When interest rates in the U.S. decline, we can expect net capital outflow to:
A) increase.
B) decrease.
C) be unaffected.
D) be zero.

Question

Quizplus · Accepted Answer

When interest rates in the U.S. decline, the return on U.S. assets becomes less attractive compared to other countries with higher interest rates. This leads investors to shift their investments from U.S. assets to foreign assets, which results in an increase in net capital outflow.

When Interest Rates in the U