A country that has a capital account deficit:
A)Is a net seller of assets
B)Is importing less than it exports
C)Also has a current account deficit
D)Is a net buyer of assets

Question

Quizplus · Accepted Answer

A capital account deficit means that the country is spending more on purchasing foreign assets (such as stocks, bonds, and real estate) than it is receiving from selling its own assets to foreigners. Therefore, it is a net buyer of assets. Option A is incorrect because a net seller of assets would have a capital account surplus. Option B is unrelated to the capital account. Option C is not always true, as a country can have a capital account deficit while having a current account surplus if it receives more income from investments abroad than it pays out to foreign investors.

A Country That Has a Capital Account Deficit