MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Macroeconomics, 8th (MindTap Course List)
8th Edition
ISBN: 9781337096591
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 18, Problem 3PA
To determine
The difference between foreign direct investment and foreign portfolio investment.
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Hello, I keep getting this question wrong on my practice quiz but im not sure what im doing wrong.
Provide two ways in which the criteria for investing differ between Foreign Direct Investment and
Foreign Portfolio Investment?
Which of the following is an example of U.S. foreign portfolio investment?
Select one:
a.Erica, a U.S. resident, buys bonds issued by the Swiss government.
b.Neither A nor B are examples of U.S. portfolio investment.
C.A U.S. legal office opens a branch office in Holland.
d.Both A and B are examples of U.S. portfolio investment.
Chapter 18 Solutions
MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Macroeconomics, 8th (MindTap Course List)
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- What is the difference between foreign direct investment and portfolio investment?arrow_forwardWhat are the trends regarding foreign direct investment (FDI) in the world economy?arrow_forwardWhich scenario best demonstrates foreign direct investment? Salia started a Polish restaurant in her home country, the United States, after she took cooking lessons from a well-known chef in Poland. Super Blooms, a reputable vegetable plant company in Holland, exports tomato, pepper, and potato garden plants across the globe. Ups n Downs Inc., a Chinese firm, supplies roller coaster components in the United States. Domesticity, a U.S.-based office furniture company, has set up its own assembly plant in Japan to cater to the needs of the Asian market. Lux Linens, a fabric conglomerate in the United States, imports raw silk from China and Italy.arrow_forward
- Which of the following are direct foreign investments? Explain your answer. i. A Chinese company pays $6.49 million for a stake in the Hilton. ii. A Russian businessman buys $44 billion on FOREX. iii. An American company buys another American company; stockholders in the bought-US company sell their shares on FOREX. iv. A Turkish company builds a factory in Ethiopia and manages the factory as a contractor to the Turkish government.arrow_forwardIn the United States, several states and localities actively seek investment from enterprises from other regions of the country. Why areUS investors concerned about foreign investment?arrow_forwardExplain briefly what international investment law does. Why is it important? Is it a good or bad thing?arrow_forward
- Government has resorted to external borrowing to fund government projects such as infrastructure and rural development. These resulted to promoting the market for foreign good. Is it better to expand or limit foreign borrowing for the development of technology in the country? Explainarrow_forwardGive correct answer with short explanationarrow_forwardWhat is foreign direct investment and why is it important in terms of countries? Please explain the types of motives for FDI? What are the advantages of FDI for host countries? What kind of problems can FDI cause for host countries?arrow_forward
- Draw a diagram for Saving and Investment in a small open economy.Assume the world real interest rate is above the closed equilibrium interestrate for the country you drew. Is this country a foreign lender or foreignborrower? Explain with the intuition of the saving and investment functionsarrow_forwardGreenfield investments are different from the Acquisition of a company in the host country. Are you agree with this statement? What are the advantages and disadvantages of investing in the foreign market through Greenfield foreign direct investment compared to other business forms in a foreign country?arrow_forwardList and explain two arguments for and two against Foreign Direct Investment?arrow_forward
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