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- Subject
- Budget Deficits And The Trade Balanceeconomics-mcqs › budget-deficits-and-the-trade-balance
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
Which statement accurately describes the effect of a rise in Pakistan's net capital outflow on the foreign exchange market?
Multiple choice question for Budget Deficits And The Trade Balance. Select an option, then review the explanation below.
Explanation
When Pakistan experiences an increase in net capital outflow, more rupees are supplied to the foreign exchange market as investors convert rupees into foreign currency. This increased supply of rupees causes the rupee to depreciate in value.
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