Suppose that an America-based multinational company set up two subsidiaries in China. The parent company signed a sales contract between the subsidiaries, which stipulated that the parent company would make the delivery to one of the subsidiaries in Shanghai, which should forward some of the goods to another subsidiary at Chengdu. Question: Is the transaction between the parent company and the two subsidiaries an international trade? Please provide your explanation.

Suppose that an America-based multinational company set up two subsidiaries in China. The parent company signed a sales contract between the subsidiaries, which stipulated that the parent company would make the delivery to one of the subsidiaries in Shanghai, which should forward some of the goods to another subsidiary at Chengdu. Question: Is the transaction between the parent company and the two subsidiaries an international trade? Please provide your explanation.

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains Rrom Trade

Section: Chapter Questions

Problem 9PA

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