Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 31, Problem 1QR
To determine
Define net export and net capital outflow.
Expert Solution & Answer
Explanation of Solution
The net export is the difference between the value of a country’s export and the value of a country’s import. It is also known as trade balance. The net capital outflow is the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners.
The net export and net capital outflow are related to each other. That is, for an economy, net capital outflow must always be equal to the net export. Symbolically, it can be shown as NCO=NX.
Economics Concept Introduction
Concept introduction:
Net export (NX): Net export refers to the additional value of export over the imports. It can be calculated by subtracting the imports from exports.
Net capital outflow (NCO): Net capital outflow refers to the purchase of foreign assets by the domestic residents minus the purchase of domestic assets by foreign peoples.
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Chapter 31 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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