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

Question

Quizplus · Accepted Answer

The balance on the capital account is calculated as the difference between the purchases of foreign assets by citizens and the net exports (exports minus imports). Here, Grovner's net exports are -$50 billion ($950 billion - $1,000 billion). The capital account balance is $900 billion (purchases of foreign assets) minus the net exports of -$50 billion, resulting in a capital account balance of $50 billion.

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