Understanding Foreign MNC Investment
The question asks for the specific term used when foreign Multinational Corporations (MNCs) invest money into a country's businesses.
Analyzing Investment Terms
Let's examine the options:
- 1. Direct investment: This is a broad term and could refer to domestic investment as well. It doesn't specifically indicate the foreign origin.
- 2. Foreign direct investment: This term precisely describes investments made by entities based in one country into businesses located in another country, with the goal of establishing control or significant influence. This aligns perfectly with investment by foreign MNCs. Often abbreviated as FDI.
- 3. Foreign collateral: Collateral refers to assets pledged as security for a loan. It is not a type of investment itself.
- 4. Foreign monetary investment: This is not a standard economic or financial term. While foreign investment involves money, this specific phrasing is inaccurate and redundant.
Therefore, the correct and standard term for money invested by foreign MNCs is Foreign direct investment.
Similar Questions
- The reduction in the external value of the domestic currency is called:
In the Balance of Payments, an increase in foreign exchange reserves appears under which category?
The Foreign Exchange Management Act (FEMA) was enacted in 1999 to replace the earlier FERA law. In which year did FEMA officially come into force?
- The price of one currency in terms of another is known as:
Important Questions from External Sector and Currency Exchange rate
Consider the following :
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct Investments?
Procedure for online trading involve(s) which of the following step(s)?
I. Make an application to open a Demat Account and Online Trading Account.
II. Allocate funds from the bank account to the trading account.
III. Once the order is confirmed, it is placed in the stock exchange through the online trading system.
The balance of payments of a country is a systematic record of
What is the idea that a country should be self-sufficient and not participate in international trade called?
(A) : Devaluation results in expenditure switching in an economy.
(R) : Devaluation alters the composition of the current account of the balance of payments.
