Which of the Following Statements Is the Best Example of Direct

question 91

Multiple Choice

Which of the following statements is the best example of direct investment?

• A)A U.S.company acquires more than 10 percent ownership of a foreign company.
• B)A foreign bank lends more than 10 percent of the funds needed by a business.
• C)A foreign bank lends less than 10 percent of the funds needed by a business.
• D)A U.S.company acquires less than 10 percent ownership of a foreign company.
• E)The Bank of America extends a loan to a foreign country.

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Definitions:

Specializes

The process of focusing efforts and resources on a narrow area of expertise or production for efficiency and quality improvements.

Gains From Trade

The benefits obtained by countries or individuals from engaging in international trade, allowing for consumption beyond their production possibilities.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and production technology.

Marginal Rate Of Transformation

Amount of one good that must be given up to produce one additional unit of a second good.