Say that US on average earns from assets abroad 5% a year, and then pays 1%...
Say that US on average earns from assets abroad 5% a year, and then pays 1% annually for liabilities. If Assets were $200 Billion, and liabilities are $100 Billion, what will be the net investment income? What is the net international investment position?
Homework Answers
Average earnings from assets = 5% x 200 = 10 billion
Average payment towards liabilities = 1% x 100 = 1 billion
Net investment income = Average earnings from assets - Average payment towards liabilities = 10 - 1 = 9 billion
It is a net creditor because NIIP is positive.
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