If a country's purchases of foreign assets exceeds foreign purchases of domestic assets,that country has
A)positive net exports and positive net capital outflows.
B)positive net exports and negative net capital outflows.
C)negative net exports and positive net capital outflows.
D)negative net exports and negative net capital outflows.

Question

Quizplus · Accepted Answer

If a country's purchases of foreign assets exceeds foreign purchases of domestic assets, that country has a positive net capital outflow. This is because the country is buying more foreign assets than foreigners are buying domestic assets, which means that there is a net outflow of capital from the country. A positive net capital outflow is typically associated with a positive net export, as the country is using the capital outflow to purchase goods and services from abroad.

If a Country's Purchases of Foreign Assets Exceeds Foreign Purchases