According to the open-economy macroeconomic model, if the U.S. government budget deficit decreases, then both U.S. domestic investment and net capital outflow increase.

Question

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A decrease in the U.S. government budget deficit reduces national saving and interest rates, which encourages more domestic investment and increases net capital outflow as domestic funds are more available for foreign investment.

According to the Open-Economy Macroeconomic Model, If the U