2. compare to other sources of foreign savings for a developing country, FDI has

ID: 1156644 • Letter: 2

Question

2. compare to other sources of foreign savings for a developing country, FDI has the advantage of

a. being more quickly adjustable and easily responsive to changing economic situations.

b. opening an avenue of greater international integration for domestic firms.

c. both of the above

d.none of the above

6.a reduction in the_____tax could significantly raise savings if households are _______to the after-tax return on investment.

a. Interest income; sensitive

b. Consumption ; insensitive

c. Consumption ; sensitive

d. Interest income; insensitive

(2) (b)

FDI is inflexible and rigid in terms of changing economic circumstances, but it opens a lane for more international integration for domestic firms.

(6) (a)

If households re sensitive to after-tax return on investment, a decrease in tax on interest income will increase savings.

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