If a country has positive net capital outflows, then its net exports are
A)positive, and its saving is larger than its domestic investment.
B)positive, and its saving is smaller than its domestic investment.
C)negative, and its saving is larger than its domestic investment.
D)negative, and its saving is smaller than its domestic investment.

Question

Quizplus · Accepted Answer

Positive net capital outflows mean a country is investing more abroad than it is receiving from foreign investments. This corresponds to a situation where its saving is larger than its domestic investment, allowing it to lend the excess to foreigners. Since the financial account (capital flows) and the current account (net exports) balance each other out, positive net capital outflows imply positive net exports.

If a Country Has Positive Net Capital Outflows, Then Its