By itself,the purchase of a U.S.bond by a foreign resident decreases U.S.net capital outflow and increases foreign capital outflow.

Question

Quizplus · Accepted Answer

When a foreign resident purchases a U.S. bond, it means that they are investing their capital in the United States, which decreases U.S. net capital outflow. At the same time, it increases foreign capital outflow, as money is flowing out of the foreign resident's home country to purchase the U.S. bond.

By Itself,the Purchase of a U