Question

The large foreign supply of funds to the U.S. market is partially attributed to the a. low foreign saving rates. b. high foreign interest rates. c. high foreign saving rates.

Answer 1

Answer:

a. low foreign saving rates.

Explanation:

As foreing countries saving rates are lower than US after conidering inflation and risk premium; people from abroad prefers to invest in the US than in their native country as feel it more safe and more prosperus also, they can yield better return in US dollars as their countries are exposed to decreases in the exchange-rates

Answer 2

Answer:

C) high foreign saving rates.

Explanation:

US savings rate is approximately 8.8% (2018 data) while some countries like Japan have an average savings rate of over 28%, China's and Singapore's savings rate are above 40%, European countries like Switzerland, Luxembourg, or Sweden have savings rates of approximately 16-18%. On average, countries that belong to the European Union have an average savings rate of approximately 12%.

That means that other developed countries have a much higher savings rate than the US, therefore they have excess amount of funds. An important percentage of those excess funds are invested in the US.