It is sensible for an IC to direct or allocate as much profit as reasonably possible to subsidiaries in countries with:
A) problematic labor relations.
B) the most currency controls.
C) higher taxes.
D) the highest rate of inflation.
E) the least social unrest.

Question

Quizplus · Accepted Answer

If the host country of one of the subsidiaries has lower taxes than the other host countries, the IC will try to maximize profits in the lower-tax country and reduce them in the higher-tax country. Other factors that affect the allocation of profit among host countries include country differences in currency controls, labor relations, political climate, and social unrest. It is sensible to direct as much profit as reasonably possible to subsidiaries in countries with the fewest currency controls, the best labor relations and political climate, and the least social unrest.

It Is Sensible for an IC to Direct or Allocate