When the U.S.real interest rate falls
A)U.S.purchases of foreign assets and foreign purchases of U.S.assets rise
B)U.S.purchases of foreign assets rise and foreign purchases of U.S.assets fall
C)U.S.purchases of foreign assets fall and foreign purchases of U.S.assets rise
D)U.S.purchases of foreign assets and foreign purchases of U.S.assets fall

Question

Quizplus · Accepted Answer

When the U.S. real interest rate falls, U.S. investors seek higher returns abroad, increasing U.S. purchases of foreign assets, while foreign investors find U.S. assets less attractive, leading to a decrease in foreign purchases of U.S. assets.

When the U.S.real Interest Rate Falls