Question

6. Debtors and creditors - Net international investment position Suppose that at the end of 2014, the value of U.S.-owned assets abroad is $15,888 billion, and the value of foreign-owned assets in the United States (which are U.S. liabilities) is $16,953 billion. The net international investment position of the United States in 2014 is 5 experiencing debt.) billion. (Hint: Be sure to include a negative sign if the U.S.is Suppose that in 2015, the United States runs a current account surplus of $514 billion. If other factors remained constant, the net international investment position of the United States would during 2015 to 5 billion Suppose that during 2015, the U.S. net external debt decreases by $393 billion from the previous year. Given the current account balance, which of the following can explain this outcome? Check all that apply. U.S.-owned assets held abroad deprecated (lost value). The net borrowing of the United States was greater than its current account deficit. The U.S. Current account deficit was greater than the country's net borrowing. Foreign-owned assets in the United States appreciated (cained value). e to search o e Ew 10 13.A

Answer 1

NIIP = A-L A = assets (U.S.-owned foreign assets) L = liabilities (foreign-owned U.S. assets)

1.

NIIP(Net International Investment Position) = 15888 Billion $ - 16953 Billion $

= -1065 Billion $

2. When US runs a CA surplus of 514 Billion $ =>

=>-1065+514 = -551 Billion $

NIIP would increase to -551 Billion.

3.

The option that can explain the decrease in the net external debt :

That the net current account deficit is greater than its net borrowings as net current account deficit signifies that net import of goods and services is greater than net exports and is negative value , therefore when it is less than net borrowings it causes a decrease in external debt .

Also the option that states that tell that states that the price of foreign owned assets has increased in the US (appreciation) that signifies a increase in the value of assets in the US , thus a reduction in net external debt .