a) Describe the difference between foreign direct investment and foreign portfolio investment. b) Discuss how changes in local real interest rates and foreign interest rates impact the decision to carry out investment by (i) foreigners and (ii) locals.
Question 2
a) Describe the difference between foreign direct investment and foreign portfolio investment.
b) Discuss how changes in local real interest rates and foreign interest rates impact the decision to carry out investment by (i) foreigners and (ii) locals.
Question 3
Illustrate and explain the impact on the real exchange rate and the trade balance due to:
a) A successful campaign encourages residents to “buy local”
b) A reduction in remittances from family overseas due to the world economic recession.
c) Excessive snowstorms during winter encourage tourist arrivals.
d) An increase in the real interest rate
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