Which Statement Best Defines Net Capital Outflow

question 89

Multiple Choice

Which statement best defines net capital outflow?

• A) It is the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreign residents.
• B) It is the purchase of foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents.
• C) It is the purchase of domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents.
• D) It is the purchase of domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.

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Definitions:

Gift Tax

A federal tax on the transfer of property by gift from one individual to another with the donor being primarily responsible for paying the tax.

FMV

Fair Market Value, an estimation of the market value of a property or asset, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Adjusted Basis

The original cost of an asset adjusted for factors such as depreciation or improvements, used to calculate capital gains or losses for tax purposes.

Straight-line Depreciation

A method of calculating the depreciation of an asset evenly over its useful life.