Which of the following statements regarding the market for foreign currency exchange is true?
A)An increase in SA net capital outflow increases the supply of rands and the rand depreciates.
B)An increase in SA net capital outflow increases the demand for rands and the rand appreciates.
C)An increase in SA net capital outflow increases the demand for rands and the rand depreciates.
D)An increase in SA net capital outflow increases the supply of rands and the rand appreciates.

Question

Quizplus · Accepted Answer

An increase in South Africa's net capital outflow means more rands are being converted to foreign currency to invest abroad, increasing the supply of rands in the foreign exchange market, leading to depreciation of the rand.

Which of the Following Statements Regarding the Market for Foreign