Net capital outflow (NCO) refers to the net flow of capital out of a country. It is calculated as the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreign residents.
Let's analyze each option:
a. Toyota buys stock in AT&T.
- This transaction involves a foreign company (Toyota) purchasing a domestic asset (stock in AT&T), which would decrease U.S. net capital outflow.
b. General Electric sells an aircraft engine to Airbus in Great Britain.
- This transaction does not involve capital outflow; it is an export of goods, which affects the trade balance but not directly NCO.
c. Honda builds a new plant in Ohio.
- This is a foreign investment in the U.S. (foreign company investing in domestic capital), which would decrease U.S. net capital outflow.
d. Microsoft builds a new distribution facility in Sweden.
- This is a U.S. company investing abroad (domestic company investing in foreign capital), which would increase U.S. net capital outflow.
Therefore, the option that would directly increase U.S. net capital outflow is:
d. Microsoft builds a new distribution facility in Sweden.
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