Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 19, Problem 8CQ
To determine
Impact of foreign capital inflow on the economy's capital formation.
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Chapter 19 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- When net capital flows are negative, A. net foreign investment is negative. B. capital inflows are less than capital outflows. C. capital outflows are less than capital inflows. D. A and B are both correct.arrow_forwardIf a developing country need foreign capital inflows, management expertise and technology, how can it encourage foreign investors while at the same time protect itself against capital flight and banking system collapse, as happened during the Asian financial crisis?arrow_forwardEffect of fiscal and monetary policy on foreign direct investment in Zimbabwearrow_forward
- Deregulation provides ……… opportunities for foreign investment because direct investment can take place more readily in the ………. of capital controls.arrow_forwardWhen making a new Direct Foreign Investment, what should a CEO of an MNC considers in an attempt to assess the feasibility of the investment in terms of the diversification benefits, incentives or any barriers from the host countries towards the organization?arrow_forwardState 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 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 estatearrow_forward
- Foreign Direct Investment is viewed by some economic proponents as a great boost to the Balance of Payment of a country resulting in credits in their accounts. Others think it's more exploitative and causes more debits. Which do you agree with and why?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_forwardList two disadvantages Chile face by using foreign investmentarrow_forward
- Suppose that a small open economy initially is in a situation with balanced trade at the prevailing interest rate. If the world real interest rate increase above this initial level then this small economy will have a positive net capital inflow. True Falsearrow_forwardPeru is growing relatively quickly and has begun to attract large inflows of foreign direct investment. While Peru relishes the benefit of the inflows, it is concerned about the potential negative effects if the foreign investors pull out their investments quickly. One particular reason for Peru to be concerned is that its banks have taken out large loans denominated in U.S. dollars and European euros from foreign banks. If the foreign direct investment is withdrawn quickly from Peru, what will be the effect on each of these items? A. Peru's money supply - B. Peru's exchange rate with other countries - C. Peru's exports - D. Peru's trade deficit - Answer Bank: No Effect, Increase or Decreasearrow_forwardWith regard to international borrowing, what are main differences between official channels and private sector conduits?arrow_forward
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