Multiple Choice
If a country experiences a tremendous increase in the demand for loanable funds as many new infrastructure building projects are initiated, then the interest rate will
A) rise, there will be a decrease in net capital outflow, and the real exchange rate will fall.
B) rise, there will be a decrease in net capital outflow, and the real exchange rate will rise.
C) fall, there will be an increase in net capital outflow, and the real exchange rate will rise.
D) fall, there will be an increase in net capital outflow, and the real exchange rate will fall.
Correct Answer:
Verified
Correct Answer:
Verified
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