Deck 10: Investment and Savings

Question 1

A positive relationship between FDI and growth can be seen when FDI is aimed at:

A) manufactured projects for the domestic sector.
B) natural resource-based industries.
C) manufactured projects for export.
D) all of the above.

Answer 1

C

Question 2

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Public investment,externality

Answer 2

Answer will vary

Question 3

Which of the following is NOT a standard restriction placed on FDI by governments interested in capturing the benefits of that investment?

A) performance requirements
B) labor requirements
C) restrictions on profit repatriation
D) production schedules

Answer 3

C

Question 4

According to the life-cycle model of household savings,when do savings rates tend to peak in a person's working years?

A) beginning
B) middle
C) end
D) both b and c

Question 5

Welfare weights should:

A) be used with caution so that they do not become arbitrary.
B) never be used because they are unreliable.
C) be used for every project because they are as reliable as the discount rate.
D) only be used for small projects.

Question 6

By 2010,half of all FDI in developing countries went to:

A) 10 countries.
B) 27 countries.
C) 60 countries.
D) 102 countries.

Question 7

When welfare weights are introduced or shadow prices are further adjusted to reflect social goals,the process is known as:

A) Fabian socialism.
B) social project appraisal.
C) consumption coordination.
D) chain-weighted social-welfare benefit.

Question 8

When a private firm undertakes investment analysis,it conducts:

A) risk aversion strategy.
B) commercial project appraisal.
C) a random walk.
D) asymmetric information analysis.

Question 9

The opportunity cost of cotton:

A) is considered a negative opportunity cost in the analysis of public projects.
B) is considered a positive opportunity cost in the analysis of public projects.
C) can be considered a negative or a positive opportunity cost in the analysis of public projects, depending on whether the cotton could have been used as an export or an import.
D) holds the same considerations for both the public and private sectors.

Question 10

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Investment,growth

Question 11

Export-oriented,labor-intensive,"footloose" industries should:

A) never be offered tax holidays.
B) at times be offered tax holidays because they can be more readily influenced by such incentives, as their options are wider than other industries.
C)
C) at times be offered tax holidays because they are more likely to provide positive spillover.
D) both b and

Question 12

In an economy with a 9 percent interest rate,the present value of $1,000 that you will receive three years from now is:

A) $772.
B) $1,295.
C) $917.
D) $1,090.

Question 13

Today,FDI is aimed primarily at all of the following broad categories EXCEPT:

A) natural resource-based activities.
B) alternative and "green energy" production.
C) manufacturing and services aimed at the domestic market in the host country.
D) labor-intensive manufacturing aimed for export on world markets.

Question 14

The theory that,under certain circumstances,a change in taxes will have absolutely no effect on total domestic saving,is known as the:

A) Ricardian equivalence.
B) Mill's minimum.
C) Marshall's conundrum.
D) Keynesian nullification.

Question 15

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Cost-benefit analysis,net cash flow

Question 16

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Net present value,internal rate of return (IRR)

Question 17

The majority of direct foreign investment in developing countries comes:

A) equally from the private and public sectors.
B) predominantly from the public sector.
C) predominantly from the private sector.
D) from multinational corporations.

Question 18

Multinational corporations:

A) avoid spillovers whenever possible.
B) often encourage horizontal spillover.
C) often encourage vertical spillover.
D) encourage both horizontal and vertical spillover.

Question 19

The net present value of a project is the:

A) sum of the project's cash flow from each year.
B) project's total cash flow divided by the current interest rate.
C) sum of the present value of the project's cash flow from each year.
D) project's total cash flow, less its start-up costs.

Question 20

Which of the following is an income tax incentive that exempts firms from paying taxes on corporate income,usually for three to six years?

A) tax extension
B) tax subsidization
C) tax holiday
D) tax shelter

Question 21

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
FDI,growth

Question 22

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Foreign direct investment (FDI),multinational corporations (MNCs)

Question 23

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Income tax incentives,labor-intensive industries

Question 24

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Economic project appraisal,shadow prices

Question 25

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Positive spillover,negative spillover

Question 26

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Dependent population,working population

Question 27

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Economic openness,investment

Question 28

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Foreign savings,domestic savings