The diagram below represents the market for loanable funds and the market for foreign-currency exchange in Mexico. Use the diagram to answer the following questions.
Figure 32-6
-Refer to Figure 32-6.Supposing that the Mexican economy starts at r₀ and E₁.Which of the following is consistent with the effects of capital flight?
A) the shift from D₀ to D₁ in Panel A
B) the shift from NCO₀ to NCO₁ in Panel B
C) the shift from S₀ to S₁ in Panel C
D) All of the above shifts are consistent with the effects of capital flight.
Correct Answer:
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