At each value of the domestic interest rate, increases in the riskiness of domestic assets ________ capital inflows, ________ capital outflows, and ________ net capital inflows.
A)increase; increase; increase
B)increase; increase; decrease
C)increase; decrease; increase
D)decrease; increase; decrease

Question

Quizplus · Accepted Answer

Increased riskiness of domestic assets induces investors domestic and foreign to desire foreign investments. This decreases capital inflows, increases capital outflows and decreases net capital inflows.

At Each Value of the Domestic Interest Rate, Increases in the Riskiness