Asked by CECILIA SIOCO on Jul 21, 2024
Verified
By itself, if a U.S. firm builds a new factory overseas, U.S. net capital outflow rises.
U.S. Net Capital Outflow
The difference between the amount of money flowing out of the United States for foreign investments and the amount of foreign capital entering the U.S. for investments.
Factory Overseas
A manufacturing facility located in a country different from the company's home country, often to take advantage of lower labor costs and less stringent regulations.
- Learn about the principles involving net exports, net capital outflow, and their consequences for balancing international trade.
- Analyze the relationship between saving, investment, and international capital flows.
Verified Answer
BD
brandon davicsinJul 23, 2024
Final Answer :
True
Explanation :
When a U.S. firm builds a new factory overseas, it represents an investment abroad, which increases U.S. net capital outflow, as it is money flowing out of the country to purchase foreign assets.
Learning Objectives
- Learn about the principles involving net exports, net capital outflow, and their consequences for balancing international trade.
- Analyze the relationship between saving, investment, and international capital flows.