Question

State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy:

1. Export sales to Germany
2. Returns paid on past U.S. financial investments in Brazil
3. Foreign aid from the U.S. government to Egypt
4. Imported oil from the Russian Federation
5. Japanese investors buying U.S. real estate

Short answer

Parts (a), (b), and (e) involve a financial flow to the U.S. economy. Parts (c) and (d) involve a financial flow away from the U.S. economy.

Step-by-step solution

Step 1. Introduction 

Financial flows refer to the exchange of money across international borders. It can be the inflow of money in the country through exports of goods and services, or investment in the domestic country. It can also be outflow through imports of goods and services, investment in foreign countries, etc.

Step 2. Explanation Part (a)

An export sale to Germany involves a financial flow from Germany to the U.S. economy.

Step 3. Explanation Part (b)

The issue here is not U.S. investments in Brazil, but the return paid on those investments, which involves a financial flow from the Brazilian economy to the U.S. economy.

Step 4. Explanation Part (c)

Foreign aid from the United States to Egypt is a financial flow from the United States to Egypt.

Step 5. Explanation Part (d)

Importing oil from the Russian Federation means a flow of financial payments from the U.S. economy to the Russian Federation.

Step 6. Explanation part (e)

Japanese investors buying U.S. real estate is a financial flow from Japan to the U.S. economy.