If net exports are negative, then
A) net capital outflow is positive (indicating an inflow of capital), so foreign assets bought by Americans are greater than American assets bought by foreigners.
B) net capital outflow is positive (indicating an inflow of capital), so American assets bought by foreigners are greater than foreign assets bought by Americans.
C) net capital outflow is negative (indicating an outflow of capital), so foreign assets bought by Americans are greater than American assets bought by foreigners.
D) net capital outflow is negative (indicating an outflow of capital), so American assets bought by foreigners are greater than foreign assets bought by Americans.

Question

Quizplus · Accepted Answer

When net exports are negative, it means that imports are greater than exports. This implies that there is a higher amount of American assets being bought by foreigners, which is represented by a negative net export. This also indicates a negative net capital outflow, meaning there is an outflow of capital from the domestic economy to the foreign economy, as foreigners are buying American assets.

If Net Exports Are Negative, Then