Exam 6: International Trade and Investment

Leontief predicted that if the Heckscher-Ohlin theory held, then the United States would ________.

The ________ of a good is the value of what is given up to get the good.

What is the difference between interindustry trade and intraindustry trade? Provide an example to illustrate your answer.

The term ________ refers to the voluntary exchange of goods, services, assets, or money between one person or organization and another.

What is the primary focus of the new trade theory developed by Krugman, Helpman, and Lancaster?

Which type of investment involves the acquisition of foreign assets for the purpose of controlling them?

Which theory explains why a firm would choose to enter a foreign market via FDI rather than exploit its ownership advantages internationally through other means?

Since World War II, world trade has ________.

For the ________ advantage to accrue, undertaking the business activity must be more profitable overseas than undertaking it locally.

What did Adam Smith believe about the ultimate effects of mercantilist policies on the health of a country's economic situation?

________ are the costs of negotiating, monitoring, and enforcing a contract.

________ represents passive holdings of securities such as foreign stocks, bonds, or other financial assets.

Ellis, a manager at an MNE, is studying international trade theories. In his current position, Ellis would most likely use this knowledge to ________.

Krugman and Lancaster predict that intraindustry trade will be rare.

Which of the following was determined by Leontief?

The center of the international commercial flower industry is ________.

The theory of comparative advantage uses the concept of opportunity cost to determine which good a country should produce.

What is the goal of mercantilism? How is mercantilism implemented? What are the disadvantages of mercantilism?

In which stage of the international product life cycle does the innovating firm's country become a net importer of the product?

How can an understanding of international trade theories and foreign investment theories benefit MNEs?