Hey guys,
Question:
Because of a sharp decline in real estate values, the household sector has increased the fraction of disposable income that it saves. If output and investment spending remain unchanged, which of the following is most likely?
Answer:
My question is actually regarding what’s highlighted. Increasing exports can increase capital outflows if we sale on a credit basis to foreigners, i get that. But how “increased purchases of assets from foreigners” can increase outflows? To me it’s money coming our way.
Thanks.