For an International Capital Flow Shock in Which Foreign Investors

Multiple Choice

For an international capital flow shock in which foreign investors lose confidence in a country:

A) the country's real domestic product is affected if the country has a fixed exchange rate but is not affected if the country has a floating exchange rate.
B) the country's real GDP decreases regardless of whether the country has a fixed or floating exchange rate, but the country's real GDP declines less if the country has a floating exchange rate.
C) the country's real domestic product is affected if the country has a floating exchange rate but not affected if the country has a fixed exchange rate.
D) the country's real GDP tends to decline if the country has fixed exchange rate, but the country's real GDP tends to increase if the country has a floating exchange rate.