Everything else equal,when U.S.imports ________,net capital outflows ________.

Question

Quizplus · Accepted Answer

When the U.S. imports more, it means that U.S. residents are buying more foreign goods, which increases the demand for foreign currency. This leads to an increase in net capital outflows because U.S. residents need to sell more U.S. dollars to buy the foreign currency they need to pay for the imports. This increased demand for foreign currency leads to an increase in its value, which causes a decrease in the supply of dollars in foreign exchange markets, raising the dollar's value and adding to the net capital outflows. Therefore, as imports increase, net capital outflows decrease.

Everything Else Equal,when U.S.imports ________,Net Capital Outflows ________

Everything Else Equal,when U.S.imports ,Net Capital Outflows