When interest rates in the U.S. increase, we can expect NCO to:
A) decrease, because capital inflow is increasing.
B) increase, because capital inflow is increasing.
C) decrease, because capital outflow is increasing.
D) increase, because capital outflow is increasing.

Question

Quizplus · Accepted Answer

When interest rates in the U.S. increase, foreign investors are more likely to invest in U.S. assets due to higher returns, leading to increased capital inflow and a decrease in Net Capital Outflow (NCO).

When Interest Rates in the U