The country of Solidia is politically very stable and has a long tradition of respecting property rights.If several other countries suddenly became politically unstable,we would expect Solidia's
A)real interest rate to rise.
B)real exchange rate to rise.
C)net exports to rise.
D)None of the above is likely.

Question

Quizplus · Accepted Answer

If other countries become politically unstable, investors may seek a safe haven for their investments, leading to increased demand for Solidia's currency. This increased demand would cause the real exchange rate to rise.

The Country of Solidia Is Politically Very Stable and Has