Question ONE

1. What are the effects of each of the following on the U.S. international investment position?
   1. Foreign central banks increase their official holdings of U.S. government securities.
   2. U.S. residents increase their holdings of stocks issued by Japanese companies.
   3. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds.

Question TWO

2. On December 31, a country has the following stocks of international assets and liabilities to foreigners.

1. The country's residents own $30 billion of bonds issued by foreign governments.
2. The country's central bank holds $20 billion of gold and $15 billion of foreign- currency assets as official reserve assets.
3. Foreign firms have invested in production facilities in the country, with the value of their investments currently $40 billion.
4. Residents of foreign countries own $25 billion of bonds issued by the country's companies.
   1. What is the value of the country's international investment position? Is the country an international creditor or debtor?
   2. If the country during the next year runs a surplus in its current account, what will the impact be on the value of the country's international investment position?

Please answer each with the corresponding numbers in order with a simple response to reach 2 sentences.