1. An example of direct foreign investment is given by: a. The sale of U.S. gove

Question

1. An example of direct foreign investment is given by: a. The sale of U.S. government bonds to foreigners. b. The sale of U.S. stocks (equities) to foreigners. c. A multinational corporation such as Ford, builds production facilities in Mexico. d. All of the above. 3. A current account surplus implies that: a. A country is a net exporter to the rest of the world. b. The country is running a net capital account surplus. c. The country's foreign direct investment is negative. d. all of the above. 4. Current account deficits are offset by: a. Capital account deficits. b. Capital account surpluses. c. Current account surpluses. d. Balance of payments surpluses. 5. The purchase of a U.S. stock or bond by a foreign investor is: a. A credit item in the current account. b. A debit item in the current account. c. A credit item in the capital account. d. A debit item in the capital account.

Explanation / Answer

1.b. The sale of U.S. stocks (equities) to foreigners. 3.b. The country is running a net capital account surplus 4.b. Capital account surpluses. 5.d. A debit item in the capital account.

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