Multiple Choice
If Canadian firms decide to invest more domestically at each interest rate, which statement would best describe the results?
A) The real interest rate decreases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow decreases.
B) The real interest rate decreases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow increases.
C) The real interest rate increases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases.
D) The real interest rate increases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases.
Correct Answer:
Verified
Correct Answer:
Verified
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