In the open-economy macroeconomic model,the key determinant of net capital outflow is
A)the real exchange rate.When the real exchange rate rises,net capital outflow rises.
B)the real exchange rate.When the real exchange rate rises,net capital outflow falls.
C)the real interest rate.When the real interest rate rises,net capital outflow rises.
D)the real interest rate.When the real interest rate rises,net capital outflow falls.

Question

Quizplus · Accepted Answer

The real interest rate is the key determinant of net capital outflow. When the real interest rate rises, domestic assets become more attractive, leading to a decrease in net capital outflow as investors prefer to invest domestically.

In the Open-Economy Macroeconomic Model,the Key Determinant of Net Capital