Question 1

If the FDI is a substitute for imports of goods or services, the effect can be to improve the _____ of the host country's balance of payments.

Accepted Answer

A)  offshore account 
B)  currency account 
C)  market imperfections 
D)  current account 
A)  offshore account 
B)  currency account 
C)  market imperfections 
D)  current account

Question 2

Host country citizens that are employed by an MNE following an FDI are an example of a(n) _____ of FDI.

Accepted Answer

A)  internality 
B)  direct effect 
C)  externality 
D)  indirect effect 
A)  internality 
B)  direct effect 
C)  externality 
D)  indirect effect

Question 3

Which of the following is a home-country policy aimed at limiting outward FDI flow?

Accepted Answer

A)  Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings 
B)  Implementation of government-backed insurance programs to cover major types of foreign investment risk 
C)  Eliminating double taxation of foreign income 
D)  Persuading host countries to relax their restrictions on inbound FDI 
A)  Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings 
B)  Implementation of government-backed insurance programs to cover major types of foreign investment risk 
C)  Eliminating double taxation of foreign income 
D)  Persuading host countries to relax their restrictions on inbound FDI

Question 4

When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that:

Accepted Answer

A)  have a low value-to-weight ratio. 
B)  have a high value-to-weight ratio. 
C)  can be produced only in one region. 
D)  require locally-sourced raw materials. 
A)  have a low value-to-weight ratio. 
B)  have a high value-to-weight ratio. 
C)  can be produced only in one region. 
D)  require locally-sourced raw materials.

Question 5

According to the _____ view of FDI, MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

Accepted Answer

A)  imperialist 
B)  conservative 
C)  free market 
D)  radical 
A)  imperialist 
B)  conservative 
C)  free market 
D)  radical

Question 6

The free market view argues that international production should be distributed among countries according to the _____.

Accepted Answer

A)  eclectic paradigm 
B)  theory of competitive advantage 
C)  new trade theory 
D)  theory of comparative advantage 
A)  eclectic paradigm 
B)  theory of competitive advantage 
C)  new trade theory 
D)  theory of comparative advantage

Question 7

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Accepted Answer

A)  If the foreign subsidiary imports a substantial number of its inputs from abroad 
B)  If the FDI reduces existing employment opportunities 
C)  If the FDI is a substitute for imports of goods or services 
D)  If the FDI results in substitution of products produced domestically 
A)  If the foreign subsidiary imports a substantial number of its inputs from abroad 
B)  If the FDI reduces existing employment opportunities 
C)  If the FDI is a substitute for imports of goods or services 
D)  If the FDI results in substitution of products produced domestically

Question 8

Which of the following arises when a country is importing more goods and services than it is exporting?

Accepted Answer

A)  Current account surplus 
B)  Trade deficit 
C)  Trade surplus 
D)  Trade balance 
A)  Current account surplus 
B)  Trade deficit 
C)  Trade surplus 
D)  Trade balance

Question 9

The _____ of FDI refers to the amount of FDI undertaken over a year.

Accepted Answer

A)  stock 
B)  net value 
C)  accumulated value 
D)  flow 
A)  stock 
B)  net value 
C)  accumulated value 
D)  flow

Question 10

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely choose? Explain your answer.

Accepted Answer

FDI can take the form of a greenfield in

Question 11

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Accepted Answer

The main benefits of inward FDI for a ho

Question 12

Rivals rarely imitate what a firm does in an oligopoly.

Accepted Answer

A) True 
 B)False

Question 13

How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?

Accepted Answer

A)  By increased imports to the home country as a result of the FDI 
B)  By the subsequent inflow of foreign earnings 
C)  By substituting direct exports made earlier from the home country 
D)  By further investments usually made to expand foreign operations 
A)  By increased imports to the home country as a result of the FDI 
B)  By the subsequent inflow of foreign earnings 
C)  By substituting direct exports made earlier from the home country 
D)  By further investments usually made to expand foreign operations

Question 14

Which of the following observations concerning Knickerbocker's theory is true?

Accepted Answer

A)  It does not explain imitative FDI behavior by firms in oligopolistic industries. 
B)  Economists favor this theory as an explanation for FDI compared to the internalization theory. 
C)  It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad. 
D)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license. 
A)  It does not explain imitative FDI behavior by firms in oligopolistic industries. 
B)  Economists favor this theory as an explanation for FDI compared to the internalization theory. 
C)  It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad. 
D)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.

Question 15

Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?

Accepted Answer

A)  Tax rebates 
B)  Political pressure 
C)  Expropriation 
D)  Domestic risk insurance 
A)  Tax rebates 
B)  Political pressure 
C)  Expropriation 
D)  Domestic risk insurance

Question 16

Which of the following specifically reduces the viability of an exporting strategy specifically for products with low value-to-weight ratios?

Accepted Answer

A)  Foreign exchange controls 
B)  Trade barriers 
C)  Transportation costs 
D)  Output quality 
A)  Foreign exchange controls 
B)  Trade barriers 
C)  Transportation costs 
D)  Output quality

Question 17

Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?

Accepted Answer

A)  FDI has experienced a slower growth than world output. 
B)  FDI has accelerated faster than world trade growth. 
C)  FDI has remained the same over the past few decades. 
D)  FDI has dropped dramatically. 
A)  FDI has experienced a slower growth than world output. 
B)  FDI has accelerated faster than world trade growth. 
C)  FDI has remained the same over the past few decades. 
D)  FDI has dropped dramatically.

Question 18

When a firm is considering FDI, what are the some of the negotiating points it must weigh before making its decision?

Accepted Answer

Despite the move toward a free market st

Question 19

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as:

Accepted Answer

A)  location-specific advantages. 
B)  capital-specific advantages. 
C)  absolute advantages. 
D)  production factor advantages. 
A)  location-specific advantages. 
B)  capital-specific advantages. 
C)  absolute advantages. 
D)  production factor advantages.

Question 20

Which of the following is an example of a greenfield investment?

Accepted Answer

A)  A Chinese sugar maker setting up a sugar crushing facility in Cuba. 
B)  A Serbian automobile company purchasing a Croatian component manufacturer. 
C)  A Finnish mobile phone manufacturer expanding its production facility in Finland. 
D)  An Indian oil exploration company acquiring an oil refining company. 
A)  A Chinese sugar maker setting up a sugar crushing facility in Cuba. 
B)  A Serbian automobile company purchasing a Croatian component manufacturer. 
C)  A Finnish mobile phone manufacturer expanding its production facility in Finland. 
D)  An Indian oil exploration company acquiring an oil refining company.

If the FDI is a substitute for imports of goods or services, the effect can be to improve the _____ of the host country's balance of payments.

Host country citizens that are employed by an MNE following an FDI are an example of a(n) _____ of FDI.

Which of the following is a home-country policy aimed at limiting outward FDI flow?

When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that:

According to the _____ view of FDI, MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

The free market view argues that international production should be distributed among countries according to the _____.

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Which of the following arises when a country is importing more goods and services than it is exporting?

The _____ of FDI refers to the amount of FDI undertaken over a year.

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely choose? Explain your answer.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Rivals rarely imitate what a firm does in an oligopoly.

How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?

Which of the following observations concerning Knickerbocker's theory is true?

Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?

Which of the following specifically reduces the viability of an exporting strategy specifically for products with low value-to-weight ratios?

Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?

When a firm is considering FDI, what are the some of the negotiating points it must weigh before making its decision?

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as:

Which of the following is an example of a greenfield investment?

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 8: Foreign Direct Investment

If the FDI is a substitute for imports of goods or services, the effect can be to improve the _____ of the host country's balance of payments.

Host country citizens that are employed by an MNE following an FDI are an example of a(n) _____ of FDI.

Which of the following is a home-country policy aimed at limiting outward FDI flow?

When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that:

According to the _____ view of FDI, MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

The free market view argues that international production should be distributed among countries according to the _____.

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Which of the following arises when a country is importing more goods and services than it is exporting?

The _____ of FDI refers to the amount of FDI undertaken over a year.

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely choose? Explain your answer.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Rivals rarely imitate what a firm does in an oligopoly.

How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?

Which of the following observations concerning Knickerbocker's theory is true?

Through their choice of policies, home countries can both encourage and restrict FDI by local firms. Policies designed to encourage outward FDI include which of the following?

Which of the following specifically reduces the viability of an exporting strategy specifically for products with low value-to-weight ratios?

Which of the following statements is true about the growth of foreign direct investment in the world economy over the last few decades?

When a firm is considering FDI, what are the some of the negotiating points it must weigh before making its decision?

Advantages that arise from using resource endowments or assets that are tied to a particular place and that a firm finds valuable to combine with its own unique assets are known as:

Which of the following is an example of a greenfield investment?

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters