Question

Suppose a wealthy French citizen buys $2 million worth of stock issued by an American corporation. The American firm uses the proceeds for a factory expansion.
This is an example of foreign _____ investment in the United States.
Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries?
(i) Provide tax breaks and patents for firms that pursue research and development in health and sciences.
(ii) Protect property rights and enforce contracts.
(iii) Give families cash payments on the condition that their children show up for school and medical exams.
(iv) Pursue inward-oriented policies.
Which of the following are possible outcomes of rapid population growth?
(i) A reduction in human capital per worker
(ii) A reduction in capital per worker
(iii) An increase in technological knowledge
(iv) All of the above

Answer 1

Answer: 1. Portfolio

2. • Protecting property rights and enforce contracts.

• Providing tax breaks and patents for firms that pursue research and development in health and sciences.

3. All of the above

Explanation:

1. Since the wealthy French citizen buys $2 million worth of stock issued by an American corporation and the American firm uses the proceeds for a factory expansion, then this is considered to be an example of foreign portfolio investment in the United States.

2. The policies that are consistent with the goal of increasing productivity and growth in developing countries include:

• Protecting property rights and enforce contracts.

• Providing tax breaks and patents for firms that pursue research and development in health and sciences.

3. The possible outcomes of rapid population growth include a reduction in the human capital per worker, a reduction in capital per worker and an increase in technological knowledge. Therefore, the answer is all of the above.