Answer to Question #150327 in Macroeconomics for Kane

Question

If the real interest rate in Mexico is higher than that of the United States, what will happen to capital flow:
Mexico will experience capital outflow, the U.S. will experience capital inflow
Mexico and the U.S. will both experience capital inflow
Mexico will experience capital inflow, there will be no change the U.S.’s capital flow
Mexico will experience capital inflow, the U.S. will experience capital outflow

Answer 1

Mexico will experience capital inflow, the U.S. will experience capital outflow