Question

If a country changes its corporate tax laws so that domestic businesses build and manage more business in other countries, then the net capital outflow of that country Group of answer choices

Answer 1

Answer: falls and the net capital outflow of other countries rise

Explanation:

Net capital outflow refers to the net flow of funds that's invested abroad by a particular country at a particular period. It should be noted that a positive net capital flow simply means that such country invests more outside more than than what the other parts of the world invests in it.

Given the question above, since the country changes its corporate tax laws so that domestic businesses build and manage more business in other countries, it means that the net capital outflow of that country falls and the net capital outflow of other countries rise.