ME_The Foreign Sector

What is the main role of the foreign sector in an economy?

• To increase government spending

• To facilitate trade and investment between countries

• To provide loans to domestic businesses

• To regulate domestic markets

Which of the following is a key factor that attracts Foreign Direct Investment (FDI)?

• High tax rates

• Political instability

• A large domestic market

• Low interest rates only

Foreign Direct Investment (FDI) involves investments that:

• Only involve buying stocks in foreign markets

• Are short-term investments in foreign government bonds

• Involve establishing or expanding businesses in foreign countries

• Are limited to buying foreign currency

Which of the following is NOT a characteristic of Foreign Direct Investment (FDI)?

• It brings capital to the host country

• It involves direct control or influence by the foreign investor

• It is a short-term investment with high returns

• It contributes to job creation in the host country

Which factor is likely to decrease the inflow of Foreign Direct Investment (FDI) into a country?

• Stable political environment

• Low labor costs

• High taxes and regulations

• Strong domestic market

Which of the following is an advantage of globalization?

• Increased protectionism

• Access to global markets

• Reduced technological advancements

• Reduced international competition

One of the disadvantages of globalization is:

• Increased access to capital

• Enhanced job creation in developed countries

• Widening income inequality in developing countries

• Enhanced protection of local industries

Globalization has led to:

• An increase in local monopolies

• A decrease in global trade and investment

• More interconnected global economies

• The isolation of developing economies

Which of the following is a disadvantage of globalization for developing countries?

• Increase in the standard of living

• Loss of cultural identity

• Greater access to technology

• Enhanced competition for global market share

Globalization has contributed to:

• Decreased mobility of goods and services

• An increase in the flow of capital, goods, and people across borders

• Decreased competition in international markets

• Isolation of national economies