Suppose Cavland's exports equal $400 billion and its imports equal $500 billion. JForeigners purchased $200 billion worth of assets in Cavland. What is Cavland's
Jbalance on its capital account?

Question

Quizplus · Accepted Answer

Cavland's capital account balance is calculated by subtracting the value of assets purchased by foreigners ($200 billion) from the trade deficit ($100 billion, which is exports minus imports). Thus, the capital account balance is $100 billion.

Suppose Cavland's Exports Equal $400 Billion and Its Imports Equal