Suppose that purchases of Irish assets by foreigners exceed Irish purchases of foreign assets. Ireland has
A)positive net capital outflow and a trade surplus.
B)positive net capital outflow and a trade deficit.
C)negative net capital outflow and a trade surplus.
D)negative net capital outflow and a trade deficit.

Question

Quizplus · Accepted Answer

When purchases of Irish assets by foreigners exceed Irish purchases of foreign assets, Ireland has negative net capital outflow, meaning more capital is flowing into Ireland than out. This typically corresponds with a trade deficit, as the capital inflow finances the excess of imports over exports.

Suppose That Purchases of Irish Assets by Foreigners Exceed Irish