Foreign Trade

Repayment of a foreign loan

• decreases foreign liabilities.

• is recorded as a debit in the financial account

• increases foreign assets.

• is recorded as a debit in primary income

One reason direct investment may be prefered to portfolio is

• it fills the savings investment gap.

• it doesn't pose a threat to national sovereignty

• it doesn't create an outflow on primary income.

• it is more long term and stable.

Which of the following would most likely lead to an increase in the FD in the short term?

• An appreciation of the AUD.

• A fall in Australia's household savings ratio.

• A decrease in the size of a federal government budget deficit

• A fall in the size of the current account deficit.

Which of following are examples of foreign direct investments?

• Mergers

• Acquisitions or partnership in retail

• Vertical FDI

• Service & Manufacturing

More expansion of foreign direct investment can boost:

• Unemployment

• Supply

• Employment

• Money circulation

What is Foreign direct investment?

• This is when a country makes an investment into a company.

• This is when a company makes an investment into a foreign country and has the right to control.

• When a domestic country invest into its own companies.

• When a foreign individual invest in domestic stock markets

Foreign Direct Investment or FDI occurs when a company from one country invests in another country as an effort to secure lasting interest in the other country's enterprises to produce and/market a product or service.

• True

• False

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

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.

What does the acronym FDI mean?

• Free Daily Inputs

• Foreign Dividends Investment

• Foreign Direct Intervention

• Foreign Direct Investment