Question

The free market view would argue that

A) MNEs decrease the overall efficiency of the world economy.
B) FDI is a benefit to both the source country and the host country.
C) MNEs can never be instruments of economic development, only of economic domination.
D) FDI is beneficial to the host country of an MNE but it is harmful for the home country of the MNE.
E) FDI in a mercantilist society would not benefit the home country.

Answer 1

Answer: B. FDI is a benefit to both the source country and the host country.

Explanation: FDI means Foreign Direct Investment, it is an investment by a foreign individual or organization having controlling ownership of a business in another country. This kind of investment create employment in the host country and revenue for the source country from return of investment.

Free market encourage free entry and exist in the economic, so it will argue that "FDI is a benefit to both the source country and the host country" . Although some economist will disagreed sighting the demerit of FDI.