Homework 14

When the Chinese government buys U.S. government bonds, from the perspective of the United States, this is a(n):

capital inflow

Net capital inflows equal:

capital inflows minus capital outflows

When an American buys stock in a French company, from the perspective of the United States, this is a(n):

capital outflow

In an open economy, domestic investment equals:

domestic saving plus net capital inflows

A trade surplus occurs when:

exports exceed imports

When a U.S. restaurant purchases French wine and the French wine company uses the proceeds to buy U.S. government debt, U.S. _____ and there is a capital _____ the United States.

imports increase; inflow to

If the United States has a $300 billion trade deficit, then there must be:

net capital inflows of $300 billion

From the point of view of a particular country, capital inflows are:

purchases of domestic assets by foreigners

From the point of view of a particular country, capital outflows are:

purchases of foreign assets by domestic households or firms

International capital flows are:

purchases or sales of real and financial assets across international borders

The value of exports minus the value of imports in a period is called the:

trade balance

Net exports plus net capital inflows equal:

zero