A Japanese bank buys U.S.government bonds,this purchase
A)increases U.S.net capital outflow and has no affect on Japanese net capital outflow.
B)increases U.S.net capital outflow and increases Japanese net capital outflow.
C)increases U.S.net capital outflow,but decreases Japanese net capital outflow.
D)decreases U.S.net capital outflow,but increases Japanese net capital outflow.

Question

Quizplus · Accepted Answer

When a Japanese bank buys U.S. government bonds, it represents a capital inflow to the U.S., decreasing U.S. net capital outflow, while it represents a capital outflow from Japan, increasing Japanese net capital outflow.

A Japanese Bank Buys U.S.government Bonds,this Purchase