To find:
Factor that will be true if international interest rate is 8%.
Answer to Problem 7MCQ
Option C is correct.
Explanation of Solution
Option C is correct as country N will experience a capital outflow of $250.
Option A is incorrect as there will be inflow of capital due to increase in interest rate.
Option B is incorrect as there will inflow of capital, not the outflow.
Option D is incorrect as when interest rate to rise by 8%, the outflow will be $250.
Option E is incorrect as international
Financial account is a component of balance of payments that records transactions of assets and liabilities to nonresidents concerning financial assets.
Current account is also a component of balance of payments that records transactions of goods and services with home country and rest of the world.
Chapter 8R Solutions
Krugman's Economics For The Ap® Course
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