Answer:
WHAT IS OUTFLOWS IN ECONOMY?
- Capital outflow is an economic term describing capital flowing out of (or leaving) a particular economy. Outflowing capital can caused by any number of economic or political reasons but can often originate from instability in either sphere.
- Too much inflows of money into our economy usually results to INFLATION, a decline in the value of money, with an upward movement of the price level. When the amount of money in circulation increases, people have more money to spend. There will be an increase in demand. Therefore, consumers compete for available goods.
An explanation of what happens if there are net outflows of money from a country. Impact on:
- Exchange rate - exchange rate will fall
- Balance of Payments – debit on financial account
- Confidence – if big outflows it can cause a negative spiral of declining confidence.
- Government debt – it can be more difficult to finance government borrowing from overseas investors.
- Employment
- Real GDP (tends to fall)
It depends whether the outflow of money is small or caused by a loss of confidence (capital flight)
sana po makatulong
