Question

Based on Table 1, the balance on the capital account is:

Table 1

$\begin{array}{cc}\text{Exports of goods and services}& 1000\\ \text{Importants of goods and services}& 800\\ \text{Net change in assets owned abroad}& 500\\ \text{Net change in foreign owned assets at home}& 400\\ \text{Unilateral transfers received}& 100\\ \text{Unilateral transfers paid}& 200\\ \text{Investment income paid to foreigners}& 300\\ \text{Investment income received from foreigners}& 400\end{array}$

• A. +200
• B. +100
• C. 0
• D. -100
• E. -200

Answer 1

The correct option is D

-100

Capital account balance considers net assets owned abroad and foreign assets owned at home.

Capital account balance = 400 - 500 = -100