If Kenya Experienced Capital Flight, Which of the Following Best

question 178

Multiple Choice

If Kenya experienced capital flight, which of the following best explains the effects?

• A)The supply of Kenyan schillings curve would shift left, which would make the real exchange rate of the Kenyan schilling appreciate.
• B)The supply of Kenyan schillings curve would shift left, which would make the real exchange rate of the Kenyan schilling depreciate.
• C)The supply of Kenyan schillings curve would shift right, which would make the real exchange rate of the Kenyan schilling appreciate.
• D)The supply of Kenyan schillings curve would shift right, which would make the real exchange rate of the Kenyan schilling depreciate.

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Definitions:

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be positive or negative.

Diminishing Utility

A principle in economics that as consumption of a good or service increases, the marginal utility derived from each additional unit decreases.

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.

Externalities

Costs or benefits that affect parties who did not choose to incur that cost or benefit, often leading to market failure if unaddressed.