The Negative Implications for the Operation of a Foreign-Based Subsidiary

question 95

Multiple Choice

The negative implications for the operation of a foreign-based subsidiary due to joint venture laws and restrictions can result in ________.

• A) high degree of leverage
• B) deficit in balance-of-payment position for the home country
• C) difficulties obtaining the remission of profits
• D) manipulation of tax rules

---

Definitions:

Expansionary Gap

A condition in which the actual output of an economy surpasses the level of output at full employment, commonly resulting in inflation.

Real GDP

Gross Domestic Product adjusted for inflation, reflecting the value of all goods and services produced by an economy in a given year in real terms.

Nominal GDP

The total market value of all goods and services produced within a country’s borders in a given period without adjusting for inflation.

Short Run

In economics, the short run is a period in which at least one input, like equipment or labor, is fixed and cannot be changed, influencing decision-making and production levels.