In the open-economy macroeconomic model,if net capital outflow increases then
A)the demand for dollars in the market for foreign-currency exchange shifts right.
B)the demand for dollars in the market for foreign-currency exchange shifts left.
C)the supply of dollars in the market for foreign-currency exchange shifts right.
D)the supply of dollars in the market for foreign-currency exchange shifts left.

Question

Quizplus · Accepted Answer

When net capital outflow increases, more domestic currency is supplied to the foreign exchange market to purchase foreign assets, shifting the supply of dollars to the right.

In the Open-Economy Macroeconomic Model,if Net Capital Outflow Increases Then