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3. Suppose that at the end of 1990 the Net Foreign Asset Position of the United States was -$100 million. Then in 1991 the US
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Answer #1

The net foreign asset (NFA) position of a country is the value of the assets that country owns abroad, minus the value of the domestic assets owned by foreigners. The net foreign asset position of a country reflects the indebtedness of that country.

Change in Net Foreign Assets = Current Account

Current Account = Savings - Investment

In 1991

US Current Account = $700 - $600 = $100 Millions

In 1992

US Current Account = $850 - $900 = -$50 Millions

In 1990 end

Net Foreign Asset = -$100 Millions

So, US Net Foreign Asset Position at the end of 1992 = -$100 + $100 + (-$50) = -$50 Millions.

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