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Which of the following is not an example of political risk? a
Which of the following is not an example of political risk?
a. Government may impose taxes on subsidiary
b. Government may impose barriers on subsidiary
c. Consumers may boycott the MNC
d. Consumers' income levels will decrease, thus decreasing consumption.
Expert Solution
The correct answer is d. Consumers' income levels will decrease, thus decreasing consumption.
Political risk refers to events which take place due to political changes or instability, such as an increase in tariffs and taxes. Meanwhile, a decrease of consumer income, which leads to a reduction in the consumption level, is due to economic factors that affect growth, such as an increase in unemployment levels. This is not a political risk.
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