The accompanying diagram shows foreign-owned assets in the United States and U.S.-owned assets abroad, both as a percentage of foreign GDP. As you can see from the diagram, both increased around fivefold from 1980 to 2013.

a. As U.S.-owned assets abroad increased as a percentage of foreign GDP, does this mean that the United States, over the period, experienced net capital outflows?

b. Does this diagram indicate that world economies were more tightly linked in 2013 than they were in 1980?

Transcribed Image Text:

Percent of rest-of-the-world GDP 60% 50 40 30 20 10 1980 Foreign-owned assets in the United States 1985 1990 1995 U.S.-owned assets abroad 2000 2005 2010 2013 Year