For a Major Country with Extensive Capital Flows, What Is

Multiple Choice

For a major country with extensive capital flows, what is the effect of an increase in interest rates?

A) There will be an inflow of capital, a currency depreciation, and increased net exports.
B) There will be an inflow of capital, a currency depreciation, and reduced net exports.
C) There will be an outflow of capital, a currency depreciation, and increased net exports.
D) There will be an inflow of capital, a currency appreciation, and reduced net exports.