FDI or a 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 a 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 a typical definition of control as the globally agreed threshold of 10% of the voting shares. However, this is often a cloudy area since even a smaller share would accord control in companies. An FDI includes mergers and acquisitions, construction of new facilities, intra-company loans, and reinvesting profits from foreign operations.
Given are some 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
Q.1 The foreign direct investment includes _______ .
A) Intellectual properties
B) Human resources
C) Tangible goods
D) Intangible goods
Answer: C
Q.2 The three disputes of FDI are over ______ .
A) Concern
B) Interest
C) Regard
D) Hobby
Answer: B
Q.3 The Treaty of Rome was signed in the year ______ .
A) 1959
B) 1957
C) 1956
D) 1955
Answer: B
Q.4 When did Austria join the European Union?
A) 1997
B) 1993
C) 1995
D) 1999
Answer: C
Q.5 For spreading information, the foreign policy decision-makers rely on _______ .
A) Bureaucrats
B) Politicians
C) Media
D) Public
Answer: C
Q.6 More expansion of foreign direct investment can boost __________ .
A) Money circulation
B) Demand
C) Employment
D) Unemployment
Answer: C
Q.7 How will the offer curve react when customers are heterogeneous?
A) Zero quadrant
B) Negative quadrant
C) Optimum quadrant
D) Positive quadrant
Answer: B
Q.8 Which of the following are improved when capital and labour are moved internationally?
A) Economic growth gains
B) Capital gains
C) Gains from income
D) Gains from trade
Answer: C
Q.9 Which industry will have a free entry?
A) Mineral mining
B) Cable television
C) T-shirt silk screening
D) Satellite radio
Answer: C
Q.10 What is it called when a country is specialised in a particular good and then it trades the good with other countries?
A) Agreement
B) Interdependence
C) Correlation
D) Dependence
Answer: B
Explore more MCQs on economics. Stay tuned for questions papers, sample papers, syllabus, and relevant notifications on our website.
Thanks I like MCQ