Question

Holding constant risk and the real returns available abroad, higher domestic real interest rates __________ capital inflows, __________ capital outflows, and __________ net capital inflows.

Answer 1

Increase capital inflows

Decrease capital outflows

Increase capital inflows

Step-by-step explanation:

This is mainly.because when the real interest rates are high, that means the interest rates are well above the inflation level and investors, can get a higher yield. However, highers interest rates discourage borrowings as the cost of capital is high.

Answer 2

increase, decrease, increase

Step-by-step explanation:

Holding constant risk and the real returns available abroad, higher domestic real interest rates increase capital inflows, decrease capital outflows, and increase net capital inflows.