<p>I don't like the question because money movement is a current flow and it is also capital flow.</p>

<p>Anyway, the current outflow (to pay for the goods from Mexico) will be matched by a capital inflow. Mexico will use the increase in earnings to buy goods and services and investments in Vietnam. If we assume proportions are constant before and after the increase in earnings, then some amount of the increase will go into investments in Vietnam. Investments are capital.</p>

CC BY-SA 4.0
2019-04-29T00:54:43.833Z
2019-04-29T00:54:43.833Z
H2ONaCl
<p>I'm studying for an economics exam and am stuck on this question:</p>

<p><strong>If consumers in Vietnam increase their demand for products that are manufactured in Mexico, which of the following will occur?</strong></p>

<p><strong>A. The supply of Vietnamese <em>dong</em> will decrease.</strong></p>

<p><strong>B. The Vietnamese <em>dong</em> will appreciate.</strong></p>

<p><strong>C. Mexico's financial capital inflow will increase.</strong></p>

<p><strong>D. The Mexican <em>peso</em> will depreciate.</strong></p>

<p><strong>E. Vietnam's financial capital inflow will increase.</strong></p>

<p>The answer is <strong>E.</strong> Can somebody explain? From my understanding, since Vietnamese <em>dong</em> are going to Mexico to buy those manufactured products, there would be net capital <em>out</em>flow from Vietnam, not <em>in</em>flow. Thank you!</p>

<macroeconomics>
Help with financial capital inflow
Thomas
# Help with financial capital inflow

(Asked by: username_0 on 2019-04-29)

I'm studying for an economics exam and am stuck on this question:

**If consumers in Vietnam increase their demand for products that are manufactured in Mexico, which of the following will occur?**

**A. The supply of Vietnamese *dong* will decrease.**

**B. The Vietnamese *dong* will appreciate.**

**C. Mexico's financial capital inflow will increase.**

**D. The Mexican *peso* will depreciate.**

**E. Vietnam's financial capital inflow will increase.**

The answer is **E.** Can somebody explain? From my understanding, since Vietnamese *dong* are going to Mexico to buy those manufactured products, there would be net capital *out*flow from Vietnam, not *in*flow. Thank you!

**Tags:** macroeconomics


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## 1 answers

### Answer by username_1 on 2019-04-29. Score: 3 | Accepted answer

I don't like the question because money movement is a current flow and it is also capital flow.

Anyway, the current outflow (to pay for the goods from Mexico) will be matched by a capital inflow. Mexico will use the increase in earnings to buy goods and services and investments in Vietnam. If we assume proportions are constant before and after the increase in earnings, then some amount of the increase will go into investments in Vietnam. Investments are capital.


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