Assume a System of Floating Exchange Rates

question 42

Multiple Choice

Assume a system of floating exchange rates.In response to relatively high domestic interest rates,suppose that foreign investors place their funds in domestic capital markets.The result would be

• A) a depreciation of the domestic currency and a rise in net exports
• B) a depreciation of the domestic currency and a fall in net exports
• C) an appreciation of the domestic currency and a rise in net exports
• D) an appreciation of the domestic currency and a fall in net exports

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Definitions:

Depression

A disorder in mental health, identified by enduring feelings of depression or a decreased interest in activities, significantly affecting life on a day-to-day basis.

Schizophrenia

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception and inappropriate actions.

Deep Brain Stimulation

A neurosurgical procedure involving the implantation of a medical device called a brain pacemaker, which sends electrical impulses to specific parts of the brain.

Depression

A syndrome linked to mental wellness, involving long-term downheartedness or disengagement in regular interests, thereby gravely impacting regular life operations.