For a major country with extensive capital flows, what is the effect of an increase in interest rates?

Question

Quizplus · Accepted Answer

An increase in interest rates would generally lead to a currency appreciation as foreign investors are attracted by higher returns on their investment. This would lead to reduced net exports as exports become more expensive for foreign buyers, while imports become cheaper for domestic buyers due to the stronger currency.

For a Major Country with Extensive Capital Flows, What Is