When foreigners purchase U.S. assets, there is an inflow of funds from abroad and this is recorded as a
A) positive item in the capital account.
B) positive item in the current account.
C) negative item in the capital account.
D) negative item in the current account.

Question

Quizplus · Accepted Answer

When foreigners purchase U.S. assets, it represents a capital transaction and involves a transfer of ownership rights, resulting in an inflow of funds from abroad. Therefore, it is recorded as a positive item in the capital account. The current account, on the other hand, records transactions related to imports, exports, and other income flows.

When Foreigners Purchase U