Figure 32-3 -Refer to Figure 32-3. Which of the following is consistent with capital flight from Mexico? A)The real exchange rate of the peso appreciates from E₀ to E₁. B)The real exchange rate of the peso depreciates from E₀ to E₁. C)The real exchange rate of the peso appreciates from E₁ to E₀. D)The real exchange rate of the peso depreciates from E₁ to E₀.

Question

Quizplus · Accepted Answer

Capital flight typically leads to a depreciation of the currency as investors sell off the currency, increasing its supply and reducing its value.

Figure 32-3 -Refer to Figure 32-3. Which of the Following Is Consistent