Regarding Foreign Direct Investment and Trade

question 103

Multiple Choice

Regarding foreign direct investment and trade

• A) historically, foreign trade has followed foreign direct investment.
• B) foreign trade is typically more costly and more risky than making a direct investment into foreign markets.
• C) typically, a firm would hire sales representatives to live in overseas markets as a first step in developing international trade.
• D) fewer government barriers to trade, increased competition from globalizing firms, and new production and communications technology are causing many international firms to disperse the activities of their production systems to locations close to available resources.
• E) management can expand the business in small increments through trade, although this requires considerably greater investment and associated risk.

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Definitions:

Shadow Welfare State

A term describing indirect government social welfare policies implemented through tax breaks, subsidies, and other means not directly recognized as social welfare spending.

Tax Breaks

Governmental incentives that reduce the tax liability of individuals or businesses, encouraging certain economic activities or investments.

Tax Expenditures

Tax expenditures are government revenue losses attributed to tax provisions allowing special exclusions, exemptions, or deductions from taxable income or providing tax credits.

National Treasury

The government department responsible for developing and implementing the country’s financial and tax policies, managing government revenue, and economic policy.