QUIZ WEEK 10 FOREIGN DIRECT INVESTMENT

TRUE OR FALSE

1. No tariffs or duties are paid in export processing zones.

TRUE

2. Free trade areas are made up of two or more states.

TRUE

3. Nondiscrimination guarantee is the assurance of a host state government that foreign

investors will be able to take out of the state both the investment capital they brought in and
the profits they earned.

FALSE

4. Choice-of-law clause promises foreign investors that the host government will not change
its tax for a certain period of time.

FALSE

5. Depriving a person or company of private property without compensation is called

nationalization.

FALSE

CHOOSE THE RIGHT ANSWER

6. Which of the following is true of closed sectors?

A. They limit the percentage of foreign investment.

B. They are not open to foreign investors.
C. They have the highest tax rates.
D. They are usually present in developing countries.

7. The parts of a state’s economy that are not fully open to foreign investors are called
________.

A. exclusive economic zones

B. special economic zones
C. closed sectors
D. restricted sectors
8. The parts of a state’s economy in which foreigners are encouraged to invest are called
________.

A. exclusive economic zones

B. special economic zones
C. foreign priority sectors
D. restricted sectors

9. ________ are geographical areas wherein goods may be imported and exported free from
customs tariffs and in which a variety of trade-related activities may be carried on.

A. Foreign priority sectors

B. Closed sectors
C. Free zones
D. Exclusive economic zones

10. Acquisition by a state of property previously held by private persons or companies, usually
in exchange for some consideration is called ________.

A. expropriation
B. nationalization
C. privatization
D. municipalization