Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It decreases the currency value
B
It has no effect on currency value
C
It increases the currency value
D
It leads to currency depreciation
Understanding the Answer
Let's break down why this is correct
Answer
When more money flows into a country from foreign investors, it usually means that demand for that country's currency will increase. This is because investors need the local currency to make their investments, whether in stocks, bonds, or real estate. As demand for the currency rises, its value tends to go up compared to other currencies. For example, if many investors from abroad want to buy real estate in the United States, they will need to exchange their foreign currency for U. S.
Detailed Explanation
When more money comes into a country, it means people want to buy its currency. Other options are incorrect because Some might think that more money coming in makes the currency weaker; It's a common mistake to think that capital inflows don't change currency value.
Key Concepts
currency value
Topic
Capital Flows and Currency Value
Difficulty
easy level question
Cognitive Level
understand
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