Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the United States?
A)U.S. net exports will rise
B)U.S. net capital outflow will fall.
C)U.S. domestic investment will rise
D)the dollar will appreciate

Question

Quizplus · Accepted Answer

If foreigners withdraw their funds, the U.S. will have less foreign capital inflow, leading to a decrease in the supply of dollars in the foreign exchange market, causing the dollar to depreciate. This depreciation makes U.S. goods cheaper for foreigners, thus increasing U.S. net exports.

Which of the Following Is Most Likely to Result If