Economics Quiz B Part 2

If a country has a high level of foreign direct investment (FDI), what is the most likely impact on its economy?

• The country will experience a significant increase in unemployment.

• The country will see an increase in its GDP and job creation.

• The country will face a shortage of skilled workers.

• The country will experience a decline in its standard of living.

In the context of international finance, what does the term "capital flight" refer to?

• The sudden withdrawal of foreign investors from a country's stock market.

• The rapid increase in a country's foreign exchange reserves.

• The movement of capital from a country to another country.

• The reduction in a country's national debt.

If a country's central bank implements a policy of quantitative easing, what is the most likely impact on its economy?

• The country's inflation rate will decrease.

• The country's interest rates will increase.

• The country's currency will depreciate.

• The country's GDP will increase.

If a country has negative outward FDI, this means that

• Outward investment as a percentage of inward investment is falling.

• Sales of existing investments abroad exceed new investments abroad.

• Sales of foreign assets in the country exceed sales of the country's assets abroad.

• Inward FDI exceeds outward FDI.

A horizontally integrated multinational is one that

• Produces various stages of production in different countries.

• One which exports more than 50% of output.

• Produces different products in different countries.

• Produces the same product in more than one country.

Multinational corporations (MNCs) engaging in technological transfer may lead to gains elsewhere in the economy as

• Other companies in the host county may try to copy the methods.

• The MNC takes market share from local companies.

• Workers trained by the MNC move to other parts of the economy.

• A and C

If a country has negative outward FDI, this means that

• Inward FDI exceeds outward FDI.

• Sales of foreign assets in the country exceed sales of the country's assets abroad.

• Outward investment as a percentage of inward investment is falling.

• Sales of existing investments abroad exceed new investments abroad.

Poor communication between subsidiaries may cause

• diseconomies of scale.

• adverse selection.

• economies of scope.

• all the above.

If the total expenditure of the UK public sector is £650bn and revenues to the UK public sector are £325bn each year, then

• the UK will have a PSNB of -£325bn.

• the UK government will have a budget deficit of £325bn.

• the UK will have a PSNB of £325bn.

• the UK general government debt will rise by £325bn.

What effect will a successful supply-side policy have on the aggregate demand curve?

• Leftward shift

• Rightward shift

• Movement down along

• Movement up along