Suppose Grovner's exports equal $950 billion, its imports equal $1,000 billion, and Jpurchases of foreign assets by its citizens equals $900 billion. What is Grovner's balance on its capital account?

Question

Quizplus · Accepted Answer

The capital account balance is calculated as the net flow of financial assets. Since Grovner's citizens purchase $900 billion in foreign assets, and the trade deficit (exports - imports) is $50 billion, the capital account balance is $50 billion to offset the trade deficit.

Suppose Grovner's Exports Equal $950 Billion, Its Imports Equal $1,000