When FDI Occurs, What Are the Long-Run Effects of FDI

question 24

Multiple Choice

When FDI occurs, what are the long-run effects of FDI on industry output in the recipient nation?

• A) There is no change in either the output of the capital-intensive or the labor-intensive industry.
• B) The labor-intensive industry expands; the capital-intensive industry contracts.
• C) The capital-intensive industry expands; the labor-intensive industry contracts.
• D) Both capital- and labor-intensive industries expand in the same proportion.

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Definitions:

Indifference Curve

An indifference curve represents a graph showing different bundles of goods between which a consumer is indifferent, meaning they derive the same level of utility from each.

Midterm Grade

An evaluative score or assessment typically given to students halfway through a term to indicate their academic performance up to that point.

Horizontal Axis

In a graph or chart, the x-axis, which typically represents the independent variable or the base for measurement of distances or intervals.

Indifference Curve

A graphical representation in microeconomic theory of the combinations of two goods among which a consumer is indifferent.