Which of the following is most likely to increase the net inflow of foreign capital?
A) an increase in the rate of inflation
B) a decline in real GDP as the economy falls into a recession
C) a reduction in domestic investment
D) an increase in the real interest rate in the loanable funds market

Question

Quizplus · Accepted Answer

An increase in the real interest rate in the loanable funds market would make domestic assets more attractive to foreign investors, leading to an increase in the net inflow of foreign capital. This is because a higher real interest rate increases the return on investment for foreign investors, making it more worthwhile for them to invest in domestic assets. On the other hand, choices A, B, and C would likely decrease the net inflow of foreign capital.

Which of the Following Is Most Likely to Increase the Net