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      Question

      In a flexible exchange-rate system, an increase in the

      domestic interest rate would tend to
      A Improve the current account and worsen the capital account Correct Answer Incorrect Answer
      B Improve the capital account and worsen the current account. Correct Answer Incorrect Answer
      C Improve both the current and the capital accounts. Correct Answer Incorrect Answer
      D Worsen both the accounts. Correct Answer Incorrect Answer

      Solution

      The correct answer is C

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