Question

State whether each of the following events involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy: a. Mexico imports services from Japan b. Mexico exports goods to Canada c. U.S. investors receive a return from past financial investments in Mexico

Short answer

Event a: Financial flow out of the Mexican economy. Event b: Financial flow into the Mexican economy. Event c: Financial flow out of the Mexican economy.

Step-by-step solution

Event a: Mexico imports services from Japan

When Mexico imports services from Japan, it means that Mexican consumers or businesses are purchasing services provided by Japanese providers. In this case, the flow of money is from Mexico to Japan. Therefore, this represents a financial flow out of the Mexican economy.

Event b: Mexico exports goods to Canada

When Mexico exports goods to Canada, it means that Canadian consumers or businesses are purchasing goods produced in Mexico. In this case, the flow of money is from Canada to Mexico. Therefore, this represents a financial flow into the Mexican economy.

Event c: U.S. investors receive a return from past financial investments in Mexico

When U.S. investors receive a return from their past financial investments in Mexico, it means that they are earning a profit or interest from investing in Mexican businesses or financial instruments. In this case, the flow of money is from Mexico to the U.S. as the returns are being paid back to the U.S. investors. Therefore, this represents a financial flow out of the Mexican economy.