If real interest rate in Country X increases relative to the real interest rate in Country Y and there are no trade barriers between the two countries, then for Country X which of the following will be true of its capital flow, the value of its currency, and its exports?
(a) Inflow / Appreciation / Increase
(b) Inflow / Appreciation / Decrease
(c) Inflow / Depreciation / Increase
(d) Outflow / Depreciation / Increase
(e) Outflow / Appreciation / Decrease
Ans: (b) Inflow / Appreciation / Decrease
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