Lesson 4.4.1b

4.4.1b Impact of multinationals on the national economy Quiz: Pearson Edexcel Business, Unit 4

20 questions

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Lesson 4.4.1b, Impact of multinationals on the national economy: 20 multiple choice questions for the Pearson Edexcel Business (9BS0), Unit 4: Global business, written with Revision Ninja.

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The 20 questions

  1. What term describes long-term investment by foreign businesses into productive assets in a host nation?

    • Foreign direct investment
    • Foreign aid grants
    • Commercial bank lending
    • Portfolio investment

  2. What financial record tracks all economic transactions between a host nation and the rest of the world?

    • National debt index
    • Fiscal budget statement
    • Balance of payments
    • Gross domestic product

  3. What practice involves setting prices for goods traded internally between subsidiaries of the same multinational?

    • Predatory pricing
    • Transfer pricing
    • Price discrimination
    • Dynamic pricing

  4. What term describes the spread of modern equipment, processes, and knowledge from multinationals to host nations?

    • Intellectual property theft
    • Brain drain
    • Technology transfer
    • Capital flight

  5. Which action by a multinational negatively impacts a host country's balance of payments current account?

    • Increased domestic exports
    • Local job creation
    • Inward capital flows
    • Profit repatriation

  6. A subsidiary earns 50 million profit and pays 20% corporation tax. How much tax is paid?

    • 20 million
    • 40 million
    • 50 million
    • 10 million

  7. How can multinationals use transfer pricing to minimise tax paid in a high-tax host nation?

    • Increasing local dividends
    • Shifting taxable profits
    • Lowering export volumes
    • Raising worker wages

  8. What is a major benefit to local consumers when a foreign multinational enters a market?

    • Wider product choice
    • Higher local inflation
    • Monopolistic price increases
    • Reduced market competition

  9. How can the presence of a multinational positively influence the management culture of local businesses?

    • Increasing bureaucratisation
    • Imposing trade tariffs
    • Spreading modern practices
    • Restricting local employment

  10. Which factor can reduce the total tax revenue collected by a host government from multinationals?

    • Increased domestic employment
    • Expansion of facilities
    • Tax holiday incentives
    • Higher sales volume

  11. How does foreign direct investment directly increase a host country's gross domestic product?

    • Expanding productive capacity
    • Raising national debt
    • Restricting capital flows
    • Decreasing employment rates

  12. Which situation causes a multinational's presence to worsen a host country's balance of trade?

    • Paying corporation tax
    • Exporting finished goods
    • Importing overseas components
    • Employing local managers

  13. How do local businesses gain skilled staff trained by a domestic multinational operating nearby?

    • Currency appreciation
    • Capital flight
    • Monopoly regulation
    • Worker mobility

  14. What is a major direct benefit of foreign direct investment for a host government?

    • Increased tax revenue
    • Reduced national debt
    • Zero import tariffs
    • Lower inflation rates

  15. A multinational transfers 5 million of profit out of the host country through an inflated import price. The host tax rate is 25%. How much host tax is lost?

    • 0.5 million
    • 10 million
    • 1.25 million
    • 5 million

  16. Which negative impact occurs when a multinational imposes foreign cultural norms on host-country workers?

    • Higher wage rates
    • Local culture erosion
    • Increased consumer choice
    • Transfer of skills

  17. A deficit on a host country's balance of payments current account means that financial:

    • Outflows exceed inflows
    • Exports exceed imports
    • Inflows exceed outflows
    • Savings exceed investment

  18. How can the entry of a dominant multinational harm local consumers in the long term?

    • Increased product choice
    • Lower product quality
    • Reduced market competition
    • Higher import tariffs

  19. What practice involves multinationals manipulating internal trade prices to minimise total tax paid?

    • Transfer pricing
    • Price discrimination
    • Predatory pricing
    • Penetration pricing

  20. Which foreign exchange flow creates a negative impact on a host country's balance of payments?

    • Technology transfer
    • Capital investment
    • Profit repatriation
    • Export revenue

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