6.6: Real Interest Rates & International Capital Flow

Question 1

What happens to the value of the dollar as a result of change in real interest rates due to Americans saving more?

Answer 1

Real Interest decrease
Capital Flow decrease
International demand for dollar decrease
Value for the dollar decease

Question 2

What happens when savings increase?

Answer 2

Supply for loans Increase
Real interest increase
Net Capital Outflow increase
Supply for dollar increase
Value of dollar decreases

Question 3

What happens when investment increases ?

Answer 3

Demand for loans increases
Real interest rates increases
Net Capital Outflow decreases
Supply for dollar decreases
Value of dollar increases