Suppose the Domestic Interest Rate Is 10%, the Foreign Interest

question 32

Multiple Choice

Suppose the domestic interest rate is 10%, the foreign interest rate is 12%, and the domestic currency is expected to appreciate by 4%. We should expect to see

• A) a capital inflow and a reduction in the foreign interest rate
• B) a capital inflow and a reduction in the domestic interest rate
• C) a capital outflow and a reduction in the foreign interest rate
• D) a capital outflow and an increase in the domestic interest rate
• E) a capital outflow and an increase in the foreign interest rate

---

Definitions:

Balanced Scorecard

A strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

Innovation and Learning

The process of implementing new ideas, creating dynamic products, or improving existing services to meet market demands and learning from the process.

Customer Satisfaction

A measure of how products or services provided by a company meet or surpass the customer's expectations.

Controlling in Organisations

The management function concerned with monitoring activities to ensure they are being completed as planned and correcting any significant deviations.