Other things the same,as the real interest rate rises
A)domestic investment and net capital outflow both rise.
B)domestic investment and net capital outflow both fall.
C)domestic investment rises and net capital outflow falls.
D)domestic investment falls and net capital outflow rises.

Question

Quizplus · Accepted Answer

As the real interest rate rises, borrowing costs increase, leading to a decrease in domestic investment. Additionally, higher domestic interest rates attract foreign capital, reducing net capital outflow.

Other Things the Same,as the Real Interest Rate Rises