Which Type of Multinational Diversification Occurs When the Parent Firm

question 32

Multiple Choice

Which type of multinational diversification occurs when the parent firm establishes foreign subsidiaries to produce intermediate goods going into the production of finished goods?

• A) Forward vertical integration
• B) Backward vertical integration
• C) Forward horizontal integration
• D) Backward horizontal integration

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Definitions:

National Saving

National saving is the sum of private and public savings in an economy, essentially the portion of national income that is not spent on consumption or government expenditure.

Consumption

The use of goods and services by households. It includes spending on durable goods, nondurable goods, and services.

Loanable Funds

The market where savers supply funds for loans to borrowers, often illustrated by the supply and demand for loans.

Interest Rate

The chunk of a loan taken as interest by the borrower, typically outlined as an annual percentage of the loan's outstanding balance.