When a large number of investors in a country transfer investments elsewhere because of disturbed economic conditions, it is called
(A) Transfer of Capital
(B) Escape of Capital
(C) Outflow of Capital
(D) Flight of Capital
Correct Answer : Flight of Capital
Question Asked : SSC Section Officer (Commercial Audit) Exam 2006
Explanation : Flight of capital refers to the movement of money from one investment to another in search of greater stability or increased returns. Sometimes, it specifically refers to the movement of money from investments in one country to another in order to avoid country-specific risk (such as high inflation or political turmoil) or in search of higher returns. Capital flight is seen most commonly in massive foreign capital outflows from a specific country, often at times of currency instability.
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Tags : macroeconomics