The Country of Aquilonia Is Politically Very Stable and Has

Multiple Choice

The country of Aquilonia is politically very stable and has a long tradition of respecting property rights. If several other countries suddenly became politically unstable, which of the following would happen?

A) Aquilonia's real interest rate would rise.
B) Aquilonia's real exchange rate would fall.
C) Aquilonia's net exports would fall.
D) Aquilonia's net exports would not change.