How Can an MNE Overcome Its Inherent Disadvantages

question 18

Multiple Choice

How can an MNE overcome its inherent disadvantages?

• A)By borrowing funds from the host country rather than transferring funds from the parent firm
• B)By producing more than two products in which it has comparative advantage
• C)By expanding its operation in more than two host countries
• D)By owning one or more assets that are not owned by its local competitors in the host country

Define key taxation concepts including marginal tax rate, horizontal equity, and the principles that justify certain taxes.

Discuss the trade-offs between equity and efficiency in tax systems and the justification of taxes based on the benefits principle.

Understand the concept of deadweight loss in the context of taxation and its impact on surplus.

Identify the purposes of specific taxes and government programs funded through taxation.

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Definitions:

Foreign Securities Laws

Regulations and legal standards that govern the issuance, trading, and ownership of securities in jurisdictions outside the issuer's home country.

Rule 10b-5

A rule under the U.S. Securities Exchange Act of 1934 addressing fraud and misrepresentation in securities transactions.

Fraud

An intentional deception that causes harm to another.

Material Omission

The failure to disclose important information intentionally or unintentionally, which if known, could influence the decision-making of a party relying on the information.