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 the figure, a shift in the capital and financial account schedule from CA₀ to CA₁ would result in net financial outflows from the United States. This shift would occur due to falling investment profitability in the United States relative to investment profitability abroad.

Figure 133