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The Diagram Below Represents the Market for Loanable Funds and the Market

Question 325

Multiple Choice

The diagram below represents the market for loanable funds and the market for foreign-currency exchange in Mexico. Use the diagram to answer the following questions.Figure 19-7 The diagram below represents the market for loanable funds and the market for foreign-currency exchange in Mexico. Use the diagram to answer the following questions.Figure 19-7 -Refer to Figure 19-7. Suppose the Mexican economy starts at r<sub>0</sub> and E<sub>1</sub>. Which of the following new equilibrium is consistent with capital flight? A) r<sub>o</sub> and E<sub>0</sub> B) r<sub>1</sub> and E<sub>0</sub> C) r<sub>1</sub> and E<sub>1</sub> D) None of the above is correct.
-Refer to Figure 19-7. Suppose the Mexican economy starts at r0 and E1. Which of the following new equilibrium is consistent with capital flight?


A) ro and E0
B) r1 and E0
C) r1 and E1
D) None of the above is correct.

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