If for a particular county an increase in the interest rate is more or less matched by an expected depreciation in the local currency.
A. Traders will probably be tempted to find another country to invest in
B. The interest rate increase per se will not be enough to spark capital flow into the country
C. Both a) and b) are true
D. Capital will glow out of the country as the disgruntled citizens riot and go to war with the neighbors.
Answer:C
If for a particular county an increase in the interest rate is more or less matched by an expected depreciation in the local currency.
A. Traders will probably be tempted to find another country to invest in B. The interest rate increase per se will not be enough to spark capital flow into the country C. Both a) and b) are true D. Capital will glow out of the country as the disgruntled citizens riot and go to war with the neighbors.