How Is the Adverse Effect of the Balance of Payments

question 77

Multiple Choice

How is the adverse effect of the balance of payments for the home country due to FDI usually offset?

• A) by increased imports to the home country as a result of the FDI
• B) by the subsequent inflow of foreign earnings
• C) by substituting direct exports made earlier from the home country
• D) by further investments usually made to expand foreign operations

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Definitions:

Total Variable Cost

The overall expense that varies with production output, including costs like labor and raw materials.

Total Cost

The sum of all expenses, variable and fixed, incurred in producing goods or services.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, typically decreasing as production scale increases.

Average Variable Cost

The total variable costs (costs that change with output level) divided by the quantity of output produced.