An increase in capital outflows from the United States will
A)decrease the balance on the financial account.
B)increase the balance on the financial account.
C)decrease the balance on the capital account.
D)increase the balance on the current account.

Question

Quizplus · Accepted Answer

Capital outflows refer to the movement of assets or money out of a country. This represents a decrease in the financial account balance, as more money is leaving the country than entering it. A decrease in the financial account balance also implies a decrease in the overall balance of payments, which includes the current and capital accounts. Therefore, options B and D can be ruled out, and the correct choice is A. The capital account balance may also be affected by capital outflows, but this does not contradict the fact that the financial account balance will be decreased.

An Increase in Capital Outflows from the United States Will