Which statement best defines capital flight?
A) The process of taking advantage of differences in prices in different markets
B) The movement of funds between financial intermediaries when interest rates change
C) The ability of investment expenditures to lift a country out of poverty
D) The large and sudden reduction in the demand for assets located in a country

Question

Quizplus · Accepted Answer

Capital flight refers to the sudden and large reduction in the demand for assets located in a country, causing a significant outflow of capital. This happens when investors and citizens of the country lose confidence in its economic and political stability, and move their assets abroad to safer and potentially more profitable investments. This can lead to a currency devaluation and economic instability in the affected country.

Which Statement Best Defines Capital Flight