Question

What term refers to a large and sudden reduction in the demand for assets located in a country?

a. purchasing-power parity
b. capital flight
c. crowding out
d. capital mobility

Answer 1

Capital flight refers to a large and sudden reduction in the demand for assets located in a country. It can lead to a decline in the country's currency value, banking system collapse, and a deep recession.

Step-by-step explanation:

The term that refers to a large and sudden reduction in the demand for assets located in a country is capital flight. Capital flight occurs when investors rapidly sell off their holdings of assets in a particular country, leading to a significant decrease in demand for those assets.

This can result in a decline in the country's currency value, potentially leading to a banking system collapse and a deep recession.