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.

Question

Quizplus · Accepted Answer

Capital flight leads to an increase in the supply of the domestic currency in the foreign exchange market as investors convert their holdings to foreign currency, causing the domestic currency to depreciate.

When a Country Suffers from Capital Flight,the Exchange Rate