If Interest Rates Fall in Country A, Other Things Constant

question 170

Multiple Choice

If interest rates fall in country A, other things constant,

• A)demand for that country's currency will fall and the currency will depreciate
• B)demand for that country's currency will fall and the currency will appreciate
• C)demand for that country's currency will rise and the currency will depreciate
• D)demand for that country's currency will rise and the currency will appreciate
• E)people in country B will pull money out of country A

---

Definitions:

Operating Activities

Activities that relate directly to the primary business operations of a company, such as selling products or providing services.

Financing Activities

Transactions that involve raising capital for the business and repaying investors, such as issuing debt and equity or paying dividends.

Financing Activities

Actions that result in changes to the size and composition of the equity capital or borrowings of a company.

Cash Flows

Cash flows represent the movement of money into and out of a business, crucial for understanding liquidity, viability, and overall financial health.