Question

How would each item affect the US international investment position? Just write “increase” or “decrease” or “no effect.” (a) Ford Motor Company, a US firm builds an auto plant in Taiwan. (b) US firm Mobil Oil pays $40b for oil drilling rights in Venezuela. (c) Mexican banks increase their holdings of US stocks.

Answer 1

Answer:

U.S. investment position means the difference between the sum total value of foreign assets owned by U.S. residents (U.S. assets abroad) minus U.S. assets owned by foreigners (foreign-owned assets in the United States).

a) Ford Motor Company, a US firm builds an auto plant in Taiwan- it will increase the US international investment position.

(b) US firm Mobil Oil pays $40b for oil drilling rights in Venezuela- it will increase the US international investment position.

(c) Mexican banks increase their holdings of US stocks- it will decrease the US international investment position.