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 schedule indicate a decrease in capital inflow to the U.S. A decrease in capital inflow can be caused by a decrease in the interest rate differential between the U.S. and foreign countries, making investments in the U.S. less attractive relative to investments in other countries. Therefore, option B is the correct choice. Options C and D refer to taxes, which are not directly related to movements along this schedule. Option A is incorrect because it suggests an increase in U.S. interest rates, which would actually attract capital inflows to the U.S. and shift the schedule upward, not downward.