what happens to the currency of maxistan and aggregate demand in maxistan if the demand for its financial…

Brief Explanations:

When the demand for a country's financial assets decreases, foreign - investors are less interested in holding assets denominated in that country's currency. This reduces the demand for the currency in the foreign - exchange market, causing it to depreciate. A depreciated currency makes exports cheaper and imports more expensive. Cheaper exports increase the demand for domestic goods from abroad, and more expensive imports reduce the demand for foreign goods. Overall, net exports increase, which is a component of aggregate demand (AD = C + I+ G+ NX), so aggregate demand increases.

Answer:

C. Currency depreciates; aggregate demand (AD) increases