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Chapter 10: Q. 9 (page 265)

How does the bottom portion of Figure 10.3, showing the international flow of investments and capital, differ from the upper portion?

Short Answer

Expert verified

Bottom is the investment flow and the top is goods & services exchange.

Step by step solution

01

Step1. Given Information

Given information is the following flow diagram:

02

Step2. Explanation

The bottom part of the diagram, i.e. the one which talks about the flow foreign investment, investment income received, investment income paid and the investment from abroad, these all flows are related to the flow of investment income, i.e. these are the capital inflows and outflows.

The top part of the flow diagram talks about exports and imports and their related payments, which is more about the trade part. It talks of the trade of goods and services and attached movement of the money in form of income received and payments made.

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