Offering Subsidies to Foreign MNEs in the Form of Tax

question 3

Multiple Choice

Offering subsidies to foreign MNEs in the form of tax breaks or grants is one way of:

• A)adopting a retaliatory stance in bilateral trade.
• B)courting FDI believed to be in national interest.
• C)adopting a radical stance to FDI.
• D)blocking FDI inflows into the country.

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Definitions:

Fixed Manufacturing Overhead

Expenses related to production that remain constant, regardless of the production volume, such as maintenance of machinery and property taxes.

Deferred

A term referring to items or expenses that are not recognized immediately but postponed to a future date.

Absorption Costing

This approach to accounting incorporates all costs associated with manufacturing such as direct materials, direct labor, and variable as well as fixed overhead expenses into the price of a product.

Operations

Refers to the day-to-day activities involved in running a business that lead to the production of goods and provision of services.