Scenario: Blickinstock at the Crossroads
Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin America. To that end, Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary. Keith Moon, Blickinstock's vice president of global business development, will be making a presentation to the board outlining the company's options.
-If Blickinstock's home government tries to stop the company from investing in Latin America, the government may be trying to ________.
A) protect its balance of payments
B) prevent a monopoly situation from occurring
C) instill a spirit of camaraderie among its home companies
D) determine whether Blickinstock is a "sunset" company

Question

Quizplus · Accepted Answer

If the government tries to stop Blickinstock from investing in Latin America, it is likely trying to protect its balance of payments. This refers to the country's total financial transactions with other countries and a government may try to limit outflows of capital to maintain a favorable balance of payments.