Suppose the majority of the shares of the U.S. General Motors stock were sold to a Japanese firm. Assuming all else remains constant, this will
A) decrease net portfolio investment in the U.S.
B) create a capital outflow.
C) increase the balance on the U.S. current account.
D) increase foreign direct investment in the U.S.
E) increase the balance of the financial account.

Question

Quizplus · Accepted Answer

When a Japanese firm buys U.S. General Motors stock, it results in a capital inflow, increasing the balance of the financial account.

Suppose the Majority of the Shares of the U