Q1) The best examples of market imperfections include trade barriers and special

Question

Q1) The best examples of market imperfections include trade barriers and specialized knowledge

Q2) Answer is False

Balance of payments is a national accounting system which encompasses all payments and reciepts to and from other countries respectively.

Capital accounts record transactions involving the purchase and sale of assets.

Q3) The current account.records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country.

Q4) According to the market imperfections theory, Businesses undertake FDI to internalize the transaction and thereby remove the obstacles.

Explanation / Answer

The best examples of market imperfections include:

Cultural distance, linguistic differences

Transaction costs, institutional barriers

Tariffs and regulations

trade barriers and specialized knowledge

The balance of payment account records transactions involving the purchase or sale of assets. These assets include physical assets such as foreign direct investments in factories and equipment, and financial assets such as shares of stock in a company abroad.

False True

The ………..records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country.

global account

capital account

Balance of payment,

current account

According to the market imperfections theory,

Businesses undertake FDI to internalize the transaction and thereby remove the obstacles.

Businesses do strategic alliances to internalize the transaction and thereby remove the obstacles.

Businesses go global to reduce the transaction costs and thereby remove the obstacles.

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