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The July 2010 BEA Survey of Current Business contains a table on U.S. International Transactions. You can use this link to access the data (the

The July 2010 BEA Survey of Current Business contains a table on "U.S. International Transactions." You can use this link to access the data (the table is on the first page of the PDF file): http://www.bea.gov/scb/pdf/2010/07%20July/0710_itaq-tables.pdf

The table shows that in 2009, U.S. income receipts on its foreign assets totaled $585.256 billion (line 13), while the country's payments on liabilities to foreigners totaled $456.027 billion (line 30). Yet we saw that the U.S. is a substantial net debtor to foreigners. Explain the paradox: how is it possible that the U.S. received more foreign asset income than it paid out on its liabilities?

Hint: Explain the Composition Effect and the Rate of Return Effect

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