Consider Only the Flow of Funds Spent on Acquiring Assets

question 21

Multiple Choice

Consider only the flow of funds spent on acquiring assets. Which of the following is true if the U.S. has a net capital inflow of funds?
I. Foreign purchases of U.S. assets are greater than U.S. residents' purchases of foreign assets.
II. Foreign purchases of U.S. assets are less than U.S. residents' purchases of foreign assets.
III. There is a capital account surplus.
IV. There is a capital account deficit.

• A) I and III
• B) I and IV
• C) II and III
• D) II and IV

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Definitions:

Constitution Drafting

The process of writing and creating a constitution, which outlines the fundamental principles and laws by which a state or organization is governed.

Congressional Authority

The powers granted to the United States Congress by the Constitution, including making laws, declaring war, and controlling federal spending.

Articles of Confederation

The first constitution of the United States, ratified in 1781, which established a confederation of states with a weak central government, leading to its replacement by the U.S. Constitution in 1789.