As the interest rate rises, it is possible that net capital outflow could move from a positive to a negative value.

Question

Quizplus · Accepted Answer

As interest rates rise in a country, domestic assets become more attractive to both domestic and foreign investors, leading to an increase in the demand for the country's currency. This can result in a decrease in capital outflows as investors are more inclined to invest within the country or even an increase in capital inflows, potentially moving net capital outflow from a positive to a negative value.

As the Interest Rate Rises, It Is Possible That Net