What contributes to the measurement of net foreign equity?

The measurement of net foreign equity essentially refers to the difference between the value of foreign-owned assets located in a country and the value of domestic assets owned by foreigners abroad. Selecting the correct option involves understanding that net foreign equity is calculated by taking the total value of foreign investments in the domestic market and subtracting the total value of domestic investments held overseas.

In this context, the appropriate answer focuses on foreign ownership of assets within the domestic sphere as well as the domestic ownership of assets externally. The correct choice identifies this relationship by stating the value of foreign-owned assets in Australia minus the local assets owned abroad.

The other answer choices do not accurately capture the definition or calculation of net foreign equity. One option might involve local assets in a manner that could confuse the overall foreign investment dynamics, while others might look solely at income or specific types of assets without considering the broader measurement framework needed for net foreign equity. Thus, the definition laid out in the selection offers the most accurate representation of how net foreign equity is measured.