Question

A macroeconomic perspective focuses on the financial management decisions that affect the value of MNC.

a. True
b. False

Answer 1

The statement, 'A macroeconomic perspective focuses on the financial management decisions that affect the value of an MNC,' is false because macroeconomics focuses on the economy as a whole whereas microeconomics includes financial management decisions affecting an MNC's value. The correct option is b.

Step-by-step explanation:

Macroeconomics examines the economy as a whole, exploring broad phenomena such as growth in the standard of living, unemployment, and inflation and using policies such as monetary and fiscal policy to achieve its goals.

Financial management decisions at the firm level, including those affecting the value of a Multinational Corporation (MNC), are actually under the purview of microeconomics, which focuses on the decisions of individual households and businesses.

While macroeconomic conditions can influence microeconomic decisions, and vice versa, they are distinct areas of study. Macroeconomic health does have an impact on firm decisions, such as hiring practices, but the financial management decisions specific to an MNC, such as investment choices and portfolio management, are microeconomic activities that directly tie into the company's value. Hence, b is the correct option.

Answer 2

The given statement "A macroeconomic perspective focuses on the financial management decisions that affect the value of MNC. is b. False.

Step-by-step explanation:

A macroeconomic perspective does not specifically focus on the financial management decisions that affect the value of a Multinational Corporation (MNC). Instead, it looks at the broader economic factors influencing an entire economy. Financial management decisions, on the other hand, are part of the microeconomic aspects that concern individual firms. While macroeconomic conditions can indirectly impact MNCs, the primary focus is on factors such as GDP growth, inflation rates, and exchange rates, rather than specific financial management decisions. The given statement is (b) False.

Firstly, macroeconomics examines the overall economic performance of a country, considering indicators like GDP and unemployment rates. These indicators provide a general understanding of the economic health and stability, which can impact MNCs but don't delve into the specifics of financial management decisions. Secondly, financial management decisions for an MNC are more microeconomic in nature. These decisions include capital budgeting, financing, and risk management strategies. They directly influence the firm's financial position and performance but are not the central focus of macroeconomics.

In conclusion, the statement is false because a macroeconomic perspective primarily deals with broader economic factors affecting an entire economy, rather than honing in on the specific financial management decisions of individual companies like MNCs.