Suppose Jaffe's exports equal $50 billion, its purchases of foreign assets equal $200
Billion, and foreign purchase of Jaffe's assets equal $100 billion. What is Jaffe's balance on its capital account?

Question

Quizplus · Accepted Answer

The capital account balance is equal to the difference between purchases of foreign assets and foreign purchases of domestic assets. In this case, Jaffe's purchases of foreign assets are $200 billion and foreign purchases of Jaffe's assets are $100 billion, so the capital account balance is $200 billion - $100 billion = $100 billion.

Suppose Jaffe's Exports Equal $50 Billion, Its Purchases of Foreign