Suppose that purchases of Irish assets by foreigners exceed Irish purchase 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 foreigners purchase more Irish assets than Ireland purchases foreign assets, Ireland has a negative net capital outflow. 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