In 2008, Chinese authorities were concerned with raising interest rates to combat inflation because:
A) of the fear of large capital inflows into China fueling inflation.
B) of the fear of large capital outflows from China fueling inflation.
C) of the fear of a contraction.
D) none of the above.

Question

Quizplus · Accepted Answer

Raising interest rates can attract foreign capital, leading to large capital inflows, which can increase the money supply and potentially fuel inflation.

In 2008, Chinese Authorities Were Concerned with Raising Interest Rates