When a Japanese auto maker opens a factory in the U.S. ,U.S.net capital outflow
A)increases because the foreign company makes a portfolio investment in the U.S.
B)declines because the foreign company makes a portfolio investment in the U.S.
C)increases because the foreign company makes a direct investment in capital in the U.S.
D)declines because the foreign company makes a direct investment in capital in the U.S.

Question

Quizplus · Accepted Answer

When a Japanese automaker opens a factory in the U.S., it is making a direct investment in capital, which decreases U.S. net capital outflow because it represents an inflow of foreign capital into the U.S. economy.

When a Japanese Auto Maker Opens a Factory in the U.S