Which of the following affects a country's net international investment position? real interest rates paid on...

Which of the following affects a country's net international investment position?

real interest rates paid on foreign assets
		real interest rates paid on domestic assets
		government policies that affect foreign ownership of domestic assets
		All of these

Expert Solution

Question:

Which of the following affects a country's net international investment position?

real interest rates paid on foreign assets
real interest rates paid on domestic assets
government policies that affect foreign ownership of domestic assets
All of these

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In open economy macroeconomics, the outflow and inflow of capital and investments primarily depends on the interest rates prevailing in different countries.

More specifically, the interest rate differential is important. Capital always flows to the country with higher interest rates, from countries with lower interest rates.

Further, other factors may include government policies, political situations, civil unrest and so on. For example, if the government of country A prohibits investments in country B, that will significantly affect overall investments.

Therefore in the given question, all the given choices are correct.

Correct answer) All of these

Rahul Sunny answered 2 years ago

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