If U.S. net exports are negative, then net capital outflow is
A)positive, so foreign assets bought by Americans are greater than American assets bought by foreigners.
B)positive, so American assets bought by foreigners are greater than foreign assets bought by Americans.
C)negative, so foreign assets bought by Americans are greater than American assets bought by foreigners.
D)negative, so American assets bought by foreigners are greater than foreign assets bought by Americans.

Question

Quizplus · Accepted Answer

When U.S. net exports are negative, it means that imports exceed exports, implying that more money is leaving the country to buy foreign goods than is entering from the sale of domestic goods to foreigners. This situation corresponds to a negative net capital outflow, indicating that American assets bought by foreigners are greater than foreign assets bought by Americans.

If US Net Exports Are Negative, Then Net Capital Outflow Is