Refer to the Article Summary. According to the summary, the Chinese economy is trying to move away from an export based economy, while at the same time imports have declined. This decrease in exports and decrease in imports will
A) decrease net exports if the decline in exports is greater than the decline in imports.
B) increase net exports if the decline in exports is greater than the decline in imports.
C) definitely increase net exports.
D) definitely decrease net exports.
A
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The consumption function shifts upward when
A) real income increases. B) saving increases. C) the real wealth of the average household increases. D) population decreases.
A multinational enterprise (MNE) produces a component in the United Kingdom, where the corporate income tax rate is 60 percent. It produces its final product in Taiwan, where the corporate income tax rate is 25 percent. The cost of the component produced in the United Kingdom is $4 per unit. The components can be shipped to Taiwan at almost no cost, and there is no tariff on the component when it is imported into Taiwan. Each unit of the final product requires one unit of the component. Other production costs in Taiwan to complete the final product are $14 per unit. The final product price, when it is sold by the Taiwan affiliate to outside buyers, is $20 per unit. If the goal of the multinational enterprise is to maximize its global after-tax profit, which of the following three choices
should the controller of the multinational enterprise favor? Why?a. Charge a transfer price of $4 per unitb. Charge a transfer price of $5 per unitc. Charge a transfer price of $6 per unit What will be an ideal response?