Arrange the following steps in the correct order of how an increase in real interest rates in a country influences capital flows into that country: A) Higher returns attract foreign investors, B) Increased demand for the country's currency, C) Shift of investment towards the country, D) Decrease in domestic investment due to higher borrowing costs.

When real interest rates in a country increase, it first leads to higher returns on investments, which attracts foreign investors looking for better opportunities. As these investors move their money into the country, they create increased demand for the country's currency because they need it to make their investments. This shift of investment towards the country is the next step, as more capital flows in from abroad. However, the higher interest rates can also result in a decrease in domestic investment because borrowing costs for local businesses become more expensive. For example, if a country raises its interest rates, a foreign investor might buy bonds there, increasing currency demand and drawing in more capital, while local companies might hold off on expanding due to higher loan costs.