If there is a substantial amount of capital leaving the country, which of the following is the country likely to implement to control the situation?
A) Exchange controls
B) Local-content laws
C) Import restrictions
D) Tax controls
E) Price controls

Question

Quizplus · Accepted Answer

Exchange controls stem from shortages of foreign exchange held by a country. When a nation faces shortages of foreign exchange and/or a substantial amount of capital is leaving the country, controls may be levied over all movements of capital or selectively against the most politically vulnerable companies to conserve the supply of foreign exchange for the most essential uses.

If There Is a Substantial Amount of Capital Leaving the Country