13OpenEconomyConcepts

- 2 a When an American buys a Sony Walkman there is a decrease in net exports b When an American buys a share of Sony stock there is an increase

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2. a. When an American buys a Sony Walkman, there is a decrease in net exports.     b. When an American buys a share of Sony stock, there is an increase in net capital        outflow.     c. When the Sony pension fund buys a U.S. Treasury bond, there is a decrease in net       capital outflow.     d. When a worker at Sony buys some Georgia peaches from an American farmer, there is       an increase in net exports. 3. a. Wheat is traded more internationally than in the past because shipping costs have       declined, as have trade restrictions.     b. Banking services are traded more internationally than in the past because      communications costs have declined, as have trade restrictions.     c. Computer software is traded more internationally than in the past because the computer       industry has grown and the software is easier to transport (because it can now be      downloaded electronically).     d. Automobiles are traded more internationally than in the past because transportation       costs have declined, as have tariffs and quotas.  4. Foreign direct investment requires actively managing an investment, for example, by opening a  retail store in a foreign country. Foreign portfolio investment is passive, for example, buying corporate stock in a retail chain in a foreign country. As a result, a corporation is more likely to engage in foreign direct investment, while an individual investor is more likely to engage in foreign portfolio investment.
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This note was uploaded on 02/13/2012 for the course ECO 202 taught by Professor Normmiller during the Spring '08 term at Miami University.

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- 2 a When an American buys a Sony Walkman there is a decrease in net exports b When an American buys a share of Sony stock there is an increase

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