When a Country Suffers from Capital Flight,the Exchange Rate

question 99

Multiple Choice

When a country suffers from capital flight,the exchange rate

• A)depreciates,because demand in the market for foreign-currency exchange shifts left.
• B)depreciates,because supply in the market for foreign-currency exchange shifts right.
• C)appreciates,because demand in the market for foreign-currency exchange shifts right.
• D)appreciates,because supply in the market for foreign-currency exchange shifts left.

---

Definitions:

Physical Capital

Manufactured productive resources, such as buildings and machines; often referred to simply as “capital.”

Factor Market

A marketplace for the services of a factor of production, such as labor, capital, or land.

Labor

Human effort, whether physical or mental, used in the production of goods and services.

Circular-Flow Diagram

A pictorial scheme of the economy, focusing on the exchange of dollars between households and firms through the market system.