Statement I: A lower dollar makes American stocks,bonds,and real estate more expensive to foreigners.
Statement II: As our net indebtedness to foreigners grows,the net outflow of factor payments will grow.

Question

Quizplus · Accepted Answer

Statement I is false because a lower dollar actually makes American stocks, bonds, and real estate less expensive to foreigners, making them more attractive investments. Statement II is true because as the U.S. borrows more from abroad (increasing its net indebtedness), the payments it must make on this debt (interest and dividends) will increase, leading to a larger net outflow of factor payments.

Statement I: a Lower Dollar Makes American Stocks,bonds,and Real Estate