Question

If net capital outflow is positive, then: a. exports must be positive. b. exports must be negative. c. the trade balance must be positive. d. the trade balance must be negative.

Answer 1

The correct answer is option c. the trade balance must be positive.

Net capital outflow

The net flow of money a country invests overseas over a specific time period is known as a net capital outflow (NCO) (usually a year). An increased amount of foreign investment relative to domestic investment is indicated by a positive NCO. NCO is one of two main metrics used to describe how a nation interacts with the rest of the world on a financial and economic level (the other being the balance of trade).

The net flow of money a country invests overseas over a specific time period is known as a net capital outflow (NCO) (usually a year). An increased amount of foreign investment relative to domestic investment is indicated by a positive NCO.

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