If the nation's investment opportunities are highly attractive relative to those available abroad, the nation will tend to
A) experience an outflow of capital and a trade deficit.
B) experience an outflow of capital and a trade surplus.
C) experience an inflow of capital and a trade deficit.
D) experience an inflow of capital and a trade surplus.

Question

Quizplus · Accepted Answer

When a nation's investment opportunities are attractive, it attracts foreign capital, leading to an inflow of capital. This inflow can cause the currency to appreciate, making exports more expensive and imports cheaper, potentially resulting in a trade deficit.

If the Nation's Investment Opportunities Are Highly Attractive Relative to Those