Exam 6: International Trade and Investment

What motivates firms to become involved in international trade and foreign direct investment?

Which of the following is a form of foreign direct investment?

Adam Smith was best known as an advocate of ________.

Demand factors affecting the decision to undertake FDI include all of the following except ________.

Germany exports BMWs to the United States, and the United States exports Dell Computers to Germany. This is an example of ________.

Trade between two countries of goods produced by the same industry is known as interindustry trade.

Foreign direct investment is acquisition of foreign assets for the purpose of controlling them.

Why is the notion of specialization important when analyzing the benefits of free trade?

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

More foreign direct investment in the United States originates in the United Kingdom than any other country.

Coffman Electronics produces small, portable printers. The market for the product has stabilized, and Coffman has shifted production to Taiwan. However, Coffman's marketing department in the U.S. remains responsible for advertising and branding decisions. Coffman Electronics is most likely in the ________ product stage of the product life cycle.

Explain the three stages in the international product life cycle theory.

What does the relative factor endowment theory suggest about a country's comparative advantage?

Which theory suggests that a country should export those goods and services for which it is more productive than other countries and import those goods and services for which other countries are more productive?

Which theory incorporates the concept of opportunity cost?

________ suggest(s) that FDI will be more likely to occur when transaction costs with a second firm are high.

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

Why are the islands of Caribbean so important to the United States both as a source and a destination of investment?

Which theory suggests that a country should produce and export those goods and services for which it is relatively more productive than other countries are and import those goods and services for which other countries are relatively more productive?

Leontief predicted that if the Heckscher-Ohlin theory held, then the U.S. would ________.