MANKIW: PRINCIPLES OF MACROECONOMICS
8th Edition
ISBN: 9781337801782
Author: Mankiw
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 4PA
Subpart (a):
To determine
Effect of US net capital outflow.
Subpart (b):
To determine
Effect of US net capital outflow.
Subpart (c):
To determine
Effect of US net capital outflow.
Subpart (d):
To determine
Effect of US net capital outflow.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Match the following international transactions to the correct type of foreign investment by choosing from the drop
down menu:
A US investment company buys Eurobonds issued by the Turkish Treasury
Choose.
Gaming company Zynga acquires Istanbul-based Peak Games
Choose.
İşbank borrows € 100 million from European Investment Bank, a bank owned by
Foreign Portfolio Investment
EU member states
Foreign Direct Investment
Teknosa imports Samsung smartphones from Korea.
Not an Investment
Toyota decides to increase the capacity of its factory in Sakarya
Choose.
Complete the following table by indicating the effect each of the following transactions has on U.S. net capital outflow and whether it involves direct
investment or portfolio investment.
Transaction
A Vanguard mutual fund sells its Toyota stock to a German investor. (Note:
Assume the German investor pays in U.S. dollars.)
Samsung sells stock to the General Electric pension fund.
Sony expands its corporate office in New York.
An American cellular phone company establishes an office in the Czech Republic.
Effect on Net Capital
Outflow
Decrease
Increase
Decrease
Increase
Type of Investment
Involved
Portfolio investment
Portfolio investment
Direct investment
Direct investment
An American garment company establishes an office in the Slowakische Republic.
How would the transaction affect U.S Net capital outflow? Does the transaction affect
direct investment or portfolio investment?
Chapter 18 Solutions
MANKIW: PRINCIPLES OF MACROECONOMICS
Knowledge Booster
Similar questions
- a) Would each of the following transactions be included in net exports or net capital outflow? Be sure to say whether it would represent an increase or decrease in that variable. i) An Indian buys a Samsung TV ii) An Indian buys a share of sony stock iii) The sony pension fund buys a bond from the Indian government iv) A worker at a Toyota plant in Japan buys some Nagpur oranges from an Indian farmerarrow_forwardIf the U.S government establishes a investment tax credit rule, this rule subsidizes domestic investment. How does this policy affect national saving, domestic investment, net capital outflow, the interest rate, the exchange rate, and the trade balance? Use this model (In the picture) to answer questionarrow_forwardThe forward rate of exchange is 2 , the spot rate of exchange is 1.75. The US has a bond of 9% interest and Canada has a bond for 5% interest. What is the amount you can collect in US dollars for the Canada bond on an investment of $10,000? $10,937.50 and the Canadian investment is better than the US investment $10,937.50 and the Canadian investment is worse than the US investment $10,900 and the Canadian investment is better than the US investment $10,900 and the Canadian investment is worse than the US investmentarrow_forward
- The role of the European Investment Bank as an institution of economic convergence between European countries. (1500 WORDS ESSAY WITH REFERENCE )arrow_forwardAssume that you are a senior manager in a U.S. automobile company considering investing in production facilities in China, Russia or Germany. These facilities will serve the local market demand. Evaluate the benefits, costs, and risks associated with doing business in each nation. Which country seems to be the most attractive target for foreign direct investment? Why?arrow_forwardHow would each item affect the US international investment position? Just write “increase” or “decrease” or “no effect.” Swiss bank UBS buys shares on the US stock exchange. Swedish firm IKEA builds several new stores in the US. US mutual fund Fidelity sells most of its holdings of Chinese stock to buy US stock instead.arrow_forward
- If the economy enters a recessionary gap, then incomes in the economy decrease, which reduce income tax revenues earned by the government. When the economy enters a recession, unemployment compensation increases due to an increase in jobless claims. In other words, the government budget deficit increases. Begin with the open economy financial market in equilibrium. What will happen to the U.S. savings and net capital inflow function if the U.S. budget deficit increases? What will to the investment function if the U.S. budget deficit increases? What will happen to the real rate of interest if the U.S. budget deficit increases? What will happen to the quantity saved/invested if the U.S. budget deficit increases? Given the change in the level of savings, what would happen to the level of consumption?arrow_forwardSuppose Canada sells chocolate to the United States. Which of the following correctly identifies the effects of this transaction? U.S. net exports increase, and U.S. net capital outflow increases. U.S. net exports increase, and U.S. net capital outflow decreases. U.S. net exports decrease, and U.S. net capital outflow increases. U.S. net exports decrease, and U.S. net capital outflow decreases.arrow_forwardWhich of the following does the international investment position consider? The distribution of a nation's assets abroad at the end of the year The total amount of a nation's assets abroad at the end of the year The foreign assets in the nation at the end of the year All of the above 11. A) B) C) D) Answer: 12. If the exchange rate between Euro and US$ is $2.32/€ and the exchange rate between Euro and Swiss Franc is SF2.21/€ then what is the exchange rate between US$ and SF? A) $.626/SF B) $.92/SF C) $1.05/SF D) $1.6/SF Answer:arrow_forward
- Q9. Suppose that Malaysians decide to increase their saving. a) If the elasticity of Malaysian net capital outflow with respect to the real interest rate is very high, will this increase in private saving have a large or small effect on Malaysian domestic investment? b) If the elasticity of Malaysian exports with respect the real exchange rate is very low, will this increase in private saving have a large or small effect on the Malaysian real exchange rate?arrow_forwardHello, I keep getting this question wrong on my practice quiz but im not sure what im doing wrong.arrow_forwardI am a bit confused on how to identify whether the problems are decreasing/increasing in Net Exports and Net Capital Flowarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education