Which of the following is an example of U.S.foreign direct investment and by itself increases U.S.net capital outflow?
A)A U.S.electronics company opens and operates a new factory in India.
B)A Swiss bank buys bonds issued by a U.S.company.
C)A U.S.pension fund buys bonds issued by the Japanese government.
D)A French restaurant opens and operates a restaurant in New York.

Question

Quizplus · Accepted Answer

U.S. foreign direct investment involves a U.S. company investing in a foreign country by either opening a branch or establishing a new business. In this case, a U.S. electronics company opening a new factory in India is an example of foreign direct investment and increases U.S. net capital outflow as the U.S. company is investing in a foreign country. The other options do not involve U.S. foreign direct investment and do not necessarily increase U.S. net capital outflow.

Which of the Following Is an Example of U