A decrease in the supply of money causes domestic interest rates to fall and a capital outflow to occur.

Name: A decrease in the supply of money causes domestic interest rates to fall and a capital outflow to occur.
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A decrease in the supply of money typically causes domestic interest rates to rise, as there is less money available for borrowing. Higher interest rates can attract foreign capital, leading to a capital inflow rather than an outflow.

A Decrease in the Supply of Money Causes Domestic Interest