A Large Country Imposes Capital Controls That Prohibit Foreign Borrowing

question 97

Multiple Choice

A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents.The country is currently running a capital and financial account deficit.The imposition of the capital controls will cause

• A)net exports to increase.
• B)real domestic interest rates to rise.
• C)real world interest rates to fall.
• D)desired national saving to fall.

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