As the real interest rate ________,net capital outflows ________.

Question

Quizplus · Accepted Answer

An increase in the real interest rate means that the return on domestic assets is higher relative to foreign assets, which will lead to a decrease in net capital outflows as investors are incentivized to keep their money in the domestic economy to take advantage of the higher interest rates. Conversely, a decrease in the real interest rate would lead to an increase in net capital outflows as investors seek higher returns abroad. Therefore, choice C is correct.

As the Real Interest Rate ________,Net Capital Outflows ________

As the Real Interest Rate ,Net Capital Outflows