Which Is a Possible Adverse Effect of FDI on a Host

question 11

Multiple Choice

Which is a possible adverse effect of FDI on a host country's balance-of-payments position?

• A) When a foreign subsidiary exports a substantial number of its outputs abroad.
• B) When a foreign subsidiary gets a substantial number of its inputs from its host-country.
• C) When most of the foreign subsidiary's management team is from the home country.
• D) Set against the initial capital inflow that comes with FDI must be the subsequent outflow of income as the foreign subsidiary repatriates earnings to its parent company.
• E) the increased competition weakens domestic companies reducing local production and increasing imports

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Definitions:

Unlimited Wants

The economic principle that humans have infinite desires or wants but limited resources to fulfill them.

Scarce

Denotes the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, which necessitates prioritization of resource allocation.

Choices

Decisions made by individuals or organizations among two or more alternatives.

Rational Government

The concept of a government acting based on reasoned decisions, typically aiming for the most economically efficient outcomes that maximize social welfare.