Which of the Following Is True of Corporations That Operate

question 17

Multiple Choice

Which of the following is true of corporations that operate in several different countries?

• A)A nation may expropriate the assets of multinational corporations without compensation.
• B)Differences in legal systems of host nations make it easy for executives trained in one country to operate effectively in another.
• C)Cash flows in various parts of a multinational corporate system are denominated in one currency.
• D)Multinational corporations have the advantage of uniform attitudes toward risk taking from one country to the next.
• E)Uniformity of tax-laws across different nations result in proper coordination and control of subsidiaries.

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Definitions:

Heckscher-Ohlin Model

An economic theory that proposes countries export what they can most efficiently and abundantly produce.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than its competitors.

Ricardian Model

An economic theory that focuses on comparative advantage, explaining how countries can gain from trade by specializing in producing goods at a lower opportunity cost.

Production Possibility Frontiers

These are curves that depict the maximum potential output of a combination of two goods or services that an economy can produce with available resources.