FDI or Foreign Direct Investment is a controlling stake (ownership) in a commercial enterprise located in a country by an entity based out of another country. This is different from portfolio foreign investment with respect to the element of ‘control’. The latter kind of investment is only an unassertive investment in the securities of a foreign nation like bonds and stocks.
The Financial Times gives typical definitions of ‘control’ as the globally agreed threshold of 10% of the voting shares. However, often this is a cloudy area since even a smaller share would accord control in companies. FDI includes mergers and acquisitions, construction of new facilities, intra-company loans and reinvesting profits from foreign operations.
Given below are important MCQs on Foreign Direct Investment to analyse your understanding of the topic. The answers are also given for your reference.
Foreign Direct Investment MCQs:
1. The foreign direct investment includes
A) Intellectual Property
B) Human Resource
C) Tangible Good
D) Intangible Goods
Answer: C
2. The disputes of FDI are over
A) Concern
B) Interest
C) Regard
D) Hobby
Answer: B
3. Treaty of Rome was signed in the year
A) 1959
B) 1957
C) 1956
D) 1955
Answer: B
4. When did Austria join European Union?
A) 1997
B) 1993
C) 1995
D) 1999
Answer: C
5. For spreading information the Foreign policy decision-makers rely on
A) Bureaucrats
B) Politicians
C) Media
D) Public
Answer: C
6. More expansion of foreign direct investment can boost
A) Money circulation
B) Demand
C) Employment
D) Unemployment
Answer: C
7. How will offer curve react when customers are heterogeneous?
A) Zero quadrant
B) Negative quadrant
C) Optimum quadrant
D) Positive quadrant
Answer: B
8. When capital and labour are moved internationally, it will help in developing
A) Economic growth gains
B) Capital gains
C) More gains from income
D) More gains from trade
Answer: C
9. Which industry characteristics will have free entry?
A) Mineral mining
B) Cable television
C) T-shirt silk screening
D) Satellite radio
Answer: C
10. When a country is specialised in particular good and then trade with other countries is called
A) Agreement
B) Interdependence
C) Correlation
D) Dependence
Answer: B
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