A capital inflow occurs when a
A) domestic resident purchases a domestic asset.
B) domestic resident purchases a foreign asset.
C) foreign resident purchases a domestic asset.
D) foreign resident purchases a foreign asset.

Question

Quizplus · Accepted Answer

A capital inflow is defined as a foreign resident purchasing a domestic asset, such as stocks, bonds, or property. This increases the capital stock of the country and can indicate investor confidence in the country's economic performance. Choices A, B, and D all involve domestic residents making purchases, which do not constitute a capital inflow.

A Capital Inflow Occurs When a