________ is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation or when a country's economic prospects are shaky in other respects.
A) The random walk effect
B) The Fisher Effect
C) The International Fisher Effect
D) Capital flight

Question

Quizplus · Accepted Answer

Governments typically impose convertibility restrictions on their currency when they fear that free convertibility will lead to a run on their foreign exchange reserves. This occurs when residents and nonresidents rush to convert their holdings of domestic currency into a foreign currency-a phenomenon generally referred to as capital flight.

________ Is Most Likely to Occur When the Value of the Domestic