If the risk of holding assets in foreign countries rises relative to the risk of holding U.S assets, then
a. U.S. net capital outflow rises which increases the U.S. exchange rate.
b. U.S. net capital outflow rises which decreases the U.S. exchange rate.
c. U.S. net capital outflow falls which increases the U.S. exchange rate.
d. U.S. net capital outflow falls which decreases the U.S. exchange rate.
c
You might also like to view...
The LM curve slopes upward to the right because
A) the demand for money plus the demand for nonmoney assets must equal the supply of money plus the supply of nonmoney assets. B) a higher real interest rate is associated with a higher level of the output gap in money market equilibrium. C) a higher real interest rate is associated with a higher level of saving in goods market equilibrium. D) in equilibrium the actual real interest rate must increase one-for-one with expected real interest rate.
Which of the following is correct?
A. IM + X = G? T B. I + G + T = S + X? M C. I + G + X = S + T + IM D. I + T + G = S? X? IM