If the Risk of Buying U

question 144

Multiple Choice

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

• A)net capital outflow and the real exchange rate will rise.
• B)net capital outflow will rise and the real exchange rate will fall.
• C)net capital outflow will fall and the real exchange rate will rise.
• D)net capital outflow and the exchange rate will fall.