MACROECON HELP PLEASE......(graph)?

Question

In 2006, the U.S. Commerce Department reported that Americans' personal saving rate fell to -0.5%, which is the lowest personal saving rate since the Great Depression of the 1930s. The decrease in the personal saving rate is due to a substantial decrease in personal saving. The following questions will examine the effects of a decrease in personal saving on national saving, investment, net capital inflows, and the trade balance.

Show how a decrease in personal saving affects net capital inflows into the United States.

should the KI curve shift right or left

Answer 1

Personal saving rate is decrese the consumption is increase, but theres is no savings there is no investment and no production and reconsumpotion.  So saving is affected on national saving, investment, net capital inflows, and the trade balance.

Answer 2

♦ Capital inflow will increase thus capital inflow curve will shift right (but capital outflow will fall thus net capital outflow will shift left).

Domestic saving function will shift left and with unchanged demand for desired investment it will tend to increase equilibrium interest rate.

Because of rising US interest rate world investors will move capital into US (capital inflow) thus increasing import and consequently reducing net exports (trade balance).

Net export will tend to fall (due to increase in imports), demand for US dollar will rise pressing to appreciate dollar and supply on international market of Yuan will increase depreciating it (except the case if China spends it's foreign currency reserves to buy US bonds). Interest rates in US will rise due to increase in demand for bonds (thus market price of bonds will increase too).

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Answer 3

A decrease in the personal savings rate would mean an increase in the level of consumption expenditure. This would mean a fall in National Savings. Lower National Savings would mean fall in investment form domestic sources, but the demand for investment will not fall  and in fact may rise to increase capacity to meet growth in consumption expenditure. This would mean the US economy will need to have extra savings flowing in from abroad. This means net capital inflows should rise. But net capital inflows can effectively rise if there is an increase in trade deficit or decrease in trade surplus.