10. Suppose the domestic interest rate is 5 percent, the international interest rate is 8 percent, and the risk premium is 0 percent. If the exchange rate is expected to depreciate by 2 percent, which one of the following would describe the likely short-run outcome?

A) The flow of capital will not be affected.

B) There will be a decrease in the net inflow of capital.

C) There will be an increase in the net inflow of capital.

D) There will be an increase in the net outflow of capital.

E) There will be a decrease in the net outflow of capital.