Quiz on Multinational Corporations (MNCs)

What is a characteristic of multinational corporations (MNCs)?

• Limited to one country

• Dominant players in the market

• Focused on local markets only

• Avoid investment in R&D

Which of the following is a benefit of MNCs on local communities and the environment?

• Environmental disasters

• Loss of traditions and cultures

• Higher employment, less poverty, lower crime

• Damage to traditional industries

What is a negative impact of MNCs on local labour and job creation?

• Skills development

• Creates wage inflation for local businesses

• Better working conditions

• Push wages up improving overall standard of living

How can MNCs benefit local firms?

• By reducing business opportunities

• By creating environmental disasters

• By helping develop reliable infrastructure

• By increasing unskilled work

What is one of the benefits of FDI flows into a host economy?

• Inflationary pressure

• Job creation and related wealth

• Loss of local businesses

• Brain drain

How can economic growth be negatively impacted by MNCs?

• Increased demand and employment

• Inflationary pressure if the economy has little spare capacity

• Generation of revenue for the local government

• Wider choice of goods and services

What is a potential negative impact of MNCs on the balance of payments?

• Surplus from exports

• Inward flow of cash

• Outward flow due to imported materials and services

• Increased tax revenues

What is a benefit of technology and skills transfer by MNCs?

• Brain drain

• Loss of traditional businesses

• Spread of technology and skills across sectors

• Increased tax liabilities

How can MNCs negatively affect local consumers?

• Access to global brands

• Better quality products

• Loss of local, more traditional businesses

• Wider choice of goods and services

What is one positive impact of multinational corporations (MNCs) on host countries?

• Provision of significant employment and training to the labor force

• Reduction in local cultural diversity

• Use of transfer pricing for tax avoidance

• Remittance of profits to the MNC's base country