Which of the Following Is True of Foreign Direct Investment

question 66

Multiple Choice

Which of the following is true of foreign direct investment?

• A)The contributions of entrepreneurs and small businesses to foreign direct investment is insignificant.
• B)Globalization has led emerging markets to undertake less foreign direct investment and industrialized nations to undertake more foreign direct investment.
• C)The desire to increase a firm's global competitiveness drives many cross-border mergers and acquisitions.
• D)Foreign direct investment does not involve obtaining a degree of control in a company.

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Definitions:

Increasing-Cost Industry

An industry in which expansion through the entry of new firms raises the prices firms in the industry must pay for resources and therefore increases their production costs.

Long-Run Supply Curve

As it applies to macroeconomics, a supply curve for which price, but not real output, changes when the demand curves shifts; a vertical supply curve that implies fully flexible prices.

Perfectly Elastic

Describes a situation in which the quantity demanded or supplied changes infinitely with any change in price.

Pure Competition

A market structure characterized by a large number of buyers and sellers dealing in perfectly substitutable goods or services.