Questions from General Economics

Q: Describe the difference between foreign direct investment and foreign portfolio investment.

Describe the difference between foreign direct investment and foreign portfolio investment. Who is more likely to engage in foreign direct investment—a corporation or an individual investor? Who is mo...

Q: Define net exports and net capital outflow. Explain how and why

Define net exports and net capital outflow. Explain how and why they are related.

Q: If a Japanese car costs 500,000 yen, a similar

If a Japanese car costs 500,000 yen, a similar American car costs $10,000, and a dollar can buy 100 yen, what are the nominal and real exchange rates?

Q: If the Fed started printing large quantities of U.S.

If the Fed started printing large quantities of U.S. dollars, what would happen to the number of Japanese yen a dollar could buy? Why?

Q: Define nominal exchange rate and real exchange rate, and explain how

Define nominal exchange rate and real exchange rate, and explain how they are related. If the nominal exchange rate goes from 100 to 120 yen per dollar, has the dollar appreciated or depreciated?

Q: The chapter notes that the rise in the U.S.

The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand, the popular press sometimes claims that the increa...

Q: An economist discussing trade policy in The New Republic wrote: “

An economist discussing trade policy in The New Republic wrote: “One of the benefits of the United States removing its trade restrictions [is] the gain to U.S. industries that produce goods for export...

Q: Suppose the French suddenly develop a strong taste for California wines.

Suppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and with a diagram. a. What happens to the demand for dollars in the market for foreign...

Q: Compare the following two pairs of goods: • Coke and

Compare the following two pairs of goods: • Coke and Pepsi • Skis and ski bindings a. In which case are the two goods complements? In which case are they substitutes? b. In which case do you expect th...

Q: A senator renounces his past support for protectionism: “The U

A senator renounces his past support for protectionism: “The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If we subsidize U.S. exports instead, we can reduce...