2. Foreign direct investmentWhich of the following statements about foreign direct investment (FDI) are correct? Check all that apply.FDI occurs when the parent company obtains sufficient common stock in a foreign company to assume voting control.FDI is an effective method of technology transfer.Trade restrictions have no effect on foreign direct investment.FDI occurs when a firm in one country sells investment goods in another country.U.S. FDI includes accounts in foreign banks owned by U.S. residents.

Both the home country and the host country derive significant economic benefits from FDI. It is a…

2. Foreign direct investment Which of the following statements about foreign direct investment (FDI) are correct? Check all that apply. FDI occurs when the parent company obtains sufficient common stock in a foreign company to assume voting control. ⒸFDI is an effective method of technology transfer. Trade restrictions have no effect on foreign direct investment. FDI occurs when a firm in one country sells investment goods in another country. U.S. FDI includes accounts in foreign banks owned by U.S. residents.

2. Foreign direct investment Which of the following statements about foreign direct investment (FDI) are correct? Check all that apply. FDI occurs when the parent company obtains sufficient common stock in a foreign company to assume voting control. ⒸFDI is an effective method of technology transfer. Trade restrictions have no effect on foreign direct investment. FDI occurs when a firm in one country sells investment goods in another country. U.S. FDI includes accounts in foreign banks owned by U.S. residents.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Imagine that Sony is having difficulty selling Playstations in Greece because of differences in local tastes. It decides to build a subsidiary in Greece. This is an example of a _______________ motive for foreign direct investment. A. cost factor B. backward integration C. country risk D. demand factor
tends to discourage firms from making physical capital investments. O Government borrowing O Large trade imbalances O A high exchange rate O High interest rates
If U.S. residents purchase $600 billion worth of foreign assets and foreigner residents purchase $300 billion worth of U.S. assets, OA. U.S. net capital outflow is $300 billion; capital is flowing into the U.S. OB. U.S. net capital outflow is -$300 billion; capital is flowing into the U.S. OC. U.S. net capital outflow is -$300 billion; capital is flowing out of the U.S. OD. U.S. net capital outflow is $300 billion; capital is flowing out of the U.S. Reset Selection
23. Capital inflows in the Trinidad and Tobago balance of payments accounts include a. purchases of financial assets by T&T residents. b. direct investments in foreign countries. c. indirect investments in foreign countries. d. purchases of T&T government bonds by foreigners. A supply of foreign exchange occurs in the United States when a. a U.S. citizen wants sells stock on a European stock exchange. b. the United States exports steel to Japan. c. United States citizens travel abroad. d. All of the above
Solve b
QUESTION 5 Which of the following is associated with a trade surplus? a. Domestic investment exceeds domestic savings. b. Foreign savings is positive. Oc. Domestic savings exceeds domestic investment. Od. Foreign investment is negative. QUESTION 6 Which of the following is considered a capital inflow? Oa. A U.S. citizen's repayment of a loan from a foreign bank Ob.A sale of U.S. financial assets to a foreign buyer Oc. A purchase of foreign financial assets by a U.S. buyer d. A loan from a U.S. bank to a foreign borrower
8. State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy: a. Export sales to Germany b. Returns being paid on past U.S. financial investments in Brazil c. Foreign aid from the U.S. government to Egypt d. Imported oil from the Russian Federation e. Japanese investors buying U.S. real estate
1. Other things equal, what is the likely impact of a U.S. trade deficit on 1. the current account? 2. foreign savings if domestic investment is greater than domestic saving? 3. foreign savings if domestic investment is less than domestic saving?
3. it might be less expensive to import the materials rather than locate production close to the source of supply True False 4. To weaken a potential international competitor and protect its domestic market, a company can enter the competitor's home market. True False 5. Spot transaction occurs when an enterprise purchases or sells goods for which payment is made in a foreign currency, or when it borrows or lends foreign currency. True False 14. Additional investment in a foreign country is sometimes motivated by a need to protect that market from local competitors. True False 16. Additional investment in a foreign country is sometimes motivated by a need to protect local market from local competitors True False
2. The Table gives some information about Canada's international transactions in 2010. Item Billions of dollars. Imports of goods and services Net foreign investment in Canada Exports of goods and services. Net interest income. Net transfers Statistical discrepancy 508 54 476 16 (-3) 1 (a) Calculate the balance on the three balance of payments accounts. (b) Was Canada a net borrower or a net lender in 2010? Explain your answer.
5. “A country with high unemployment and a balance of payments surplus needs a combination of expenditure-reducing and expenditure-switching policies.” Comment on this statement.
Provide two ways in which the criteria for investing differ between Foreign Direct Investment and Foreign Portfolio Investment?