Question

In a speech in 2009, President Barack Obama made the following observations: "I know that for many, the face of globalization is contradictory...Trade can bring new wealth and opportunities, but also huge disruptions and change in communities." How does trade bring "new wealth and opportunities"? A. Countries that are more open to foreign trade and investment are more likely to receive foreign direct investment (FDI) B. Countries that are more open to foreign trade and investment are more likely to receive foreign portfolio investment C. Countries that are more open to foreign trade and investment experience wars and revolutions, which increase military contracts and military spending D. Countries that are more open to foreign trade and investment experience low rates of saving and investment E. A and B only

Answer 1

Step-by-step explanation:

In his speech in 2009, President Barack Obama pointed out that trade can bring "new wealth and opportunities." Let's understand how this is possible.

One way trade can bring new wealth and opportunities is by attracting foreign direct investment (FDI). FDI is when a company from one country invests in another country by establishing a business or acquiring assets. When countries are open to foreign trade and investment, they create an environment that is attractive to foreign companies. These companies bring in new capital, technology, and expertise, which can lead to economic growth, job creation, and increased productivity. For example, a multinational company might invest in a developing country, bringing in new technology and creating jobs for the local population.

Another way trade can bring new wealth and opportunities is through foreign portfolio investment. This is when investors buy stocks, bonds, or other financial assets in a foreign country. When countries have open trade policies, they are more likely to attract foreign investors. These investments can provide additional capital for businesses, stimulate economic activity, and contribute to the development of financial markets. For instance, a foreign investor might buy shares in a company listed on a foreign stock exchange, providing the company with funding for expansion.

In summary, trade can bring "new wealth and opportunities" by attracting foreign direct investment (FDI) and foreign portfolio investment. FDI brings in new capital, technology, and expertise, leading to economic growth and job creation. Foreign portfolio investment provides additional capital for businesses and stimulates economic activity. Therefore, the correct answer is E. A and B only.