Scenario: Global Manufacturing, Inc. (GMI)
GMI is a fast-growing U.S. company that wants a production system that makes each of its product's two components in the location where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI purchased an existing company in Brazil to produce component A and built a subsidiary in Thailand to produce component B.
-GMI's expansions into Brazil and Thailand would appear in the ________.
A) current account of the United States
B) capital account of the World Trade Organization
C) capital accounts of Brazil, Thailand, and the United States
D) current accounts of Brazil and Thailand

Question

Quizplus · Accepted Answer

GMI's investments in Brazil and Thailand for production facilities would be recorded in the capital accounts of these countries as foreign direct investment, as well as in the capital account of the United States as an outflow of capital.