If the Foreign Exchange Market Is in Equilibrium and Attractive

question 28

Multiple Choice

If the foreign exchange market is in equilibrium and attractive domestic investment opportunities result in a net inflow of capital,

• A) the nation will experience a trade deficit.
• B) the nation will experience a trade surplus.
• C) interest rates will rise in the loanable funds market.
• D) the actual rate of unemployment must exceed the natural rate of unemployment.