With reference to the definition of MNCs, consider the following statements: 1. A Multinational Corporation (MNC) is defined as a company that produces goods only in its home country but sells them globally. 2. MNCs typically set up offices and factories in regions where they can get cheap labour and other resources. 3. The investment made by MNCs in foreign countries to buy assets is termed as foreign investment. Which of the statements given above is/are correct?

The correct option is 2 and 3 only. Explanation Multinational Corporations (MNCs) are large companies that operate in more than one country and play a central role in the process of globalisation through production, investment, and trade across borders. Statement-wise Analysis: - Statement 1 - Incorrect. An MNC is not limited to producing goods only in its home country; it typically owns or controls production facilities in multiple countries. - Statement 2 - Correct. MNCs often establish offices and factories in regions where labour, raw materials, and other resources are available at lower cost to maximize profits. - Statement 3 - Correct. Investment made by MNCs in foreign countries to acquire assets such as land, factories, or machinery is termed foreign investment. Key Takeaway: MNCs operate across countries by locating production where costs are lower, and their overseas asset acquisition constitutes foreign investment.

NCERT Class 10 Economics — Chapter 4: Globalisation and the Indian Economy

mcqeasy

With reference to the definition of MNCs, consider the following statements:

A Multinational Corporation (MNC) is defined as a company that produces goods only in its home country but sells them globally.
MNCs typically set up offices and factories in regions where they can get cheap labour and other resources.
The investment made by MNCs in foreign countries to buy assets is termed as foreign investment.

Which of the statements given above is/are correct?

Official previous-year question

Verified 1 Aug 2026.

Options

A2 only
B2 and 3 only
C1, 2 and 3
D1 and 2 only

Did you get this right?

Solution

The correct option is 2 and 3 only.

Explanation

Multinational Corporations (MNCs) are large companies that operate in more than one country and play a central role in the process of globalisation through production, investment, and trade across borders.

Statement-wise Analysis:

Statement 1 - Incorrect. An MNC is not limited to producing goods only in its home country; it typically owns or controls production facilities in multiple countries.
Statement 2 - Correct. MNCs often establish offices and factories in regions where labour, raw materials, and other resources are available at lower cost to maximize profits.
Statement 3 - Correct. Investment made by MNCs in foreign countries to acquire assets such as land, factories, or machinery is termed foreign investment.

Key Takeaway: MNCs operate across countries by locating production where costs are lower, and their overseas asset acquisition constitutes foreign investment.

Your note

More from Chapter 4: Globalisation and the Indian Economy

The term "Containerisation" in the context of globalisation has primarily led to: 1. Huge reduction in port handling costs. 2. Increased time required for the delivery of goods to export markets. 3. Ability to load goods intact onto ships, railways, planes, and trucks. Which of the statements given above is/are correct?

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Which international organisation is primarily mandated to establish rules regarding global trade and ensure their compliance?

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The rapid improvement in which of the following has been the major factor stimulating the globalisation process?

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Which one of the following is NOT a primary factor considered by Multinational Corporations (MNCs) when establishing production units in a country?

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In the context of globalisation in India, which one of the following industries has generally remained resilient compared to others where small manufacturers faced stiff competition?

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The correct option is 2 and 3 only.

Explanation

Statement-wise Analysis:

Statement 1 - Incorrect. An MNC is not limited to producing goods only in its home country; it typically owns or controls production facilities in multiple countries.
Statement 2 - Correct. MNCs often establish offices and factories in regions where labour, raw materials, and other resources are available at lower cost to maximize profits.
Statement 3 - Correct. Investment made by MNCs in foreign countries to acquire assets such as land, factories, or machinery is termed foreign investment.

Key Takeaway: MNCs operate across countries by locating production where costs are lower, and their overseas asset acquisition constitutes foreign investment.