Question

video comprehension questions

1. what is foreign direct investment (fdi)?

a. when a country borrows money from abroad
b. when a company invests directly in another country
c. when a country sells goods to another country
d. when a company exports goods to other countries

1. how does fdi help boost a countrys exports?

a. by increasing imports
b. by bringing in new capital and technology
c. by reducing competition
d. by limiting production capabilities

1. what can happen when foreign companies set up operations locally?

a. they only sell local products
b. they might increase imports of equipment and materials
c. they reduce the need for imports
d. they stop all foreign transactions

1. what are spillover effects in the context of fdi?

a. negative impacts on local businesses
b. technology and management improvements spreading across industries
c. increased costs of production
d. decreased employment opportunities

1. how can fdi affect the trade balance over the long term?

a. it always worsens the trade balance
b. it can lead to increased exports and economic growth
c. it has no impact on the trade balance
d. it decreases the demand for local goods

1. what role do government policies play in attracting fdi?

a. they discourage foreign investment
b. they create incentives for investments in specific sectors
c. they limit foreign companies operations
d. they increase taxes on foreign profits

1. what is a potential negative effect of fdi on imports?

a. it can lead to higher imports if not managed
b. it has no effect on imports
c. it reduces the need for imports
d. it eliminates all imports

1. how does a stronger export sector influence the trade balance?

a. it leads to a decrease in exports
b. it can help maintain a healthier trade balance
c. it has no effect on the trade balance
d. it only benefits local consumers

1. what is a key benefit of improving industry standards through fdi?

a. it reduces competition among local businesses
b. it lowers the quality of goods produced
c. it increases the competitiveness of exports
d. it eliminates the need for foreign investment

1. why might governments target specific sectors for fdi?

a. to limit economic growth
b. to diversify exports and reduce reliance on imports
c. to eliminate competition
d. to increase imports only

Explanation:

Each question tests understanding of FDI's definition, impacts, and related concepts. Answers align with core economic principles of FDI.

Answer:

1. b. When a company invests directly in another country
2. b. By bringing in new capital and technology
3. b. They might increase imports of equipment and materials
4. b. Technology and management improvements spreading across industries
5. b. It can lead to increased exports and economic growth
6. b. They create incentives for investments in specific sectors
7. a. It can lead to higher imports if not managed
8. b. It can help maintain a healthier trade balance
9. c. It increases the competitiveness of exports
10. b. To diversify exports and reduce reliance on imports