When the U.S.real interest rate falls,purchasing U.S.assets becomes
A)less attractive and so U.S.net capital outflow rises.
B)less attractive and so U.S.net capital outflow falls.
C)more attractive and so U.S.net capital outflow rises.
D)more attractive and so U.S.net capital outflow falls.

Question

Quizplus · Accepted Answer

When the U.S. real interest rate falls, U.S. assets yield lower returns, making them less attractive to investors. As a result, investors may seek higher returns abroad, leading to an increase in U.S. net capital outflow.

When the U.S.real Interest Rate Falls,purchasing U.S.assets Becomes