How Can FDI Undertaken to Serve the Home Market Stimulate

question 7

Multiple Choice

How can FDI undertaken to serve the home market stimulate economic growth in the home country?

• A) by freeing home-country resources to concentrate on activities where the home country has a comparative advantage
• B) by importing more goods and services than it is exporting
• C) by circumventing trade barriers that may have prevented direct exports in the past
• D) by reducing demand for home-country exports of capital equipment, intermediate goods, and complementary products

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Definitions:

Indirect Materials

Materials used in the production process that cannot be directly traced to a finished product.

Employer Payroll Taxes

Taxes that employers are required to pay on behalf of their employees, including Social Security and Medicare taxes in the United States.

Manufacturing Overhead Applied

The portion of manufacturing overhead costs allocated to each unit of production.

Job Cost System

An accounting method used to track the expenses of a specific job or project and compare those expenses to the project’s revenue, helping in assessing profitability.