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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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