Which of the Following Best Defines Net Capital Outflow

question 86

Multiple Choice

Which of the following 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:

Total Reserves

The sum of a bank's deposits held in reserve at a central bank plus its cash on hand, used to satisfy demand for withdrawals or to meet regulatory requirements.

Interstate Banking

The practice or system allowing banks to operate branches and offer services in more than one state, previously restricted in the U.S.

M2

A measure of the money supply that includes cash, checking deposits, and easily convertible near money, such as savings deposits and money market securities.

M1

A measure of the money supply that includes all physical currency, as well as demand deposits, checking accounts, and other liquid assets easily convertible to cash.