The Impact of Foreign Investments on Austria's Net Capital Outflow
How do Carl and Carly's investments affect Austria's net capital outflow?
Given the scenario of Carl buying stock in a corporation in Austria and Carly opening a coffee shop in Austria, whose purchase, by itself, decreases Austria's net capital outflow?
Question 4 options:
- Carl's
- Both Carl's and Carly's
- Neither Carl's nor Carly's
- Carly's
Neither Carl's purchase of stock in a corporation in Austria nor Carly's opening a coffee shop in Austria, by itself, decreases Austria's net capital outflow. The correct option is "neither Carl's nor Carly's."
Neither Carl's purchase of stock in a corporation in Austria nor Carly's opening a coffee shop in Austria, by itself, decreases Austria's net capital outflow.
Carl's purchase of stock represents a financial investment rather than a direct investment in the Austrian economy. It does not necessarily result in a direct inflow or outflow of capital from Austria.
Similarly, Carly's opening a coffee shop represents a direct investment in the Austrian economy, but it alone does not decrease Austria's net capital outflow. Net capital outflow refers to the difference between capital outflows (investments made abroad) and capital inflows (investments made domestically). Carly's investment in Austria does contribute to capital inflows, but it is just one factor among many that influence the net capital outflow of a country.
Therefore, neither Carl's nor Carly's purchase, by itself, decreases Austria's net capital outflow. The correct option is "neither Carl's nor Carly's."