Which of the following conditions will attract foreign funds into a country?
A) If the country has high trade deficits
B) If the country's interest rate is relatively high compared to other countries
C) If the country's currency is depreciated
D) If the country is experiencing high levels of inflation

Question

Which of the following conditions will attract foreign funds into a country? 
A) If the country has high trade deficits 
B) If the country's interest rate is relatively high compared to other countries 
C) If the country's currency is depreciated 
D) If the country is experiencing high levels of inflation

Quizplus · Accepted Answer

Countries with higher interest rates tend to attract foreign funds as investors seek higher returns on their investments. A) High trade deficits indicate that a country is importing more than it is exporting, which can lead to a decrease in the value of its currency and make it less attractive to foreign investors. C) A depreciated currency can make a country's goods and services cheaper for foreign investors, but can also indicate economic instability and discourage long-term investment. D) High levels of inflation can make a country's currency less valuable and create uncertainty in the economy, which can also deter foreign investment.

Which of the Following Conditions Will Attract Foreign Funds into a Country