Macro Political Risk and Micro Political Risk in International Business

question 63

Multiple Choice

Macro political risk and micro political risk in international business refer to the risk

• A) that will affect all foreign firms and the risk that will affect an individual firm or specific industry, respectively.
• B) of nationalization of the oil industry and the risk of a political revolution, respectively.
• C) that will affect an individual firm or specific industry and the risk that will affect all foreign firms, respectively.
• D) of sudden taxes on exporting the manufactured goods of a particular industry and the risk of the devaluation of the host country's currency, respectively.

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Definitions:

Accounting Equation

The fundamental principle of double-entry bookkeeping: Assets = Liabilities + Equity, depicting the relationship between a company's resources and claims on those resources.

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase cost.

Cash-Equivalent Value

The value of an asset that is easily convertible into a known amount of cash with minimal risk of change in value.

Business Activities

Operations, actions, and tasks that a company engages in as part of its economic operations, including production, sales, marketing, and finance.