Unit 2 - Foreign Direct Investment

More expansion of foreign direct investment (FDI) can boost:

• Employment

• Unemployment

• Money circulation

• Demand

What is the relationship between foreign direct investment (FDI) and Multinational Corporations (MNCs)?

• A MNC is never involve FDI

• FDI is never done by MNCs

• MNCs involve FDI

• All FDI is done by MNCs

A company that establishes a new operation in a foreign country has made:

• An acquisition

• A merger

• A greenfield investment

• A brownfield investment

Benefit of foreign direct investment (FDI) include all of the following EXCEPT:

• The resource transfer effect

• The employment effect

• The balance of payments effect

• National sovereignty and autonomy

Which of the following methods would NOT attract FDI into a country?

• Tax breaks and subsidies

• Grants and low interest loans

• Relaxed regulations and reduced restrictions

• Political instability and uncertainty

When Multinational Corporations (MNCs) set up in new countries, they may use legal creative accounting to minimize the tax burden in the recipient countries (host countries). This is an example of:

• Tax avoidance

• Tax evasion

• Repatriation

• Moving profit abroad

• Tax assistance

Select options below that represent reasons for the emergence of Multinational Corporations (MNCs) and Foreign direct investment (FDI):

• Higher transport and communication costs

• Increase protectionism and trade restrictions

• Access to cheap materials

• Large customer populations in foreign markets

Which of the following best defines a multinational corporation (MNC)?

• A company that exports to many countries.

• A large company that import from many countries.

• A company that operates in more than two different countries.

• A company that produces goods and services for a large market.

Which of the following best describes the term Foreign Direct Investment (FDI)?

• When a country makes an investment into a company

• When a domestic country invests into its own companies

• When a company makes an investment into a foreign country and has right to control

• When foreign individuals invest in domestic stock markets

Job creation is a significant advantage for countries that receives FDI. Which situation below indicates that a foreign country has created jobs in the United States?

• American car manufacturer Ford closes down its car production plant in Detroit, Michigan and moves to Mexico

• Apple partners with electronics producer Foxconn in Shenzhen to produce its iPhone and iPad products

• Japanese car manufacturer Honda builds a production plant in Marysville, Ohio and expands to 11 other locations as well

• American company Toys R Us closes down its retail stores in the US and starts opening them in China