Question

The government of Aquardica recently passed a law requiring any foreign company that wants to do business in its country to take back 60 percent of the revenue it is earning, and investing the remaining 40 percent back into the country. As a result, many foreign companies are rethinking their strategy to expand into Aquardica. This is a type of _____ faced by companies that want to conduct business in Aquardica.

Answer 1

Answer:This is a type of POLICY UNCERTAINTY faced by companies that want to conduct business in Aquardica.

Explanation:

Policy uncertainty occurs where the economy isn't stable and the policy made by the government are uncertain which makes business owners and individuals be hesitant to even make investments until the uncertainty bis resolved.

The uncertainty is usually based on not trusting the policy makers in the decisions on policies and how those policies will influence the economy.

During times of election there is always some conflict between parties where there is no clear path to who will be leading this is when uncertainty strikes business owners.

Then uncertainty also begins when the new political leaders come to lead because no one knows what policy changes will they make.

Answer 2

Answer:

Policy Uncertainty

Explanation:

Policy uncertainty (also called system instability) is a form of financial risk in which the future direction of government policy is unknown, increasing risk premia and causing companies and people to defer investment and growth until the whole uncertainty has been settled.