In the open-economy macroeconomic model,net capital outflow rises if
A)either the exchange rate rises or the real interest rate falls.
B)either the exchange rate falls or the real interest rate rises.
C)the real interest rate rises.Net capital outflow does not depend on the exchange rate.
D)the real interest rate falls.Net capital outflow does not depend on the exchange rate.

Question

Quizplus · Accepted Answer

Net capital outflow increases when the real interest rate falls because lower domestic interest rates make foreign investments more attractive, leading to an outflow of capital. Net capital outflow is not directly dependent on the exchange rate.

In the Open-Economy Macroeconomic Model,net Capital Outflow Rises If