Question 1

On average, the percentage of exporting firms in a U.S. industry is:

Accepted Answer

A)  9. 
B)  14. 
C)  18. 
D)  22. 
E)  27. 
A)  9. 
B)  14. 
C)  18. 
D)  22. 
E)  27.

Question 2

The movement of production to low-wage countries is the major reason for job losses in manufacturing in the U.S.

Accepted Answer

A) True 
 B)False

Question 3

O in the OLI approach refers to:

Accepted Answer

A)  overseas. 
B)  organization. 
C)  ownership. 
D)  officers. 
E)  optimization. 
A)  overseas. 
B)  organization. 
C)  ownership. 
D)  officers. 
E)  optimization.

Question 4

Which statement concerning the OLI approach is not true?

Accepted Answer

A)  O denotes ownership of an important asset. 
B)  L denotes a locational advantage. 
C)  I denotes international economies of scale. 
D)  I denotes internalization. 
E)  I denotes industrialization. 
A)  O denotes ownership of an important asset. 
B)  L denotes a locational advantage. 
C)  I denotes international economies of scale. 
D)  I denotes internalization. 
E)  I denotes industrialization.

Question 5

Firms in industries vary widely in productivity levels.

Accepted Answer

A) True 
 B)False

Question 6

At the firm level, a proxy for the quality of management is:

Accepted Answer

A)  the ability to pay low wages. 
B)  a low K/L ratio. 
C)  high TFP. 
D)  all of the above. 
E)  none of the above. 
A)  the ability to pay low wages. 
B)  a low K/L ratio. 
C)  high TFP. 
D)  all of the above. 
E)  none of the above.

Question 7

The highest percentage of firms exporting in any U.S. industry is 38.

Accepted Answer

A) True 
 B)False

Question 8

MNCs never internalize any operation that could theoretically be delegated to an outside firm.

Accepted Answer

A) True 
 B)False

Question 9

Research on the firm in international trade began in the:

Accepted Answer

A)  1970s. 
B)  1980s. 
C)  1990s. 
D)  2000s. 
E)  2007. 
A)  1970s. 
B)  1980s. 
C)  1990s. 
D)  2000s. 
E)  2007.

Question 10

The movement of part of the production process to obtain lower wages would be an example of:

Accepted Answer

A)  internalization. 
B)  location. 
C)  ownership. 
D)  vertical FDI. 
E)  horizontal FDI. 
A)  internalization. 
B)  location. 
C)  ownership. 
D)  vertical FDI. 
E)  horizontal FDI.

Question 11

Suppose that the corporate income tax rate is 60 percent in Germany and 35 percent in the U.S. If a German firm had a wholly owned subsidiary in the U.S., then which of the following statements would be true?

Accepted Answer

A)  The firm would charge the American subsidiary high prices on anything purchased from the parent firm in Germany. 
B)  The firm would charge the American subsidiary as low a price as it could justify to the German tax authorities. 
C)  The firm would never sell anything to the American subsidiary because of tax complications involved in these types of transactions. 
D)  The firm would allocate as much as possible of the firm's activities such as research and development to the American subsidiary. 
E)  None of the above 
A)  The firm would charge the American subsidiary high prices on anything purchased from the parent firm in Germany. 
B)  The firm would charge the American subsidiary as low a price as it could justify to the German tax authorities. 
C)  The firm would never sell anything to the American subsidiary because of tax complications involved in these types of transactions. 
D)  The firm would allocate as much as possible of the firm's activities such as research and development to the American subsidiary. 
E)  None of the above

Question 12

A multinational corporation that has separated production into several distinct stages is horizontally integrated.

Accepted Answer

A) True 
 B)False

Question 13

Most of the FDI in the world occurs among:

Accepted Answer

A)  low-income countries. 
B)  middle-income countries. 
C)  high-income countries. 
D)  Asian countries. 
E)  Latin American countries. 
A)  low-income countries. 
B)  middle-income countries. 
C)  high-income countries. 
D)  Asian countries. 
E)  Latin American countries.

Question 14

Exporting firms are:

Accepted Answer

A)  large. 
B)  more productive. 
C)  primarily engaged in servicing the domestic market. 
D)  all of the above 
E)  none of the above 
A)  large. 
B)  more productive. 
C)  primarily engaged in servicing the domestic market. 
D)  all of the above 
E)  none of the above

Question 15

Sales by foreign affiliates in the world economy are approximately:

Accepted Answer

A)  $1.3 trillion. 
B)  $7.0 trillion. 
C)  $10 trillion. 
D)  $22 trillion. 
E)  $32.5 trillion. 
A)  $1.3 trillion. 
B)  $7.0 trillion. 
C)  $10 trillion. 
D)  $22 trillion. 
E)  $32.5 trillion.

Question 16

National treatment:

Accepted Answer

A)  means that domestic firms are taxed at a lower rate than foreign firms. 
B)  means that foreign firms are taxed at a lower rate than domestic firms. 
C)  is more prevalent in developing countries than in OECD countries. 
D)  means that foreign firms and domestic firms are both treated the same way. 
E)  means that local taxes are lower than taxes on MNCs. 
A)  means that domestic firms are taxed at a lower rate than foreign firms. 
B)  means that foreign firms are taxed at a lower rate than domestic firms. 
C)  is more prevalent in developing countries than in OECD countries. 
D)  means that foreign firms and domestic firms are both treated the same way. 
E)  means that local taxes are lower than taxes on MNCs.

Question 17

Draw a graph and explain the relationship between TFP and the profits of the firm.

Accepted Answer

To draw a graph and explain the relation

Question 18

Describe the OLI approach to the existence of MNCs.

Accepted Answer

The OLI approach, also known as the ecle

Question 19

Economies of scales means that average costs decline as output expands.

Accepted Answer

A) True 
 B)False

Question 20

Firms with high TFP tend not to enter new markets.

Accepted Answer

A) True 
 B)False

On average, the percentage of exporting firms in a U.S. industry is:

The movement of production to low-wage countries is the major reason for job losses in manufacturing in the U.S.

O in the OLI approach refers to:

Which statement concerning the OLI approach is not true?

Firms in industries vary widely in productivity levels.

At the firm level, a proxy for the quality of management is:

The highest percentage of firms exporting in any U.S. industry is 38.

MNCs never internalize any operation that could theoretically be delegated to an outside firm.

Research on the firm in international trade began in the:

The movement of part of the production process to obtain lower wages would be an example of:

Suppose that the corporate income tax rate is 60 percent in Germany and 35 percent in the U.S. If a German firm had a wholly owned subsidiary in the U.S., then which of the following statements would be true?

A multinational corporation that has separated production into several distinct stages is horizontally integrated.

Most of the FDI in the world occurs among:

Exporting firms are:

Sales by foreign affiliates in the world economy are approximately:

National treatment:

Draw a graph and explain the relationship between TFP and the profits of the firm.

Describe the OLI approach to the existence of MNCs.

Economies of scales means that average costs decline as output expands.

Firms with high TFP tend not to enter new markets.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters

Exam 6: The Firm in the World Economy

On average, the percentage of exporting firms in a U.S. industry is:

The movement of production to low-wage countries is the major reason for job losses in manufacturing in the U.S.

O in the OLI approach refers to:

Which statement concerning the OLI approach is not true?

Firms in industries vary widely in productivity levels.

At the firm level, a proxy for the quality of management is:

The highest percentage of firms exporting in any U.S. industry is 38.

MNCs never internalize any operation that could theoretically be delegated to an outside firm.

Research on the firm in international trade began in the:

The movement of part of the production process to obtain lower wages would be an example of:

Suppose that the corporate income tax rate is 60 percent in Germany and 35 percent in the U.S. If a German firm had a wholly owned subsidiary in the U.S., then which of the following statements would be true?

A multinational corporation that has separated production into several distinct stages is horizontally integrated.

Most of the FDI in the world occurs among:

Exporting firms are:

Sales by foreign affiliates in the world economy are approximately:

National treatment:

Draw a graph and explain the relationship between TFP and the profits of the firm.

Describe the OLI approach to the existence of MNCs.

Economies of scales means that average costs decline as output expands.

Firms with high TFP tend not to enter new markets.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters