Question 1

Which of the following explains why China has been receiving so much FDI?

Accepted Answer

A)  There has been heavy investment by the government. 
B)  The economy is growing rapidly. 
C)  Growth in income is highly concentrated in the hands of the middle classes. 
D)  It is a huge economy, with a massive population. 
E)  All of the above 
A)  There has been heavy investment by the government. 
B)  The economy is growing rapidly. 
C)  Growth in income is highly concentrated in the hands of the middle classes. 
D)  It is a huge economy, with a massive population. 
E)  All of the above

Question 2

A horizontally integrated multinational is one that

Accepted Answer

A)  exports more than 50% of output. 
B)  produces different products in different countries. 
C)  produces various stages of production in different countries. 
D)  produces the same product in more than one country. 
A)  exports more than 50% of output. 
B)  produces different products in different countries. 
C)  produces various stages of production in different countries. 
D)  produces the same product in more than one country.

Question 3

A conglomerate multinational is one that produces different products in different countries.

Accepted Answer

A) True 
 B)False

Question 4

Why does locating in a foreign country that imposes tariffs on imports give a MNC a competitive advantage?

Accepted Answer

The MNC will gain a competitive advantag

Question 5

Trading internationally may prolong a product's life cycle.

Accepted Answer

A) True 
 B)False

Question 6

The product life cycle model helps explain why

Accepted Answer

A)  firms always locate where labour is cheapest per hour. 
B)  firms may first export and then engage in FDI. 
C)  may engage in FDI at the launch stage. 
D)  all of the above 
A)  firms always locate where labour is cheapest per hour. 
B)  firms may first export and then engage in FDI. 
C)  may engage in FDI at the launch stage. 
D)  all of the above

Question 7

What are the main drivers of globalisation?

Accepted Answer

• Market drivers, e.g. the establishment

Question 8

A vertically integrated multinational is one that

Accepted Answer

A)  produces different products in different countries. 
B)  produces various stages of production in different countries. 
C)  exports more than 50% of output. 
D)  produces the same product in more than one country. 
A)  produces different products in different countries. 
B)  produces various stages of production in different countries. 
C)  exports more than 50% of output. 
D)  produces the same product in more than one country.

Question 9

Give two indicators of the degree of globalisation and how it is changing.

Accepted Answer

There are several possible indicators, i

Question 10

Which of the following is/are causes of globalisation?

Accepted Answer

A)  Restrictions on trade are being removed. 
B)  Currency speculation has grown. 
C)  Trade is growing faster than GDP. 
D)  A and B 
E)  A, B and C 
A)  Restrictions on trade are being removed. 
B)  Currency speculation has grown. 
C)  Trade is growing faster than GDP. 
D)  A and B 
E)  A, B and C

Question 11

Investing in developing economies is likely to be much riskier than investing in developed market economies, and returns are likely to be considerably lower.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a disadvantage to a developing host country?

Accepted Answer

A)  Transfer pricing may prevent substantial tax revenues from being raised from FDI. 
B)  Profits are unlikely to remain in the host country, but instead will be repatriated. 
C)  Domestic producers in the host country may be driven from the market. 
D)  The inputs to production are typically bought in the host country and the high demand can force up prices. 
E)  Governments of potential host nations tend to compete with other developing countries and so may end up offering deals to MNCs that are not particularly beneficial to them as a host nation. 
A)  Transfer pricing may prevent substantial tax revenues from being raised from FDI. 
B)  Profits are unlikely to remain in the host country, but instead will be repatriated. 
C)  Domestic producers in the host country may be driven from the market. 
D)  The inputs to production are typically bought in the host country and the high demand can force up prices. 
E)  Governments of potential host nations tend to compete with other developing countries and so may end up offering deals to MNCs that are not particularly beneficial to them as a host nation.

Question 13

What are some of the possible disadvantages of globalisation?

Accepted Answer

Globalisation may allow MNCs to exploit

Question 14

Which of the following is not one of the key gaps that FDI can help to fill?

Accepted Answer

A)  Public finance gap 
B)  Skills and technology gap 
C)  The savings gap 
D)  The foreign exchange gap 
E)  Income gap 
A)  Public finance gap 
B)  Skills and technology gap 
C)  The savings gap 
D)  The foreign exchange gap 
E)  Income gap

Question 15

The effects of a multinational creating import substitutions are reduced if profits are repatriated.

Accepted Answer

A) True 
 B)False

Question 16

Mergers and acquisitions fell during the recession of the late 2000s.

Accepted Answer

A) True 
 B)False

Question 17

What is a multinational corporation?

Accepted Answer

A)  A business that sells in domestic and overseas markets 
B)  A business that has owners who are located in more than one country 
C)  A business that buys and sells in domestic and overseas markets 
D)  A business that either owns or controls foreign subsidiaries in more than one country 
A)  A business that sells in domestic and overseas markets 
B)  A business that has owners who are located in more than one country 
C)  A business that buys and sells in domestic and overseas markets 
D)  A business that either owns or controls foreign subsidiaries in more than one country

Question 18

Firms may become MNCs in order to access

Accepted Answer

A)  economies of scale. 
B)  managerial skills. 
C)  better quality inputs. 
D)  all of the above. 
A)  economies of scale. 
B)  managerial skills. 
C)  better quality inputs. 
D)  all of the above.

Question 19

Which of the following is the largest multinational?

Accepted Answer

A)  Chevron 
B)  Wal- Mart stores 
C)  Exxon Mobil 
D)  BP 
E)  Royal Dutch Shell 
A)  Chevron 
B)  Wal- Mart stores 
C)  Exxon Mobil 
D)  BP 
E)  Royal Dutch Shell

Question 20

During the maturity stage of the product life cycle, we would expect to see a MNC exporting.

Accepted Answer

A) True 
 B)False

Exam 23: Globalisation and Multinational Business

Which of the following explains why China has been receiving so much FDI?

A horizontally integrated multinational is one that

A conglomerate multinational is one that produces different products in different countries.

Why does locating in a foreign country that imposes tariffs on imports give a MNC a competitive advantage?

Trading internationally may prolong a product's life cycle.

The product life cycle model helps explain why

What are the main drivers of globalisation?

A vertically integrated multinational is one that

Give two indicators of the degree of globalisation and how it is changing.

Which of the following is/are causes of globalisation?

Investing in developing economies is likely to be much riskier than investing in developed market economies, and returns are likely to be considerably lower.

Which of the following is a disadvantage to a developing host country?

What are some of the possible disadvantages of globalisation?

Which of the following is not one of the key gaps that FDI can help to fill?

The effects of a multinational creating import substitutions are reduced if profits are repatriated.

Mergers and acquisitions fell during the recession of the late 2000s.

What is a multinational corporation?

Firms may become MNCs in order to access

Which of the following is the largest multinational?

During the maturity stage of the product life cycle, we would expect to see a MNC exporting.

The Business Environment and Business Economics

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