The balance on capital account in the balance of payments reflects net international capital flows based on:
A) nominal interest rate differentials.
B) real interest rate differentials.
C) portfolio managers' attempts to find the best total return from holdings of domestic and foreign assets.
D) portfolio managers' unwillingness to hold securities issued by foreign business and governments.

Question

Quizplus · Accepted Answer

The capital account in the balance of payments reflects net international capital flows based on portfolio managers' attempts to find the best total return from holdings of domestic and foreign assets, as they seek to optimize returns by investing in various international markets.

The Balance on Capital Account in the Balance of Payments