If net exports are equal to net foreign investment,
A)the balance of payments is zero.
B)the current account balance is equal to the negative of the financial account balance.
C)net capital inflows are equal to imports minus exports.
D)all of the above are true.

Question

Quizplus · Accepted Answer

If net exports are equal to net foreign investment, it means that the current account balance (which includes net exports) is equal to the financial account balance (which includes net foreign investment). Therefore, there is no imbalance in the balance of payments, and the balance of payments is zero. This also means that the current account balance is equal to the negative of the financial account balance (as they are equal in value but opposite in sign), and net capital inflows (which are part of the financial account) are equal to imports minus exports (which are part of the current account).

If Net Exports Are Equal to Net Foreign Investment