Suppose Jaffe's exports equal $50 billion, its purchases of foreign assets equal $200 Jbillion, and foreign purchase of Jaffe's assets equal $100 billion. What is Jaffe's balance on its capital account?

Question

Quizplus · Accepted Answer

The capital account records the net change in a country's ownership of foreign assets and foreign ownership of domestic assets. In this case, Jaffe's exports are $50 billion, its purchases of foreign assets are $200 billion, and foreign purchases of Jaffe's assets are $100 billion. So, Jaffe's net capital outflow is $200 billion - $100 billion = $100 billion.

Suppose Jaffe's Exports Equal $50 Billion, Its Purchases of Foreign