What is the difference between foreign direct investment and foreign portfolio investment?
A) Foreign direct investment involves purchases of foreign stock or bonds by individuals or firms, while foreign portfolio investment involves a firm purchasing or building a facility in a foreign country.
B) Individuals engage in foreign portfolio investment, but only firms can engage in foreign direct investment.
C) Foreign direct investment can give a low-income country access to funds and technology it would not otherwise have, but foreign portfolio investment does not expand that access.
D) Foreign direct investment only takes place when governments make official purchases or foreign investments, while foreign portfolio investment takes place when firms, individuals, or the government purchase foreign investments.
B
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An open market purchase of Treasury securities by the Federal Reserve causes the reserves of banks to rise
Indicate whether the statement is true or false
Most of the labor force in developing countries work in the low wage manufacturing sector
a. True b. False
Fear of floating is:
A) when the benefits of floating exchange rates outweigh the costs. B) when the attractions of fixed exchange rates are large relative to those of floating. C) when countries adopt the gold standard. D) when countries say they are floating, but fix their exchange rates in practice.
If opportunity costs are constant, then
A) the production possibilities curve does not exist. B) the production possibilities curve bows outward. C) the production possibilities curve is a straight line. D) factors of production must not be fully employed.