Suppose the U.S. economy began to grow more rapidly than other countries in the world. What would be the likely impact on U.S. financial markets as part of the global economy?

The International Economy:

More and more investors are seeking returns in both domestic and international markets in an increasingly globalized environment. If the US economy were to grow rapidly, it would pique the interest of international investors.

If the US economy grows faster than the rest of the world, it will be seen as a safe haven by potential investors, attracting significant investment in US financial instruments. For investors seeking big returns, a thriving economy sets future expectations. As a result, foreign capital pours into the United States, increasing the amount of money available for domestic enterprises and households to borrow and develop their businesses, assisting the economy's growth. So because of this financial markets in the United States are likely to outperform markets and exchanges in other nations.

Therefore, the supply curve shifts right to a greater equilibrium amount of financial capital and a lower equilibrium rate of return due to the increased supply of money. As a result, a booming US economy attracts and benefits from foreign money.