________________ Are Three Main Benefits of Inward FDI for a Host

question 89

Multiple Choice

________________ are three main benefits of inward FDI for a host country.

• A) The resource-transfer effect, the employment effect, and the balance-of-payments effect
• B) The capital-transfer effect, the technology effect, and the currency exchange effect
• C) The cultural awareness effect, the technology effect, and the balance-of-payments effect
• D) The resource-transfer effect, the technology effect, and the currency exchange effect
• E) Balance of payments effect, currency exchange effect, and the technology effect

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Definitions:

LRATC

Long Run Average Total Cost, which represents the per-unit cost of production when all factors of production are variable, and scale of production can be adjusted.

Diseconomies of Scale

occur when a company or business grows so large that the costs per unit increase, causing efficiency to decrease.

Real Cost

The total cost of producing a good or service, including all resources consumed and opportunity costs, in contrast to its financial cost.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other factors remain constant.