Gabrielle, an Italian citizen, uses some previously obtained dollars to purchase a bond issued by a U.S. company. This transaction
A)decreases U.S.net capital outflow.
B)does not change U.S.net capital outflow.
C)increases U.S.net capital outflow by more than the value of the bond.
D)increases U.S.net capital outflow by the value of the bond.

Question

Quizplus · Accepted Answer

The transaction does not change U.S. net capital outflow because Gabrielle is using dollars she already had to purchase the bond, meaning there is no new flow of capital into or out of the U.S. as a direct result of this transaction.

Gabrielle, an Italian Citizen, Uses Some Previously Obtained Dollars to Purchase