The government of Diarmina recently passed a law that requires foreign companies to partner with Diarminian companies if they want to conduct their business in the country. Many investors and companies started to pull their funds and business out of the country because of this. This scenario exemplifies _____.
A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question

Quizplus · Accepted Answer

The scenario exemplifies policy uncertainty because companies and investors are uncertain about the government's policies regarding foreign businesses in the country. The new law requiring foreign companies to partner with local companies creates uncertainty about the business environment in Diarmina. This type of policy can discourage foreign investment, which can have negative economic consequences for the country.

The Government of Diarmina Recently Passed a Law That Requires