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    Question

    Foreign funds that can move very quickly in and out of

    markets, potentially leading to market instability, are called?
    A Quick Money Correct Answer Incorrect Answer
    B Hot Money Correct Answer Incorrect Answer
    C Soft Money Correct Answer Incorrect Answer
    D Fluid Money Correct Answer Incorrect Answer
    E Digital Money Correct Answer Incorrect Answer

    Solution

    In economics, hot money is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts. These speculative capital flows are called 'hot money' because they can move very quickly in and out of markets, potentially leading to market instability.

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