If net exports are positive, 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

Positive net exports mean that exports (sales of goods and services to foreigners) exceed imports (purchases of goods and services from foreigners). This surplus of exports over imports leads to an inflow of foreign currency, which is used to buy American assets such as stocks, bonds, and real estate. This inflow of capital is reflected in a positive net capital outflow, indicating that more foreign assets are bought by Americans than American assets are bought by foreigners.

If Net Exports Are Positive, Then