature) strategies.

some migratory birds show heterothermy as they decrease their metabolic rate during cold nights to keep their body temperature low. drop in metabolic rate allows increase in production efficiency of birds that reduces the internal body temperature to make it equal to external cold temperature during cold nights.

thus, the correct answer is 'birds allow their temperature drop in order to increase their production efficiency.'