Figure 13.1.U.S.Capital and Financial Account

-Refer to Figure 13.1.Downward movements along U.S.capital and financial account schedule CA0 would be caused by:

Question

Figure 13.1.U.S.Capital and Financial Account
 
-Refer to Figure 13.1.Downward movements along U.S.capital and financial account schedule CA0 would be caused by:

Quizplus · Accepted Answer

Downward movements along the capital and financial account schedule (CA0) indicate an increase in U.S. borrowing from foreign countries. This could be caused by a decrease in U.S. interest rates relative to foreign interest rates, making it more attractive for U.S. borrowers to seek financing from foreign sources. Taxes placed on income earned by U.S. residents from their foreign investments (choice C) would not directly affect the amount of borrowing. Taxes placed on income earned by foreign residents from their U.S. investments (choice D) would not directly affect the amount of borrowing either.