What does the term 'Foreign Investment' most accurately describe in the context of global economics?
A. The income from citizens working abroad
B. Government spending on public projects
C. A country's total trade balance
D. Payments not made in exchange for goods or services
Answer (1)
The correct answer is letter B.Foreign Investment happens when people, businesses, or governments from one country put their money into another country’s economy. This can be done in two main ways:Direct Investment – For example, when a company from Japan builds a factory in the Philippines, hires workers, and operates it.Portfolio Investment – For example, when someone in the US buys shares in a Philippine company or invests in Philippine government bonds.Foreign investment is helpful because it brings new money into the country. It can help create jobs, bring in new technology, and increase business opportunities. For example, when BPO (Business Process Outsourcing) companies set up offices in the Philippines, they hire thousands of workers and pay taxes to the government.However, there are also risks. If investors suddenly pull out their money (for example, because of political instability), it can hurt the economy. That’s why countries must balance welcoming foreign investors while protecting their economy.
