Which of the following is consistent with negative net exports?
A)Net capital outflow is positive, so foreign assets bought by Canadians are greater than Canadian assets bought by foreigners.
B)Net capital outflow is positive, so Canadian assets bought by foreigners are greater than foreign assets bought by Canadians.
C)Net capital outflow is negative, so foreign assets bought by Canadians are greater than Canadian assets bought by foreigners.
D)Net capital outflow is negative, so Canadian assets bought by foreigners are greater than foreign assets bought by Canadians.

Question

Quizplus · Accepted Answer

Negative net exports mean that a country is importing more than it is exporting. This means that there is a net capital outflow, which is the difference between the amount of capital flowing out of a country to purchase foreign assets and the amount of capital flowing into a country to purchase domestic assets. If net capital outflow is negative, it means that more capital is flowing into the country to purchase domestic assets, which would indicate that Canadian assets bought by foreigners are greater than foreign assets bought by Canadians. Therefore, the correct choice is D.

Which of the Following Is Consistent with Negative Net Exports