Mexico suffered from capital flight in 1994. What happened to Mexico's net capital outflow and net exports?
A) The net capital outflow and net exports decreased.
B) The net capital outflow and net exports increased.
C) The net capital outflow increased while net exports decreased.
D) The net capital outflow decreased while net exports increased.

Question

Quizplus · Accepted Answer

Capital flight from Mexico in 1994 would have increased the net capital outflow as investors moved their capital out of the country. According to the national income accounts identity, an increase in net capital outflow must be matched by an increase in net exports.

Mexico Suffered from Capital Flight in 1994