Which choice helps the U.S. balance of payments?

The choice that helps the U.S. balance of payments is foreign investment in the U.S. When foreign investors put their money into U.S. assets—such as stocks, bonds, real estate, or businesses—it creates an inflow of capital. This capital inflow is recorded as a positive entry in the financial account of the balance of payments, which helps offset any trade deficits that may be present, where imports exceed exports.

A strong influx of foreign investment not only bolsters the financial sector but can also stimulate economic growth and job creation within the country. Enhanced investment can lead to increased production capacity and innovation, further impacting the economy positively. Overall, foreign investment serves as a critical component in maintaining a favorable balance of payments for the U.S.

In contrast, options like export subsidies and trade tariffs might protect domestic industries but can lead to retaliatory measures from trade partners and potential reductions in exports, which are less favorable for the balance of payments. Domestic investment abroad can lead to capital outflows, highlighting investments made outside the country, which would negatively impact the balance of payments in the short term.