What are the major reasons a multinational corporation would engage in Foreign Direct Investment (FDI)?
What will be an ideal response?
Greater profit earning opportunities in other markets; take advantage of economies of scale and/or scope; have direct access to natural resources; operate within a currency union and avoid restrictions and other discriminatory policies against foreign businesses operating within a country.
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Suppose expected inflation in the economy is 5%. Banks set nominal interest rates so they'll earn a 2% expected real return. Employers set nominal wages based on a 2% expected real wage increase
Suppose the nominal interest rate and nominal wages are determined this way, but actual inflation turns out to differ from the expected inflation rate. Calculate the actual real interest rate and the percent increase in the real wage for each of the following actual inflation rates: a) 2%; b) 5%; c) 10%.
A disadvantage of the proprietorship form of business organization is
A) its limited access to capital. B) its limited liability. C) that it can issue only one class of stock. D) that the owner must fight a lot of red tape to form the firm.
Major contributors to pollution are
a. individuals. b. firms. c. government. d. All of the above are correct.
Select the type of market that is described by the following attributes: many firms, differentiated products, and free entry
a. natural monopoly b. perfectly competition c. monopolistic competition d. monopoly