What is consistent with capital flight from Great Britain?
A) The British capital outflow decreases.
B) The real exchange rate of the pound depreciates.
C) The British real interest rate decreases.
D) The British demand for loanable funds increases.

Question

Quizplus · Accepted Answer

Capital flight refers to the movement of large amounts of money outside of a country due to economic or political instability. When capital flight occurs in Great Britain, it causes a decrease in demand for the British pound, which leads to a depreciation of the currency in the foreign exchange market. This means that the real exchange rate of the pound decreases as well. Therefore, choice B is consistent with capital flight from Great Britain.

What Is Consistent with Capital Flight from Great Britain