Question 1

The U.S. ,the U.K. ,France,Germany,the Netherlands,and Japan account for more than half of the global stock of FDI.As might be expected,these countries also:

Accepted Answer

A)  did not look at foreign markets to fuel their economic expansion.
B)  have cumbersome regulations against FDI inflows into their own economies.
C)  predominate in the rankings of the world's largest multinationals.
D)  express similar FDI inflows as a percentage of gross fixed capital formation.E) A) and D)
F) C) and D)

Question 2

According to the product life-cycle theory,pioneering firms shift production to _____ countries when product standardization and market saturation give rise to price competition and cost pressures.

Accepted Answer

A)  other advanced countries
B)  industrialized
C)  developing
D)  free marketE) A) and D)
F) C) and D)

Question 3

Which of the following sets form three of the main benefits of inward FDI for a host country?

Accepted Answer

A)  The resource-transfer effect,the employment effect,and the balance-of-payments effect
B)  The labor-transfer effect,the technology effect,and the currency-exchange effect
C)  The cultural awareness effect,first-mover advantage effect,and economic development effect
D)  The foreign exchange reserves effect,knowledge flow effect,and the reverse resource transfer effectE) B) and C)
F) A) and D)

Question 4

When FDI takes the form of an acquisition of an established enterprise in the host economy,research suggests that once the initial period of restructuring is over,enterprises acquired by foreign firms tend to:

Accepted Answer

A)  grow their employment base at a faster rate than domestic rivals.
B)  engage in downsizing and retrenchment.
C)  reduce their pay scales to match those of local companies.
D)  reduce employment to cut costs and control prices.E) None of the above
F) All of the above

Question 5

An industry composed of a limited number of large firms is referred to as a(n) :

Accepted Answer

A)  syndicate.
B)  monopoly.
C)  oligopoly.
D)  mushrooming industry.E) A) and C)
F) None of the above

Question 6

Products with low value-to-weight ratios are the most viable for exporting.

Accepted Answer

A) True 
 B)False

Question 7

If one firm in an oligopolistic industry cuts prices,its competitors:

Accepted Answer

A)  will make profits.
B)  will also respond with similar price cuts.
C)  will correspondingly raise prices.
D)  will fill the gap by capturing market share.E) None of the above
F) A) and C)

Question 8

What is multipoint competition? What typically occurs when two or more enterprises are multipoint competitors?

Accepted Answer

Multipoint competition arises when two o...

Question 9

Which theory helps explain how location factors affect the direction of FDI?

Accepted Answer

A)  The eclectic paradigm
B)  The theory of pragmatic nationalism
C)  The product life-cycle theory
D)  The new trade theoryE) None of the above
F) A) and B)

Question 10

In its extreme version,the radical view advances the idea that foreign direct investment can only ever be an instrument of _____,never of _____.

Accepted Answer

A)  cultural impoverishment;national integration
B)  economic development;economic domination
C)  political division;international peace
D)  corruption;democracyE) A) and D)
F) None of the above

Question 11

According to the United Nations,majority of changes made worldwide between 1992 and 2008 in the laws governing foreign direct investment have created a more favorable environment for FDI.

Accepted Answer

A) True 
 B)False

Question 12

In the balance of payments,which of the following records transactions involving the export and import of goods and services?

Accepted Answer

A)  Current account
B)  Foreign account
C)  Internal account
D)  Tariff accountE) B) and D)
F) A) and C)

Question 13

According to the text,which of the following statements regarding the free market view is true?

Accepted Answer

A)  Free market view has been endorsed by fewer countries in the last decade than in the 1990s.
B)  No country has adopted the free market view in its pure form.
C)  Free market view has helped liberate inward FDI but restrictions on outward FDI have largely remained unaffected.
D)  Free market view advances the idea that FDI is beneficial to the host country,but fails to address the benefits of FDI for the home country.E) C) and D)
F) A) and C)

Question 14

According to the pragmatic nationalistic view,many host countries are concerned that a foreign-owned manufacturing plant may import many components from its home country,which has negative implications for the host country's _____.

Accepted Answer

A)  free trade
B)  inward FDI
C)  sovereignty
D)  balance-of-payments positionE) B) and C)
F) A) and D)

Question 15

Foreign managers trained in the latest management techniques can often help to improve the efficiency of operations in the host country,whether those operations are acquired or greenfield developments.This constitutes a benefit of FDI related to _____.

Accepted Answer

A)  employment effects
B)  balance-of-payments effects
C)  effects on competition
D)  resource transfer effectsE) A) and B)
F) None of the above

Question 16

The interdependence between firms in an oligopoly leads to _____.

Accepted Answer

A)  trade wars
B)  lowered supply
C)  imitative behavior
D)  higher demandE) None of the above
F) A) and C)

Question 17

What is meant by the term foreign direct investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Accepted Answer

Foreign direct investment (FDI)occurs wh...

Question 18

A firm's bargaining power is low when the host government places a low value on what the firm has to offer.

Accepted Answer

A) True 
 B)False

Question 19

By limiting imports through quotas,governments reduce the attractiveness of FDI and licensing.

Accepted Answer

A) True 
 B)False

Question 20

A potentially major negotiating point between an MNE wishing to undertake FDI and the host government is the issue of:

Accepted Answer

A)  level of involvement of host government in top management decisions of the MNE.
B)  likely net gain in employment in the host country.
C)  technology flow between MNEs and their domestic competitors.
D)  use of profits earned in the host country to subsidize competitive attacks elsewhere.E) None of the above
F) All of the above

Exam 7: Foreign Direct Investment

The interdependence between firms in an oligopoly leads to _____.

Correct AnswerverifiedShow Answer

The U.S. ,the U.K. ,France,Germany,the Netherlands,and Japan account for more than half of the global stock of FDI.As might be expected,these countries also:

Correct AnswerverifiedShow Answer

Products with low value-to-weight ratios are the most viable for exporting.

Correct AnswerverifiedShow Answer

According to the text,which of the following statements regarding the free market view is true?

Correct AnswerverifiedShow Answer

By limiting imports through quotas,governments reduce the attractiveness of FDI and licensing.

Correct AnswerverifiedShow Answer

In the balance of payments,which of the following records transactions involving the export and import of goods and services?

Correct AnswerverifiedShow Answer

Foreign managers trained in the latest management techniques can often help to improve the efficiency of operations in the host country,whether those operations are acquired or greenfield developments.This constitutes a benefit of FDI related to _____.

Correct AnswerverifiedShow Answer

According to the product life-cycle theory,pioneering firms shift production to _____ countries when product standardization and market saturation give rise to price competition and cost pressures.

Correct AnswerverifiedShow Answer

What is multipoint competition? What typically occurs when two or more enterprises are multipoint competitors?

Correct AnswerverifiedMultipoint competition arises when two o...View AnswerShow Answer

A potentially major negotiating point between an MNE wishing to undertake FDI and the host government is the issue of:

Correct AnswerverifiedShow Answer

According to the United Nations,majority of changes made worldwide between 1992 and 2008 in the laws governing foreign direct investment have created a more favorable environment for FDI.

Correct AnswerverifiedShow Answer

A firm's bargaining power is low when the host government places a low value on what the firm has to offer.

Correct AnswerverifiedShow Answer

When FDI takes the form of an acquisition of an established enterprise in the host economy,research suggests that once the initial period of restructuring is over,enterprises acquired by foreign firms tend to:

Correct AnswerverifiedShow Answer

An industry composed of a limited number of large firms is referred to as a(n) :

Correct AnswerverifiedShow Answer

Which of the following sets form three of the main benefits of inward FDI for a host country?

Correct AnswerverifiedShow Answer

What is meant by the term foreign direct investment? Describe the difference between the flow of foreign direct investment and the stock of foreign direct investment.

Correct AnswerverifiedForeign direct investment (FDI)occurs wh...View AnswerShow Answer

In its extreme version,the radical view advances the idea that foreign direct investment can only ever be an instrument of _____,never of _____.

Correct AnswerverifiedShow Answer

According to the pragmatic nationalistic view,many host countries are concerned that a foreign-owned manufacturing plant may import many components from its home country,which has negative implications for the host country's _____.

Correct AnswerverifiedShow Answer

Which theory helps explain how location factors affect the direction of FDI?

Correct AnswerverifiedShow Answer

If one firm in an oligopolistic industry cuts prices,its competitors:

Correct AnswerverifiedShow Answer

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Multipoint competition arises when two o...
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Foreign direct investment (FDI)occurs wh...
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In its extreme version,the radical view advances the idea that foreign direct investment can only ever be an instrument of _,never of _.

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