Find theoretical long-run effects on net capital outflow

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Reference no: EM13201866

Although the world financial crisis of 2008-2009 began in the U.S. sub-prime mortgage market, it quickly spread around the world. Ironically, foreign assets became viewed as riskier than U.S. assets. As a result, investors around the world viewed the U.S. as a "safe haven" and increased their purchases of U.S. assets. Use the appropriate graphs for a large open economy to illustrate and explain the theoretical long-run effects on each of the following: the U.S. real interest rate, national saving, investment, net capital outflow, the U.S. real exchange rate and the U.S. net exports.

Reference no: EM13201866

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