If for a particular county an increase in the interest rate is more or less matched by an expected depreciation in the local currency,
A)traders will probably be tempted to find another country to invest in.
B)the interest rate increase per se will not be enough to spark capital flow into the country.
C)traders will probably be tempted to find another country to invest in and the interest rate increase per se will not be enough to spark capital flow into the country.
D)capital will glow out of the country as the disgruntled citizens riot and go to war with the neighbors.

Question

Quizplus · Accepted Answer

An increase in interest rates typically attracts foreign investment due to higher returns. However, if this increase is offset by an expected depreciation in the local currency, the net gain for foreign investors could be nullified or reduced, making the country less attractive for investment. This scenario could lead traders to look for better opportunities elsewhere and mean that the interest rate hike alone won't significantly attract capital inflow.

If for a Particular County an Increase in the Interest