Other things the same,a decrease in the U.S.real interest rate induces
A)Americans to buy more foreign assets,which increases U.S.net capital outflow.
B)Americans to buy more foreign assets,which reduces U.S.net capital outflow.
C)foreigners to buy more U.S.assets,which reduces U.S.net capital outflow.
D)foreigners to buy more U.S.assets,which increases U.S.net capital outflow.

Question

Quizplus · Accepted Answer

A decrease in the U.S. real interest rate makes holding U.S. assets less attractive, so Americans are likely to buy more foreign assets instead. This increased demand for foreign assets will increase U.S. net capital outflow (NCFO) since NCFO is equal to foreign purchases of U.S. assets minus U.S. purchases of foreign assets.

Other Things the Same,a Decrease in the U