1035EconomicsMedium
Which of the following statements regarding the market for foreign currency exchange is true?
AAn increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees depreciate
BAn increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees appreciate
CAn increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees depreciate
DAn increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees appreciate
Correct answer
C. An increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees depreciate
Explanation
The correct answer is An increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees depreciate.