How can changes in the market price of wealth previously acquired alter a country's net foreign wealth?
What will be an ideal response?
When Japan's stock market lost value in the 1990s, American and European owners of Japanese asset lost value in their claims, while Japan's net foreign wealth increased. Similarly, exchange rate changes can have this effect. When the dollar depreciates against foreign currency, foreigners who hold dollar assets will see their wealth fall when measured in their home currencies.
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Asset transformation can be described as
A) borrowing long and lending short. B) borrowing short and lending long. C) borrowing and lending only for the short term. D) borrowing and lending for the long term.
A decrease in inflationary expectations __________ interest rate
A) raises the natural B) raises the nominal C) lowers the natural D) lowers the nominal