Mexico Suffered from Capital Flight in 1994

question 139

Multiple Choice

Mexico suffered from capital flight in 1994. Which statement best describes the effects of this event on the Canadian economy?

• A) The Canadian real interest rate rose, and the real exchange rate of the dollar appreciated.
• B) The Canadian real interest rate rose, and the real exchange rate of the dollar depreciated.
• C) The Canadian real interest rate fell, and the real exchange rate of the dollar appreciated.
• D) The Canadian real interest rate fell, and the real exchange rate of the dollar depreciated.

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Definitions:

Discount Rate

A discount rate employed to ascertain the present worth of future cash flows within discounted cash flow analysis.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to analyze the profitability of an investment or project.

Operating Assets

Assets used in the day-to-day operations of a business, such as machinery, buildings, and equipment, that contribute to revenue generation.

Operating Costs

The expenses associated with the operation of a business, excluding costs associated with production.