Chapter 18 - Practice Exam Questions (pt. 2)

Which of the following is an example of U.S. foreign direct investment? a. A U.S. based mutual fund buys stock in Eastern European companies. b. A U.S. citizen builds and operates a coffee shop in the Netherlands. c. A Swiss bank buys a U.S. government bond. d. A German tractor factory opens a plant in Waterloo, Iowa.

Which of the following is an example of U.S. foreign portfolio investment? a. Albert, a German citizen, buys stock in a U.S. computer company. b. Larry, a citizen of Ireland, opens a fish and chips restaurant in the United States. c. Nancy, a U.S. citizen, buys bonds issued by a Japanese bank. d. Dustin, a U.S. citizen, opens a country-western tavern in New Zealand.

Julie and John are American residents. Julie buys stock issued by a Japanese company. John opens a sporting goods store in Mexico. Whose purchase, by itself, increases the U.S.'s net capital outflow? a. Julie's b. John's c. both Julie's and John's d. neither Julie's nor John's

Other things the same, which of the following would both make foreigners more willing to engage in U.S. portfolio investment? a. U.S. interest rates rise, the default risk of U.S. assets rise b. U.S. interest rates rise, the default risk of U.S. assets fall c. U.S. interest rates fall, the default risk of U.S. assets rise d. U.S. interest rates fall, the default risk of U.S. assets fall

Citizens in India buy music from the U.S. To do so they use Indian rupees to purchase U.S. dollars. If U.S. citizens hold these rupees rather than spending them, what happens to U.S. net exports and U.S. net capital outflows? a. both U.S. net exports and U.S. net capital outflow rise b. both U.S. net exports and U.S. net capital outflow fall c. U.S. net exports rise and U.S. net capital outflow fall d. U.S. net exports fall and U.S. net capita outflow rise

If a country has a trade surplus a. it has positive net exports and positive net capital outflow. b. it has positive net exports and negative net capital outflow. c. it has negative net exports and positive net capital outflow. d. it has negative net exports and negative net capital outflow.

From 2000-2006 net capital outflow as a percent of GDP became a a. larger positive number. b. smaller positive number. c. larger negative number. d. smaller negative number