If one nation experiences a gain in its external wealth due to valuation effects only, combined, the other nations in the world will experience:

Question

Quizplus · Accepted Answer

When one nation experiences a gain in its external wealth due to valuation effects only, it means that the value of its investments or assets abroad has increased relative to the value of foreign investments within its borders. This is a zero-sum situation in the global context, where if one country's external wealth increases due to valuation changes (e.g., due to currency appreciation), other countries' external wealth must decrease by an equal amount, as the increase in one country's wealth is mirrored by a decrease in the value of the assets that other countries hold.

If One Nation Experiences a Gain in Its External Wealth