A country has net capital outflow of $40 billion. Which of the following is consistent with this net capital outflow?

Question

BlackTom AI · Accepted Answer

We start by recalling the relationship in the open economy: net capital outflow (NCO) equals net lending to the rest of the world, and it is also equal to net exports (NX). In other words, NCO = NX. Here, NCO is given as 40 billion dollars, so any statement that is consistent with NCO = 40 should reflect a net outflow of funds to foreign assets or a positive NX of 40.

Option 1: It has -$40 billion of net exports. This would imply NX = -40, which by the identity NX = NCO would mean NCO = -40, not +40. Therefore, this option is inconsistent with the given NCO of +40.

Option 2: Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreign residents by $40 billion. This directly describes a positive net capital outflow of 40, i.e., NCO = +40. Since NX = NCO, this is also consistent with NX = +40. This option aligns with the fundamental relationship between NCO and NX.

Option 3: Its saving is $35 billion and its domestic investment is $5 billion. In the standard identity for closed versus open economies, NCO equals saving minus domestic investment (NCO = S – I). Here S – I = 35 – 5 = 30. Thus this option implies NCO = 30, not 40. Therefore it is not consistent with the given NCO.

Option 4: All of the above are consistent with a net capital outflow of $40 billion. Since we have seen that options 1 and 3 are not consistent with NCO = 40, this collective statement cannot be true. The claim that all the above are consistent is therefore incorrect.

In summary, option 2 uniquely matches the definition and the open-economy identities for NCO and NX, while options 1 and 3 fail to align with NCO = 40, and option 4 falsely asserts that all are correct.

A country has net capital outflow of $40 billion. Which of the following is consistent with this net capital outflow?单项选择题

类似问题

Kiara is a web designer living in Illinois. She creates and sells a website to Gabrielle who is living in Germany. Gabrielle pays Kiara 5,000 euros for the website. If Kiara keeps the 5,000 euros at home, NCO

If a country has positive net capital outflows, then its net exports are[Fill in the blank]

What was the value of Country D's net capital outflow?[Fill in the blank]

Kiara is a web designer living in Illinois. She creates and sells a website to Gabrielle who is living in Germany. Gabrielle pays Kiara 5,000 euros for the website. If Kiara keeps the 5,000 euros at home, NCO

Matt and Melinda are American residents. Matt buys stock issued by a German corporation. Melinda opens a shoe factory in Panama. Whose purchase, by itself, increases the U.S.’s net capital outflow?

If a country has Y > C + I + G, then it has

What was the world's first widely adopted biodiversity policy?

The aim of the Paris Agreement is to ensure that the earth’s preindustrial temperature is not exceeded by more than º Celsius.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单