Explain theoretically long-run effects on interest rates

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Although the world financial crisis of 2008-2009 began in the US subprime mortgage market, it quickly spread around the world. Ironically, foreign assets became viewed as riskier than US assets. As a result, investors around the world viewed the US as a "safe haven" and increased their purchases of US assets. Use the appropriate graphs for a large open economy to illustrate and explain the theoretically long-run effects on each of the following: the US real interest rate, national savings, investment, net capital outflow, the US real exchange rate, and the US net exports.

Reference no: EM13237030

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