If net exports are equal to net foreign investment,which of the following is not true?
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)The balance on the financial account is zero.

Question

Quizplus · Accepted Answer

The balance on the financial account being zero is not necessarily true when net exports are equal to net foreign investment. This statement does not account for the fact that the balance of payments includes more components than just the financial account and the current account (which includes net exports). The equality of net exports and net foreign investment typically implies a balance between the current account and the financial account, not that either is zero.

If Net Exports Are Equal to Net Foreign Investment,which of the Following