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Unformatted text preview: Solutions 1. For each of the following statements, indicate whether the statement is true , or false and justify your answer. Unjustified responses will receive a grade of zero . Each question is worth 5 points. (a) Here is a quote from The Economist , September 18, 2008. Going overseas: a wrong investment decision, thundered Wu Zhifeng on his blog, The Invisible Wings. He was furious about the performance of the $3 billion investment by China Investment Corporation, a sovereign-wealth fund established by the Chinese government, in shares of Blackstone, an American private-equity firm. Blackstones shares have plunged since its flotation in June 2007, reducing the value of CICs stake by $500m. Mr. Zhifeng believes that China should continue along its export-driven growth path, but should no longer invest the proceeds outside of China. Statement . Mr. Zhifengs views are coherent. TRUE . A country that runs a trade surplus ( i.e. , by exporting a lot) is necessarily investing abroad. Such a country must, by the balance-necessarily investing abroad....
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- Spring '08