Terrorism creates an economic risk for firms which
A) reduces the amount of investment foreign companies will make in a country perceived to be terror-prone.
B) is created by governmental bans on doing business with terrorist regimes.
C) is offset by the above-average returns for firms which have learned how to operate in such an environment.
D) is absorbed by firms which are highly geographically diversified and which operate in both secure and insecure locations.

Question

Quizplus · Accepted Answer

Terrorism can create a perception of instability and insecurity in a country, which can deter foreign investment and ultimately reduce an economy's growth potential. This creates an economic risk for firms operating within the country, as they may face reduced demand for their goods and services or higher costs of operation due to security measures.

Terrorism Creates an Economic Risk for Firms Which