i have three questions of my macroeconomic assignment

Principles of Macroeconomics Problem Set 8 Due 11/4/15

1. If the net capital outflow of the United States decreases, does that move the supply or demand

of domestic loanable funds? Which direction? Why? (5 points)

2. If citizens of the United States decide to save more money, will that strengthen or weaken the

dollar? Describe the chain of cause and effect that links the savings decisions to the real

exchange rate. (10 points)

3. Explain why the demand for dollars is inversely related to the real exchange rate. (5 points).

4. Is the net capital outflow increasing or decreasing in the domestic real interest rate? Why? (5

points)