In an open economy, what does net capital outflow equal?
A) imports
B) net exports
C) exports
D) net imports

Question

Quizplus · Accepted Answer

Net capital outflow is defined as the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreign residents. In an open economy, net exports (or trade balance) is the difference between exports and imports. By definition, these two variables are equal, hence the answer is B.

In an Open Economy, What Does Net Capital Outflow Equal