If foreigners held U.S.assets worth $200 billion during a certain year and the current account balance for that year was −$189 billion,the total volume of foreign assets held domestically was worth ________.

Question

Quizplus · Accepted Answer

The current account balance is the difference between exports and imports, plus net income flows and net unilateral transfers. In this case, the negative value of the current account balance (-$189 billion) indicates that the U.S. is importing more than it is exporting and making net payments to foreign countries.

Foreigners holding U.S. assets worth $200 billion implies that foreign investment in U.S. assets increased by $200 billion during the year.

Thus, the total volume of foreign assets held in the U.S. is:

Foreign assets = U.S. assets held by foreigners + U.S. liabilities to foreigners
Foreign assets = $200 billion + (-$189 billion)
Foreign assets = $11 billion

Therefore, the total volume of foreign assets held domestically was worth $211 billion.

If Foreigners Held U