If an MNC Attempts to Build a Subsidiary in a Country

question 15

Multiple Choice

If an MNC attempts to build a subsidiary in a country that will take business away from local firms that are protected by the host government, the host government might do all of the following except:

• A) require the use of local employees for managerial positions.
• B) impose additional taxes.
• C) subsidize the MNC.
• D) subsidize the MNC's competitors.

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Definitions:

Overconsumption

The excessive use of resources or consumption of goods beyond what is sustainable or environmentally sound.

Economic Growth

An increase in a country's output of goods and services over time, often measured by changes in real GDP.

Allocative Inefficiency

A situation where resources are not distributed optimally, resulting in lost potential for producing welfare or value.

Marginal Cost

The cost incurred by producing one more unit of a good or service.