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

Question

Quizplus · Accepted Answer

When U.S. interest rates decrease, foreign investors find U.S. assets less attractive, leading to a decrease in capital inflow and an increase in net capital outflow (NCO) as domestic investors seek higher returns abroad.

When Interest Rates in the U