Which of the Following Is an Example of Foreign Direct

question 144

Multiple Choice

Which of the following is an example of foreign direct investment?

• A)You purchase a plane ticket to China on WestJet.
• B)WestJet builds a hub in China.
• C)You buy a plane that was made in China.
• D)A stock broker from China sells you a Chinese government savings bond.
• E)A chinese person buys shares in Bombardier.

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Definitions:

Government Intervention

Actions taken by a government to adjust or interfere in the economic affairs of a nation, with the intention of achieving economic or societal objectives.

External Cost

Costs of a transaction that affect people other than the buyer or seller, typically not reflected in the market price, such as pollution or other negative externalities.

Negative Production Externality

An economic situation where the production process results in a harmful effect on third parties or the environment, which is not reflected in the cost of production.

Positive Production Externality

A situation where the production of a good or service results in beneficial effects for other people or entities that were not involved in the transaction.