A U.S.citizen buys bonds issued by a construction equipment manufacturer in Poland.Her expenditures are U.S.
A)foreign portfolio investment that increase U.S.net capital outflow.
B)foreign portfolio investment that decrease U.S.net capital outflow.
C)foreign direct investment that increase U.S.net capital outflow.
D)foreign direct investment that decrease U.S.net capital outflow.

Question

Quizplus · Accepted Answer

Buying bonds issued by a company in a foreign country constitutes a foreign portfolio investment. As the U.S. citizen is using her own funds to purchase these securities, it represents an increase in U.S. net capital outflow as the funds are leaving the country to be invested elsewhere.

A UScitizen Buys Bonds Issued by a Construction Equipment Manufacturer in in Poland.Her