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 when net exports are equal to net foreign investment.

Question

Quizplus · Accepted Answer

When net exports are equal to net foreign investment, it implies that the current account surplus (exports minus imports) would be equal to the capital account surplus (net foreign investment). This results in a balanced balance of payments, as both the current account and financial account balance out each other. Thus, all the options - A (balance of payments is zero), B (current account balance equals negative financial account balance), and C (net capital inflows equal imports minus exports) are true when net exports equal net foreign investment.

If Net Exports Are Equal to Net Foreign Investment