When interest rates in the United States decline, we can expect net capital outflow to:
A) increase.
B) decrease.
C) be unaffected.
D) become zero.

Question

Quizplus · Accepted Answer

When interest rates in the United States decline, foreign investors will find it less attractive to invest in US assets such as bonds and stocks. As a result, they will sell those investments and convert the proceeds back into their own currency, leading to an increase in net capital outflow.

When Interest Rates in the United States Decline, We Can