Consider only the flow of funds spent on acquiring assets. Which of the following is true if the U.S. has a net capital outflow of funds?
I. Foreign purchases of U.S. assets are greater than U.S. residents' purchases of foreign assets.
II. Foreign purchases of U.S. assets are less than U.S. residents' purchases of foreign assets.
III. There is a capital account surplus.
IV. There is a capital account deficit.

Question

Consider only the flow of funds spent on acquiring assets. Which of the following is true if the U.S. has a net capital outflow of funds? 
I. Foreign purchases of U.S. assets are greater than U.S. residents' purchases of foreign assets.
II. Foreign purchases of U.S. assets are less than U.S. residents' purchases of foreign assets.
III. There is a capital account surplus.
IV. There is a capital account deficit.

Quizplus · Accepted Answer

If the U.S. has a net capital outflow, it means U.S. residents are purchasing more foreign assets than foreigners are purchasing U.S. assets, indicating a capital account deficit.

Consider Only the Flow of Funds Spent on Acquiring Assets