When a U.S. resident increases her holdings of a foreign financial asset, this item is recorded as a:

Question

Quizplus · Accepted Answer

When a U.S. resident increases her holdings of a foreign financial asset, it is recorded as a debit entry in the U.S. capital account. This is because it reflects an outflow of financial capital from the U.S. to a foreign country, which is a liability for the U.S. in the foreign financial system.

When a US Resident Increases Her Holdings of a Foreign Financial Asset