An Increase in SA Net Capital Outflow Increases the Supply

question 21

True/False

An increase in SA net capital outflow increases the supply of rands in the market for foreign currency exchange and decreases the real exchange rate of the rands.

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Definitions:

Weak Axiom

A principle in consumer theory stating that if a consumer prefers bundle A over bundle B when prices are constant, then the consumer will not choose B over A if the price of A decreases and B's price remains unchanged.

Revealed Preferences

A concept in economics that preferences of consumers can be inferred by observing their purchasing habits and behaviors.

Francs

A former unit of currency in France and other countries, replaced by the Euro in many instances.

Utility Function

An equation that assigns numerical values to different combinations of goods and services, capturing the level of satisfaction or preference that an individual derives from these combinations.