Table :

TABLE 19-5 A Hypothetical Example of Effects of Increased Capital Inflows

European purchases of U.S. dollars (trillions of U.S. dollars)

To buy U.S. goods and services: 0.75 (down 0.25)

To buy U.S. assets: 1.5 (up 0.5)

Total purchases of U.S. dollars: 2.25

U.S. sales of U.S. dollars (trillions of U.S. dollars)

To buy European goods and services: 1.75 (up 0.25)

To buy European assets: 0.5 (no change)

Total sales of U.S. dollars: 2.25

 

U.S. balance of payments on current account: –1.0 (down 0.5)

U.S. balance of payments on financial account: +1.0 (up 0.5)