Part of the North American Free Trade Agreement (NAFTA) opened the Mexican stock market to US and Canadian investors for the first time For Mexico, there would be:
a no effect on direct investment But, portfolio investment would rise as foreign investors have an increased ability to purchase Mexican financial assets through the Mexican stock market
b no effect on direct investment or portfolio investment because Mexico already has significant foreign investment as the smallest of the three economies
c only an effect on direct investment from the US because of the shared border between the two countries
d no effect on portfolio investment But, direct investment would rise as foreign investors have an increased ability to purchase Mexican financial assets through the Mexican stock market
A country’s exporters would want the country’s government to have a balanced budget because:
a the savings curve will shift to the right, increasing interest rates and the demand for dollars, lowering the exchange rate, making the country’s exports cheaper, and giving exporters an advantage over foreign competitors
b the savings curve will shift to the left, increasing interest rates and the demand for dollars, raising the exchange rate, making the country’s exports cheaper, and giving exporters an advantage over foreign competitors
c the savings will shift to the right, increasing interest rates and the demand for dollars, raising the exchange rate, making the country’s exports cheaper, and giving exporters an advantage over foreign competitors
d the savings curve will shift to the right, reducing interest rates and the demand for dollars, lowering the exchange rate, making the country’s exports cheaper, and giving exporters an advantage over foreign competitors
Suppose many factories that once made goods in Canada move to Mexico In order to correct the balance of payments in Canada, net exports (NX) must:
a increase at the same time because net capital outflows = net exports
b increase at the same time because imports = exports
c decrease at the same time because net capital outflows = net exports
d decrease at the same time because imports = exports