A consequence of the world movement toward financial integration and openness is:
A) depreciating exchange rates.
B) financial interdependence coupled with a tenfold increase in the volume of foreign assets.
C) a retreat toward safety and heavier regulation of financial flows.
D) dominance by the United States as being the only destination for investment funds.

Question

Quizplus · Accepted Answer

Financial integration and openness lead to increased financial interdependence and a rise in foreign asset volumes. This is due to the greater ease of investing in foreign markets, resulting in diversification of portfolios, and increased capital flow between countries. Depreciating exchange rates, retreat towards safety and heavier regulation of financial flows, and dominance by the United States are all possible consequences of financial integration but are not direct consequences of it.

A Consequence of the World Movement Toward Financial Integration and Openness