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Question 11
Question 11 of 50
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A firm produces manufacturing equipment, some of which it exports. Which of the following effects of capital flight in the country it produces
in would likely reduce the quantity of
equipment it sells?
both what happens to the interest rate and what happens to the exchange rate
what happens to the interest rate but not what happens to the exchange
rate
what happens to the exchange rate but not what happens to the
interest rate
neither what happens to the interest rate nor what happens
to the interest rate
.
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«Question 11 of 50

Capital flight can impact a country's exchange rates and interest rates, affecting the quantity of equipment sold by a manufacturing equipment exporting firm.

Explanation:

Capital flight in a country can lead to effects such as changes in interest rates and exchange rates. When capital flight occurs, it causes a decrease in the demand for the country's currency, leading to a depreciation of the exchange rate. This depreciation makes imported goods more expensive, potentially reducing the quantity of equipment sold by the firm that exports manufacturing equipment.

Learn more about Capital flight effects on a firm's export sales here:

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