Question

19, which of the following statements is (are) correct?
(x) A nation with a large trade surplus must have large and positive net capital outflow
(y) A nation with a large trade deficit must have large and negative net capital outflow
(z) A nation with a small trade deficit must have a slightly larger amount of exports than imports and slightly more capital outflow than capital inflow.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

20. which of the following statements is (are) correct?
(x) In the United States before 1980, national saving and domestic investment were close, and so net capital outflow was small (in absolute value terms).
(y) In the United States after 1980, national saving and domestic investment were far apart, and so net capital outflow was large (in absolute value terms).
(z) An increase in the government budget deficit was largely responsible for the change in U.S. net capital outflow as a percent of GDP from 1980 to 1987.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Answer 1

B. x and y only

because surplus trade account means capital account deficit means capital outflow more than capital inflow.. positve net capital outflow

similarly deficit in trade account means capital account surplus means capital outflow less than capital inflow.. negative net capital outflow

z is not true

ans 3

D y and z only