Global Giant, a Multinational Corporation, Has a Producing Subsidiary in a Low

question 131

Multiple Choice

Global Giant, a multinational corporation, has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country. If Global Giant wants to minimize its worldwide tax liability, we would expect Global Giant to ________.

• A) stop producing in the low tax rate country
• B) stop marketing in the high tax rate country
• C) establish a low transfer price when the producing unit sells to the marketing unit
• D) establish a high transfer price when the producing unit sells to the marketing unit

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Definitions:

Leading Indicators

Economic factors that change before the economy starts to follow a particular pattern or trend, used to predict future movements.

Lagging Indicators

Economic indicators that usually change after the economy as a whole does, thus confirming long-term trends.

Cognitive Bias

A systematic error in thinking or decision-making due to the brain's attempt to simplify information processing.

Common Measures Bias

Refers to the distortion that occurs when the same measurement tools or methods are used to collect data on multiple variables, leading to artificially inflated correlations among these variables.