Assume exchange rates are flexible.Net capital inflows tend to
A) appreciate the currency of the capital-importing nation.
B) appreciate the currency of the capital-exporting nation.
C) increase the supply of the capital-importing country's currency in the foreign-exchange market.
D) increase the demand for the capital-exporting country's currency in the foreign-exchange market.
E) decrease the official reserves of the capital-importing country.
Correct Answer:
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