Figure 13.3.U.S.Capital and Financial Account Under a Fixed Exchange Rate System

-Refer to Figure 13.3.Falling investment profitability in the United States,relative to investment profitability abroad,would shift the U.S.capital and financial account schedule downward from CA0 to CA1,resulting in net financial outflows from the United States.

Question

Figure 13.3.U.S.Capital and Financial Account Under a Fixed Exchange Rate System
 
-Refer to Figure 13.3.Falling investment profitability in the United States,relative to investment profitability abroad,would shift the U.S.capital and financial account schedule downward from CA0 to CA1,resulting in net financial outflows from the United States.

Quizplus · Accepted Answer

According to Figure 13.3, a downward shift in the U.S. capital and financial account schedule would result in net financial outflows from the United States. Falling investment profitability in the United States relative to investment profitability abroad could result in such a shift, causing the schedule to move from CA0 to CA1.

Figure 133