Final answer:
Establishing an office in the Czech Republic and expanding a factory in Ohio are direct investments, while selling stock to a pension fund and a French investor involves portfolio investments.
Step-by-step explanation:
a. An American cellular phone company establishing an office in the Czech Republic would be considered a form of direct investment. This involves the company making a long-term commitment to the Czech Republic by setting up operations there. It would lead to an outflow of capital from the U.S. as the company invests in the office and hires employees.
b. Honda expanding its factory in Marysville, Ohio would also be considered a form of direct investment. This involves Honda increasing its production capacity in the U.S., which would require investment in equipment, infrastructure, and possibly hiring more workers. This would not have a direct impact on U.S. net capital outflow since it is an internal expansion within the U.S. economy.
c. Harrods of London selling stock to the General Electric pension fund would involve portfolio investment. This refers to the purchase of financial assets such as stocks and bonds. In this case, the investment is flowing into the U.S., as the General Electric pension fund buys shares of Harrods stock.
d. A Fidelity mutual fund selling its Volkswagen stock to a French investor also involves portfolio investment. The French investor is purchasing the Volkswagen stock, which means there is an inflow of capital into the U.S. from France.