If U.S. residents purchase $500 billion of foreign assets and foreigners purchase $1300 billion of U.S. assets,
A)U.S. net capital outflow is $800 billion; capital is flowing into the U.S.
B)U.S. net capital outflow is $800 billion; capital is flowing out of the U.S.
C)U.S. net capital outflow is -$800 billion; capital is flowing into the U.S.
D)U.S. net capital outflow is -$800 billion; capital is flowing out of the U.S.

Question

Quizplus · Accepted Answer

U.S. net capital outflow is calculated as the difference between the purchase of foreign assets by U.S. residents and the purchase of U.S. assets by foreigners. Here, it is $500 billion - $1300 billion = -$800 billion, indicating capital is flowing into the U.S.

If US Residents Purchase $500 Billion of Foreign Assets and Foreigners