Question

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

A. and the real exchange rate decrease.
B. increases and the real exchange rate decreases.
C. and the real exchange rate increase.
D. decreases and the real exchange rate increases.

Answer 1

option a)

Step-by-step explanation:

correct option is option a)

Net capital outflow is the net flow of funds which is being invested abroad by a country during a certain period of time .

loan able funds is the fund which the people of the country decide to save or lend out to borrow.

positive net capital outflow means outflow is more than the inflow of money.

when supply of loan able fund increases the real exchange rate decrease means net export increase.