When Americans ________ their net holdings of foreign assets,this change is recorded as a net U.S. acquisition of financial assets in the financial account. When foreigners ________ their net holdings of U.S. assets,this change is recorded as a net U.S. incurrence of liabilities.

Question

Quizplus · Accepted Answer

When Americans increase their net holdings of foreign assets, it is indeed recorded as a net U.S. acquisition of financial assets in the financial account, reflecting an outflow of capital from the U.S. to purchase these assets. Similarly, when foreigners increase their net holdings of U.S. assets, it is recorded as a net U.S. incurrence of liabilities, indicating an inflow of capital to the U.S. as it sells assets to foreigners.

When Americans ________ Their Net Holdings of Foreign Assets,this Change