Net capital outflow is defined as the purchase of
A)foreign assets by domestic residents minus the purchase of domestic assets by foreign residents.
B)foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents.
C)domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents.
D)domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.

Question

Quizplus · Accepted Answer

Net capital outflow is the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreign residents. This is because when domestic residents purchase foreign assets, they are essentially exporting domestic savings and investing them in foreign countries. On the other hand, when foreign residents purchase domestic assets, they are importing savings from abroad to invest domestically.

Net Capital Outflow Is Defined as the Purchase of