Multiple Choice
A firm produces manufacturing equipment, some of which it exports. Which of the following effects of capital flight in the country it produces in would likely reduce the quantity of equipment it sells?
A) both what happens to the interest rate and what happens to the exchange rate
B) what happens to the interest rate but not what happens to the exchange rate
C) what happens to the exchange rate but not what happens to the interest rate
D) neither what happens to the interest rate nor what happens to the interest rate.
Correct Answer:
Verified
Correct Answer:
Verified
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