Question 1

The United States has been an attractive target for FDI partly because of its

Accepted Answer

A)   abundance of cheap and skilled labor.
B)   stable and dynamic economy.
C)   commitment to environmental issues.
D)   low corporate tax rates.
E)   high trade barriers.F) B) and E)
G) C) and D)

Question 2

The process of exporting grants a foreign entity the right to produce and sell a firm's product.

Accepted Answer

A) True 
 B)False

Question 3

According to the free market view, countries should specialize in the production of those goods and services that they can produce most efficiently.

Accepted Answer

A) True 
 B)False

Question 4

Identify which types of industries should not rely on licensing as a form of FDI.

Accepted Answer

Firms for which licensing is not a good ...

Question 5

The ________ view of FDI traces its roots to Marxist political and economic theory.

Accepted Answer

A)   radical
B)   free market
C)   pragmatic nationalism
D)   comparative advantage
E)   pluralistF) A) and B)
G) A) and C)

Question 6

According to the radical view of FDI, multinational enterprises (MNEs)  that already exist in a country should be

Accepted Answer

A)   immediately nationalized.
B)   made to pay higher taxes.
C)   converted into publicly traded companies.
D)   banned from obtaining finance from the financial institutions in the host country.
E)   immediately privatized.F) A) and D)
G) B) and E)

Question 7

One way to describe the free market view is to say that

Accepted Answer

A)   a country should specialize in the production of a good that it can produce most efficiently.
B)   a country should focus on importing goods that it can also produce if those goods are produced at a higher cost elsewhere.
C)   an MNE is an instrument of imperialist domination.
D)   host-country nations of a company are never given the same consideration as a home-country nation.
E)   less-developed nations are kept relatively backward and dependent on advanced capitalist nations for employment.F) C) and E)
G) B) and C)

Question 8

A(n)  ________ account is a national account that tracks both payments to and receipts from other countries.

Accepted Answer

A)   equity
B)   dematerialized
C)   balance of trade
D)   asset
E)   balance-of-paymentsF) A) and E)
G) B) and E)

Question 9

Which two nations have historically been the largest recipients of inward FDI?

Accepted Answer

A)   Japan and China
B)   Italy and Germany
C)   Argentina and Brazil
D)   the United Kingdom and France
E)   the United States and CanadaF) A) and B)
G) B) and D)

Question 10

Briefly describe how Bolivia and Venezuela have taken steps that indicate a hostile approach to FDI.

Accepted Answer

There is some evidence of a shift to a m...

Question 11

Knickerbocker's concept of multipoint competition enhances the strategic behavior theory by making sure that

Accepted Answer

A)   a rival does not dominate one market and use the profits from there to drive competitive attacks elsewhere.
B)   the competitors cooperate with each other to establish a cartel.
C)   no other competitors can enter the market unless they resort to licensing or franchising with the initial pioneers.
D)   growing technologies or business methods in new markets are transferred to established markets.
E)   the firms in an industry prefer FDI over licensing or exporting.F) A) and E)
G) A) and D)

Question 12

ModShoes Inc. decides to move its manufacturing facility from Toledo, Ohio, to Jakarata, Indonesia, because it will have access to lower-cost but still highly skilled labor. This choice reflects the concept of

Accepted Answer

A)   a planned economy.
B)   supply-and-demand.
C)   location-specific advantages.
D)   an oligopoly.
E)   a comparative advantage.F) All of the above
G) A) and B)

Question 13

Discuss the three major drawbacks identified by the internationalization theory regarding licensing as a method of FDI.

Accepted Answer

According to internalization theory, lic...

Question 14

According to the ________ view, a country would be willing to offer subsidies in the form of tax breaks to foreign companies because it believes it to be in the national interest.

Accepted Answer

A)   pragmatic nationalism
B)   radical
C)   nationalism
D)   imitative theory
E)   eclectic paradigmF) A) and E)
G) A) and D)

Question 15

The free market view would argue that

Accepted Answer

A)   MNEs decrease the overall efficiency of the world economy.
B)   FDI is a benefit to both the source country and the host country.
C)   MNEs can never be instruments of economic development, only of economic domination.
D)   FDI is beneficial to the host country of an MNE but it is harmful for the home country of the MNE.
E)   FDI in a mercantilist society would not benefit the home country.F) C) and D)
G) A) and B)

Question 16

Kim's GymJam Inc., based in Australia, obtained the right to produce and sell a U.S.-based company's boxing gloves. Kim's GymJam has to pay a royalty fee to the U.S. company for every pair of gloves it sells. In this example, Kim's GymJam Inc is the

Accepted Answer

A)   franchisor.
B)   franchisee.
C)   licensor.
D)   licensee.
E)   competitor.F) B) and C)
G) D) and E)

Question 17

Mergers and acquisitions take longer to execute than a greenfield investment.

Accepted Answer

A) True 
 B)False

Question 18

Governments impose quotas to limit

Accepted Answer

A)   FDI.
B)   importing.
C)   franchising.
D)   outsourcing.
E)   licensing.F) C) and D)
G) A) and B)

Question 19

Camille told the management team that investing capital in the Swaziland-based manufacturing plant would not only benefit their company in terms of labor costs but would also promote significant economic development in Swaziland. What type of host-country benefit is Camille referring to?

Accepted Answer

A)   resource-transfer effect
B)   balance-of-payments effect
C)   effects on competition
D)   effects on foreign exchange rate
E)   technology effectF) All of the above
G) C) and D)

Question 20

Business executives view foreign direct investment as a way to

Accepted Answer

A)   erase the fear of protectionist pressures.
B)   circumvent future trade barriers.
C)   promote totalitarian political institutions.
D)   diminish privatization.
E)   shift toward centrally planned command economies.F) None of the above
G) C) and D)

Exam 8: Foreign Direct Investment

According to the free market view, countries should specialize in the production of those goods and services that they can produce most efficiently.

Correct AnswerverifiedShow Answer

Identify which types of industries should not rely on licensing as a form of FDI.

Correct AnswerverifiedFirms for which licensing is not a good ...View AnswerShow Answer

The United States has been an attractive target for FDI partly because of its

Correct AnswerverifiedShow Answer

Business executives view foreign direct investment as a way to

Correct AnswerverifiedShow Answer

One way to describe the free market view is to say that

Correct AnswerverifiedShow Answer

Which two nations have historically been the largest recipients of inward FDI?

Correct AnswerverifiedShow Answer

The free market view would argue that

Correct AnswerverifiedShow Answer

According to the ________ view, a country would be willing to offer subsidies in the form of tax breaks to foreign companies because it believes it to be in the national interest.

Correct AnswerverifiedShow Answer

Kim's GymJam Inc., based in Australia, obtained the right to produce and sell a U.S.-based company's boxing gloves. Kim's GymJam has to pay a royalty fee to the U.S. company for every pair of gloves it sells. In this example, Kim's GymJam Inc is the

Correct AnswerverifiedShow Answer

Camille told the management team that investing capital in the Swaziland-based manufacturing plant would not only benefit their company in terms of labor costs but would also promote significant economic development in Swaziland. What type of host-country benefit is Camille referring to?

Correct AnswerverifiedShow Answer

Discuss the three major drawbacks identified by the internationalization theory regarding licensing as a method of FDI.

Correct AnswerverifiedAccording to internalization theory, lic...View AnswerShow Answer

According to the radical view of FDI, multinational enterprises (MNEs) that already exist in a country should be

Correct AnswerverifiedShow Answer

Mergers and acquisitions take longer to execute than a greenfield investment.

Correct AnswerverifiedShow Answer

ModShoes Inc. decides to move its manufacturing facility from Toledo, Ohio, to Jakarata, Indonesia, because it will have access to lower-cost but still highly skilled labor. This choice reflects the concept of

Correct AnswerverifiedShow Answer

Briefly describe how Bolivia and Venezuela have taken steps that indicate a hostile approach to FDI.

Correct AnswerverifiedThere is some evidence of a shift to a m...View AnswerShow Answer

The process of exporting grants a foreign entity the right to produce and sell a firm's product.

Correct AnswerverifiedShow Answer

Knickerbocker's concept of multipoint competition enhances the strategic behavior theory by making sure that

Correct AnswerverifiedShow Answer

Governments impose quotas to limit

Correct AnswerverifiedShow Answer

A(n) ________ account is a national account that tracks both payments to and receipts from other countries.

Correct AnswerverifiedShow Answer

The ________ view of FDI traces its roots to Marxist political and economic theory.

Correct AnswerverifiedShow Answer

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According to internalization theory, lic...
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There is some evidence of a shift to a m...
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