1. Capital outflows occur if:

a. domestic interest rates are higher than foreign interest rates.

b. domestic interest rates are lower than foreign interest rates.

c. domestic and foreign interest rates are the same.

d. none of the above.

2. In the foreign exchange market, foreign residents wishing to purchase U.S. exports or U.S. real and financial assets must:

a. demand U.S. dollars by supplying their foreign currency.

b. demand U.S. dollars by supplying U.S. dollars.

c. supply U.S. dollars by demanding their foreign currency.

d. none of the above.