Requiring a firm with international operations to follow the standards of its home country instead of those of the foreign country has all of the following advantages EXCEPT
A) it takes care of the fear of a race-to-the-bottom by making it impossible for a home-based company to exploit low standards.
B) it shifts the costs of improved standards to firms and consumers in high-income countries.
C) it avoids the problems of high-income countries dictating what standards are to be used. In this situation, firms that cross national boundaries must conform to whichever standards are higher.
D) it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.
D
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If reserves in the banking system increase by $100, then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is
A) 0.01. B) 0.05. C) 0.10. D) 0.20.
Which of the following would be most likely to improve the standard of living of a less-developed country?
a. development of strong labor unions. b. more foreign investment, attracted by the expectation of economic and political stability. c. adoption of trade barriers (higher tariffs and quotas). d. widespread use of price controls to allocate goods and resources.