Explain the impacts on capital flows in Hong Kong.

The following paragraphs discuss the impact of various economic events on the exchange rate. Complete the paragraphs by filling in the blanks. Use any of the words from the following list (you can use each of these words as many times as you wish but choose carefully - your sentence must make grammatical sense):demand   supply left right buy sell imports exports rise fall increases decreases   What happens to the current account balance and the exchange rate when the following happens?   Suppose that New Zealand firms become more profitable relative to foreign firms and so increase their payment of dividends (everything else held constant). The value for net foreign income therefore ________ and the value of the current account balance will _______.   Payment of NZ dividends to foreign owners affects the _______ or/of $NZ while payments of foreign dividends to NZ owners of foreign companies affects the _______ for/of $NZ.   Therefore the impact of the change in profit of NZ firms is…

Currency traders expect the dollar to depreciate. What impact will this have on equilibrium in the foreign exchange market? The dollar will appreciate, and the equilibrium quantity of dollars will decrease. The dollar will depreciate, and the equilibrium quantity of dollars exchanged will decrease. The dollar will appreciate, and the equilibrium quantity of dollars will increase. The dollar will depreciate, and the change in the equilibrium quantity of dollars exchanged cannot be determined.

What is capital flight? When a country experiences capital flight, what is the effect on its interest rate and exchange rate?