Assume that a war breaks out abroad, and foreign investors choose to invest more in a large safe country, the United States. Then, the U. S. real interest rate:.

and net exports will both fall.

Explanation:

The real interest rate can be regarded as rate of interest that is received by an investor or lender after inflation has been allowed, we can describe this with Fisher equation, that real interest rate is regarded as approximately difference of nominal interest rate and the inflation rate. Net exports can be regarded as measure of total trade of goods and services of a particular country. It can be regarded as balance of trade, and this one that remains after deduction of import value of a country from the export value of the country which is been calculated for a particular period.In instance, whereby a war breaks out abroad, and foreign investors choose to invest more in a large safe country, the United States. Then, the U.S. real interest rate and net exports will both fall.

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