Question 1

Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive.

Accepted Answer

A) True 
 B)False

Question 2

Vernon's theory says that firms invest in a foreign country when:

Accepted Answer

A) demand is high and supply is low. 
B) demand in that country will support foreign economic conditions. 
C) demand in that country will support local production. 
D) demand is high and raw materials in that country can meet production needs. 
E) market demand is growing 
A) demand is high and supply is low. 
B) demand in that country will support foreign economic conditions. 
C) demand in that country will support local production. 
D) demand is high and raw materials in that country can meet production needs. 
E) market demand is growing

Question 3

When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____________ occurs.

Accepted Answer

A) reciprocal foreign investment 
B) cross-boarder international investment 
C) international capital investment 
D) international expansion 
E) foreign direct investment 
A) reciprocal foreign investment 
B) cross-boarder international investment 
C) international capital investment 
D) international expansion 
E) foreign direct investment

Question 4

Host government use a range of controls to restrict FDI.The two most common are

Accepted Answer

A) monetary restraints and performance requirements. 
B) technology transfer restraints and employment restraints. 
C) ownership restraints and performance requirements. 
D) employment restraints and repatriation limitations. 
E) foreign corporate tax levies and ownership restraints 
A) monetary restraints and performance requirements. 
B) technology transfer restraints and employment restraints. 
C) ownership restraints and performance requirements. 
D) employment restraints and repatriation limitations. 
E) foreign corporate tax levies and ownership restraints

Question 5

_____________ occurs, according to the U.S.Department of Commerce, whenever a U.S.citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign business entity.

Accepted Answer

A) Cross-boarder international investment 
B) Foreign direct investment 
C) Reciprocal foreign investment 
D) International capital investment 
E) International currency transfer 
A) Cross-boarder international investment 
B) Foreign direct investment 
C) Reciprocal foreign investment 
D) International capital investment 
E) International currency transfer

Question 6

The United States, the United Kingdom, France and Japan account for ______________% of all FDI outflows in 2009

Accepted Answer

A) 3.5% 
B) 7% 
C) 10% 
D) 20% 
E) 23% 
A) 3.5% 
B) 7% 
C) 10% 
D) 20% 
E) 23%

Question 7

Which of the following two statements accurately reflects the trend in foreign direct investments over the past 20 years?

Accepted Answer

A) There has been a rapid increase in the total volume of FDI undertaken and there has been a change in the importance of various countries as sources for FDI 
B) There has been a rapid increase in the total volume of FDI undertaken and the countries that have been instrumental as sources of FDI have remained the same 
C) There has been a rapid decrease in the total volume of FDI undertaken and there has been a change in the importance of various countries as sources for FDI. 
D) There has been a rapid decrease in the total volume of FDI undertaken and the countries that have been instrumental as sources of FDI have remained the same 
E) There has been a slow increase in the total volume of FDI undertaken and there has been no change in the importance of various countries as sources for FDI 
A) There has been a rapid increase in the total volume of FDI undertaken and there has been a change in the importance of various countries as sources for FDI 
B) There has been a rapid increase in the total volume of FDI undertaken and the countries that have been instrumental as sources of FDI have remained the same 
C) There has been a rapid decrease in the total volume of FDI undertaken and there has been a change in the importance of various countries as sources for FDI. 
D) There has been a rapid decrease in the total volume of FDI undertaken and the countries that have been instrumental as sources of FDI have remained the same 
E) There has been a slow increase in the total volume of FDI undertaken and there has been no change in the importance of various countries as sources for FDI

Question 8

A country's _______________ tracks both its payments to and its receipts from other countries.

Accepted Answer

A) pluses and minuses account 
B) debits and credits account 
C) checks and balances account 
D) balance-of-payments account 
E) current account 
A) pluses and minuses account 
B) debits and credits account 
C) checks and balances account 
D) balance-of-payments account 
E) current account

Question 9

The licensor _____________ in return for licensing one of its products to a foreign firm.

Accepted Answer

A) gets preferential trade treatment from the country of the licensee 
B) gets a special subsidy from the country of the licensee 
C) collects a royalty fee on every unit the licensee sells 
D) gets a one time payment from the licensee 
E) protects their local market 
A) gets preferential trade treatment from the country of the licensee 
B) gets a special subsidy from the country of the licensee 
C) collects a royalty fee on every unit the licensee sells 
D) gets a one time payment from the licensee 
E) protects their local market

Question 10

Flexible interest rates and loans are the most commons incentives governments offer to get foreign firms to invest in their countries.

Accepted Answer

A) True 
 B)False

Question 11

Raymond Vernon's view of foreign direct investment is that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.

Accepted Answer

A) True 
 B)False

Question 12

Ownership restraints and profit requirements are the two most common ways host governments restrict FDI.

Accepted Answer

A) True 
 B)False

Question 13

_______________ involves producing goods at home and then shipping them to the receiving country for sale.

Accepted Answer

A) Foreign direct investment 
B) Licensing 
C) Franchising 
D) Exporting 
E) Offshoring 
A) Foreign direct investment 
B) Licensing 
C) Franchising 
D) Exporting 
E) Offshoring

Question 14

Canada continues to restrict FDI into _________________.

Accepted Answer

A) railroads 
B) nuclear power generation 
C) the Alberta tar sands 
D) airlines 
E) land 
A) railroads 
B) nuclear power generation 
C) the Alberta tar sands 
D) airlines 
E) land

Question 15

The trend towards liberalization throughout the world is continuing to increase.

Accepted Answer

A) True 
 B)False

Question 16

How can FDI help a country achieve a current account surplus?

Accepted Answer

A) If the FDI is a substitute for exports of goods or services, the effect can be to improve the current account of the host country's balance of payments. 
B) When the MNE uses a foreign subsidiary to import goods and services to other countries. 
C) When the MNE uses a foreign subsidiary to export goods and services to other countries. 
D) If the FDI is a substitute for imports of goods or services, the effect can be positive on the current account of the home-country's balance of payments. 
E) When the MNE transfers monies to finance the FDI 
A) If the FDI is a substitute for exports of goods or services, the effect can be to improve the current account of the host country's balance of payments. 
B) When the MNE uses a foreign subsidiary to import goods and services to other countries. 
C) When the MNE uses a foreign subsidiary to export goods and services to other countries. 
D) If the FDI is a substitute for imports of goods or services, the effect can be positive on the current account of the home-country's balance of payments. 
E) When the MNE transfers monies to finance the FDI

Question 17

Regarding FDI, many host governments are concerned that key decisions that can affect the host country's economy will be made by a local instead of foreign parent.

Accepted Answer

A) True 
 B)False

Question 18

_______________, a branch of economics, seeks to explain why firms often prefer foreign direct investment to licensing as a strategy for entering foreign markets.

Accepted Answer

A) Comparative advantage theory 
B) Globalization theory 
C) Cosmopolitan theory 
D) Internalization theory 
E) Patterns of FDI 
A) Comparative advantage theory 
B) Globalization theory 
C) Cosmopolitan theory 
D) Internalization theory 
E) Patterns of FDI

Question 19

Which is a possible adverse effect of FDI on a host country's balance-of-payments position?

Accepted Answer

A) When a foreign subsidiary exports a substantial number of its outputs abroad. 
B) When a foreign subsidiary gets a substantial number of its inputs from its host-country. 
C) When most of the foreign subsidiary's management team is from the home country. 
D) Set against the initial capital inflow that comes with FDI must be the subsequent outflow of income as the foreign subsidiary repatriates earnings to its parent company. 
E) the increased competition weakens domestic companies reducing local production and increasing imports 
A) When a foreign subsidiary exports a substantial number of its outputs abroad. 
B) When a foreign subsidiary gets a substantial number of its inputs from its host-country. 
C) When most of the foreign subsidiary's management team is from the home country. 
D) Set against the initial capital inflow that comes with FDI must be the subsequent outflow of income as the foreign subsidiary repatriates earnings to its parent company. 
E) the increased competition weakens domestic companies reducing local production and increasing imports

Question 20

If a Canadian corporation decides to create FDI in Mexico because the new plant site has lower costs, this can cause Canadato:

Accepted Answer

A) lose out on taxes because Mexico will receive them for the new site. 
B) deteriorate its trade position. 
C) have an increase in its unemployment rate. 
D) have a decrease in its unemployment rate. 
E) experience increased corporate profits 
A) lose out on taxes because Mexico will receive them for the new site. 
B) deteriorate its trade position. 
C) have an increase in its unemployment rate. 
D) have a decrease in its unemployment rate. 
E) experience increased corporate profits

Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive.

Vernon's theory says that firms invest in a foreign country when:

When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____________ occurs.

Host government use a range of controls to restrict FDI.The two most common are

_____________ occurs, according to the U.S.Department of Commerce, whenever a U.S.citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign business entity.

The United States, the United Kingdom, France and Japan account for ______________% of all FDI outflows in 2009

Which of the following two statements accurately reflects the trend in foreign direct investments over the past 20 years?

A country's _______________ tracks both its payments to and its receipts from other countries.

The licensor _____________ in return for licensing one of its products to a foreign firm.

Flexible interest rates and loans are the most commons incentives governments offer to get foreign firms to invest in their countries.

Raymond Vernon's view of foreign direct investment is that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.

Ownership restraints and profit requirements are the two most common ways host governments restrict FDI.

_______________ involves producing goods at home and then shipping them to the receiving country for sale.

Canada continues to restrict FDI into _________________.

The trend towards liberalization throughout the world is continuing to increase.

How can FDI help a country achieve a current account surplus?

Regarding FDI, many host governments are concerned that key decisions that can affect the host country's economy will be made by a local instead of foreign parent.

_______________, a branch of economics, seeks to explain why firms often prefer foreign direct investment to licensing as a strategy for entering foreign markets.

Which is a possible adverse effect of FDI on a host country's balance-of-payments position?

If a Canadian corporation decides to create FDI in Mexico because the new plant site has lower costs, this can cause Canadato:

Globalization

Country Differences in Political Economy

The Cultural Environment

Ethics in International Business

International Trade Theories

The Political Economy of International Trade

Regional Economic Integration

The Foreign Exchange Market

The Global Monetary System

Global Strategy

Entering Foreign Markets

Exporting, Importing, and Countertrade

Global Marketing and RD

Global Production, Outsourcing, and Logistics

Global Human Resource Management

Filters

Exam 7: Foreign Direct Investment

Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive.

Vernon's theory says that firms invest in a foreign country when:

When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____________ occurs.

Host government use a range of controls to restrict FDI.The two most common are

_____________ occurs, according to the U.S.Department of Commerce, whenever a U.S.citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign business entity.

The United States, the United Kingdom, France and Japan account for ______________% of all FDI outflows in 2009

Which of the following two statements accurately reflects the trend in foreign direct investments over the past 20 years?

A country's _______________ tracks both its payments to and its receipts from other countries.

The licensor _____________ in return for licensing one of its products to a foreign firm.

Flexible interest rates and loans are the most commons incentives governments offer to get foreign firms to invest in their countries.

Raymond Vernon's view of foreign direct investment is that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.

Ownership restraints and profit requirements are the two most common ways host governments restrict FDI.

_______________ involves producing goods at home and then shipping them to the receiving country for sale.

Canada continues to restrict FDI into _________________.

The trend towards liberalization throughout the world is continuing to increase.

How can FDI help a country achieve a current account surplus?

Regarding FDI, many host governments are concerned that key decisions that can affect the host country's economy will be made by a local instead of foreign parent.

_______________, a branch of economics, seeks to explain why firms often prefer foreign direct investment to licensing as a strategy for entering foreign markets.

Which is a possible adverse effect of FDI on a host country's balance-of-payments position?

If a Canadian corporation decides to create FDI in Mexico because the new plant site has lower costs, this can cause Canadato:

Globalization

Country Differences in Political Economy

The Cultural Environment

Ethics in International Business

International Trade Theories

The Political Economy of International Trade

Regional Economic Integration

The Foreign Exchange Market

The Global Monetary System

Global Strategy

Entering Foreign Markets

Exporting, Importing, and Countertrade

Global Marketing and RD

Global Production, Outsourcing, and Logistics

Global Human Resource Management

Filters