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A country has a net foreign investment of $400 million and a net foreign liabili

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Question: A country has a net foreign investment of $400 million and a net foreign liabilities of $600 million. What is the net international investment position?

Options:

  1. -$200 million
  2. $200 million
  3. $1 billion
  4. $1.2 billion

Correct Answer: -$200 million

Solution: 

Net international investment position = Net foreign investment - Net foreign liabilities = $400 million - $600 million = -$200 million.

A country has a net foreign investment of $400 million and a net foreign liabili

Practice Questions

Q1
A country has a net foreign investment of $400 million and a net foreign liabilities of $600 million. What is the net international investment position?
  1. -$200 million
  2. $200 million
  3. $1 billion
  4. $1.2 billion

Questions & Step-by-Step Solutions

A country has a net foreign investment of $400 million and a net foreign liabilities of $600 million. What is the net international investment position?
  • Step 1: Identify the net foreign investment, which is given as $400 million.
  • Step 2: Identify the net foreign liabilities, which is given as $600 million.
  • Step 3: Use the formula for net international investment position: Net international investment position = Net foreign investment - Net foreign liabilities.
  • Step 4: Substitute the values into the formula: $400 million - $600 million.
  • Step 5: Perform the subtraction: $400 million - $600 million = -$200 million.
  • Step 6: Conclude that the net international investment position is -$200 million.
  • Net Foreign Investment – The difference between a country's investments abroad and foreign investments in the country.
  • Net Foreign Liabilities – The total amount a country owes to foreign entities minus what foreign entities owe to the country.
  • Net International Investment Position – A measure of a country's financial position in the world, calculated as net foreign investment minus net foreign liabilities.
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