Suppose that Pfizer, a U.S. firm, purchases $1 million worth of laptop computers from Sony, a Japanese firm…?
Suppose that Pfizer, a U.S. firm, purchases $1 million worth of laptop computers from Sony, a Japanese firm. The laptops are produced in Japan.
Sony exchanges the $1 million at Tokyo Bank for 100 million yen. Tokyo Bank lends the $1 million to Honda Motor Company, which uses it to expand its automobile manufacturing facility in Indiana.
13.3. Sony acquires a U.S. asset (that is, dollars) in exchange for the laptops. Sony’s acquisition ____ net capital outflow in the United States.
A. Increases
B. Decreases
C. Does not affect
The net capital outflow is not affected because the transactions cancel each other out. In the Case of Honda they are adding to U.S. capital and in the case of Pfizer they are subtracting U.S. capital.
sony laptop VGN-C22
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