15. Low-interest rates in the US, Japan, and other developed countries favored increased capital flows to...
15. Low-interest rates in the US, Japan, and other developed countries favored increased capital flows to East Asian countries. Explain why.
Homework Answers
When interest rate in developed countries is low, global investors channelize their funds to countries where interest rates are relatively high, so as to increase the returns from their investment in the form of higher interest income (for debt instruments). Therefore, more global capital flows into such countries, of which East Asian countries are included since they pay relatively higher interest rate.
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15. Low-interest rates in the US, Japan, and other
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