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All other things remaining equal, which of the following would encourage a speculative short-term capital flow into a country's currency?
Suggested Answer: C
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47 comments · newest first
CR
Craig
11 months ago
C makes sense, removing controls opens the door for more investment!
JO
Joye
11 months ago
A fall in interest rates usually means less attraction for capital, right?
YV
Yvonne
12 months ago
Wait, I thought lower interest rates would scare off investors?
MA
Marti
12 months ago
I disagree, B seems more likely to attract short-term flows.
LA
Lai
12 months ago
C is definitely the right choice!
CA
Caitlin
1 year ago
D seems off to me; while new factories might indicate long-term investment, I don't think it directly encourages short-term capital flow.
LI
Ligia
1 year ago
C sounds familiar because I think removing exchange controls can attract investment, but I can't recall if it specifically relates to short-term capital flows.
AR
Arlette
1 year ago
I feel like B might be correct since an expected depreciation could make investors want to sell off quickly, but I'm not entirely sure.
RO
Rory
1 year ago
I remember that a fall in interest rates usually discourages capital inflow, so I think A is definitely not the answer.
SU
Sunny
1 year ago
I think the key here is to focus on what would make the currency more attractive for short-term, speculative investors. An expected depreciation or the removal of capital controls seem like the best bets to encourage those kinds of flows. I'll go with one of those two.
CY
Cyndy
1 year ago
Okay, let's see. A fall in interest rates would make the currency less attractive for investors seeking higher returns, so that's out. An expected depreciation would encourage speculative inflows to profit from the drop, so that's a good option. Removing exchange controls would also open the door for more short-term investment, so that's another possibility.
ET
Ethan
1 year ago
This seems like a straightforward question about factors that would encourage short-term capital flows into a country's currency. I'll need to think through the economic principles at play here.
AN
Annamae
1 year ago
Hmm, I'm a bit unsure about this one. I know interest rates, exchange rate expectations, and capital controls are all important factors, but I'm not totally confident in how they would impact short-term speculative flows.
AB
Abraham
1 year ago
Hmm, not sure about this one. The options seem a bit broad - I'll need to think carefully about which one best captures the core value of documented procedures.
EL
Elvera
1 year ago
I'm a bit confused on the implications of the bank knowing about the certification requirement. Does that change the bank's responsibilities somehow? I'll need to think through that more.
AL
Allene
1 year ago
This question looks straightforward, but I want to make sure I understand all the details before I start calculating anything.
JA
Jaime
1 year ago
Okay, I think I've got this. A multi-layer control plane's main advantage is that it minimizes human error when configuring converged networks, which is option B. I'm confident that's the right answer.
ER
Erin
1 year ago
I think the net carrying amount after two years should definitely include the revaluation. It reminds me of that practice question we did about asset valuations.
LU
Luther
1 year ago
If you really want to encourage speculative capital, just start a rumor about aliens landing and offer to sell them the country. Instant currency boom!
CO
Corinne
1 year ago
C) The abolition by the country of previously-imposed exchange controls which deterred inward investment
CH
Christiane
1 year ago
C) The abolition by the country of previously-imposed exchange controls which deterred inward investment
AS
Ashton
1 year ago
B) An expected depreciation of the country's exchange rate
AM
Amira
1 year ago
B) An expected depreciation of the country's exchange rate
JA
Jacqueline
1 year ago
A) A fall in the country's interest rates
AL
Alyssa
1 year ago
A) A fall in the country's interest rates
HO
Holley
1 year ago
Multinational companies setting up factories? That's long-term investment, not the kind of speculative flow they're asking about. C is the clear winner.
JE
Jess
1 year ago
B) An expected depreciation of the country's exchange rate
HO
Hoa
1 year ago
A) A fall in the country's interest rates
RA
Raina
1 year ago
C) The abolition by the country of previously-imposed exchange controls which deterred inward investment
LE
Levi
2 years ago
Exchange rate depreciation? That's just a recipe for a currency crisis. C is definitely the way to go.
EM
Emmanuel
1 year ago
I see your point. It's all about creating a more open and attractive investment environment.
PA
Paris
1 year ago
True, but removing exchange controls would have a more immediate impact on speculative flows.
MA
Madalyn
1 year ago
But wouldn't a fall in interest rates also attract short-term capital?
EM
Emile
1 year ago
C) The abolition by the country of previously-imposed exchange controls which deterred inward investment
NI
Nickolas
2 years ago
A fall in interest rates might also encourage short-term capital inflows, but C seems like the best answer here.
AL
Albina
1 year ago
B: I agree, it makes sense that removing barriers to investment would attract more capital into the country.
PA
Paola
1 year ago
A: I think C is the best answer because abolishing exchange controls would definitely encourage short-term capital flow.
CU
Curtis
1 year ago
User 2: I agree, removing exchange controls would definitely encourage short-term capital flow.
HI
Hildred
1 year ago
User 1: I think C is the best answer.
LE
Lezlie
2 years ago
But wouldn't option D also attract capital flow by creating jobs and boosting the economy?
GL
Glen
2 years ago
I agree with Hui, removing exchange controls would attract investors.
YU
Yuriko
2 years ago
C is the correct answer. The abolition of exchange controls would encourage speculative short-term capital inflows.
DE
Deonna
1 year ago
D) Foreign-based multinational companies locating new factories in the country
AL
Allene
1 year ago
C) The abolition by the country of previously-imposed exchange controls which deterred inward investment
MI
Mitzie
1 year ago
B) An expected depreciation of the country's exchange rate
DO
Donette
1 year ago
A) A fall in the country's interest rates
HU
Hui
2 years ago
I think option C would encourage short-term capital flow.