Question 1

Which of the following best refers to the outright construction or purchase abroad of productive facilities,such as manufacturing plants,by domestic residents?

Accepted Answer

A)  Direct investment 
B)  Portfolio investment 
C)  Short-term capital investment 
D)  Long-term capital investment

Question 2

In the short run,the home country of an MNE will likely experience an employment decline when production is shifted overseas.

Accepted Answer

A) True 
 B)False

Question 3

Concerning the decision of a U.S.resident to lend or invest abroad,Zimbabwe and Somalia have recently been considered to be relatively safe investments regarding the risk of default.

Accepted Answer

A) True 
 B)False

Question 4

The migration of workers from Mexico to the United States tends to exert downward pressure on the wages of native U.S.workers that compete against Mexican workers for jobs.

Accepted Answer

A) True 
 B)False

Question 5

Critics of U.S.trade and immigration policy maintain that

Accepted Answer

A)  It has depressed wages for many Americans 
B)  It has increased the supply of less educated workers in the United States 
C)  It has an adverse impact on the employment opportunities of less-skilled,American workers 
D)  All of the above

Question 6

Direct foreign investment has taken all of the following forms except:

Accepted Answer

A)  Investors buying bonds of an existing firm overseas 
B)  The creation of a wholly owned business enterprise overseas 
C)  The takeover of an existing company overseas 
D)  The construction of a manufacturing plant overseas

Question 7

Are there any differences between the theory of multinational enterprises and conventional trade theory?

Accepted Answer

The answer of Are there any differences between the theory...

Question 8

Figure 9.2 represents the U.S.labor market.Assume that labor and capital are the only factors of production.Also assume the initial supply schedule of labor is denoted by S0 and consists entirely of native U.S.workers.The demand schedule of labor is denoted by D0.
Figure 9.2.U.S.Labor Market
 
-Consider Figure 9.2.Policies that permit Mexican workers to freely migrate to the United States would likely be resisted by:

Accepted Answer

A)  U.S.capital owners 
B)  Native U.S.workers 
C)  U.S.capital owners and native U.S.workers 
D)  Neither U.S.capital owners nor native U.S.workers

Question 9

______ tends to benefit from increased immigration

Accepted Answer

A)  owners of capital in the home country 
B)  labor in the home country 
C)  both owners of capital and labor in the home country 
D)  neither owners of capital nor labor in the home country

Question 10

What are guest workers?

Accepted Answer

The answer of What are guest workers?...

Question 11

Developing countries have sometimes feared open immigration policies of developed countries on the grounds that highly educated and skilled people may emigrate to the developed countries,thus limiting the growth potential of the developing countries.

Accepted Answer

A) True 
 B)False

Question 12

Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000.This practice is best referred to as:

Accepted Answer

A)  International dumping 
B)  Cost-plus pricing 
C)  Transfer pricing 
D)  Technological transfer

Question 13

Figure 9.2 represents the U.S.labor market.Assume that labor and capital are the only factors of production.Also assume the initial supply schedule of labor is denoted by S0 and consists entirely of native U.S.workers.The demand schedule of labor is denoted by D0.
Figure 9.2.U.S.Labor Market
 
-Consider Figure 9.2.At labor market equilibrium,the payment to U.S.capital owners equals:

Accepted Answer

A)  $3 
B)  $6 
C)  $9 
D)  $12

Question 14

American critics of U.S.multinational enterprises contend that they promote

Accepted Answer

A)  Runaway jobs 
B)  Technology transfers abroad 
C)  Tax evasion 
D)  All of the above

Question 15

Labor migration tends to increase output and decrease wages in the country of immigration while decreasing output and increasing wages in the country of emigration.

Accepted Answer

A) True 
 B)False

Question 16

Joint ventures lead to losses in national welfare when the newly established business adds to pre-existing production capacity and fosters additional competition.

Accepted Answer

A) True 
 B)False

Question 17

A joint venture leads to increases in national welfare if the cost-reduction effect is due to wage concessions and if it more than offsets the market-power effect.

Accepted Answer

A) True 
 B)False

Question 18

A joint venture along two large competing companies tends to yield a market-power effect,which results in a reduction in consumer surplus,that is not offset by a corresponding gain to producers.

Accepted Answer

A) True 
 B)False

Question 19

Due to transfer-pricing problems,multinational corporations must shift profits away from countries with low corporate tax rates to high tax-rate countries,thus absorbing a larger tax bite.

Accepted Answer

A) True 
 B)False

Question 20

Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers which would place their products at a competitive disadvantage in a foreign country.

Accepted Answer

A) True 
 B)False

Exam 9: International Factor Movements and Multinational Enterprises

Which of the following best refers to the outright construction or purchase abroad of productive facilities,such as manufacturing plants,by domestic residents?

In the short run,the home country of an MNE will likely experience an employment decline when production is shifted overseas.

Concerning the decision of a U.S.resident to lend or invest abroad,Zimbabwe and Somalia have recently been considered to be relatively safe investments regarding the risk of default.

The migration of workers from Mexico to the United States tends to exert downward pressure on the wages of native U.S.workers that compete against Mexican workers for jobs.

Critics of U.S.trade and immigration policy maintain that

Direct foreign investment has taken all of the following forms except:

Are there any differences between the theory of multinational enterprises and conventional trade theory?

______ tends to benefit from increased immigration

What are guest workers?

Developing countries have sometimes feared open immigration policies of developed countries on the grounds that highly educated and skilled people may emigrate to the developed countries,thus limiting the growth potential of the developing countries.

Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000.This practice is best referred to as:

American critics of U.S.multinational enterprises contend that they promote

Labor migration tends to increase output and decrease wages in the country of immigration while decreasing output and increasing wages in the country of emigration.

Joint ventures lead to losses in national welfare when the newly established business adds to pre-existing production capacity and fosters additional competition.

A joint venture leads to increases in national welfare if the cost-reduction effect is due to wage concessions and if it more than offsets the market-power effect.

A joint venture along two large competing companies tends to yield a market-power effect,which results in a reduction in consumer surplus,that is not offset by a corresponding gain to producers.

Due to transfer-pricing problems,multinational corporations must shift profits away from countries with low corporate tax rates to high tax-rate countries,thus absorbing a larger tax bite.

Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers which would place their products at a competitive disadvantage in a foreign country.