Question 1

As transportation costs or trade barriers increase, exporting becomes unprofitable, and the choice is between FDI and

Accepted Answer

A)  subsidies. 
B)  incentives. 
C)  licensing. 
D)  resource endowments. 
A)  subsidies. 
B)  incentives. 
C)  licensing. 
D)  resource endowments. C

Question 2

Discuss an example that substantiates Dunning's argument about location-specific advantages.

Accepted Answer

An obvious example of Dunning's arguments are natural resources, such as oil and other minerals, which are by their character specific to certain locations. Dunning suggests that to exploit such foreign resources, a firm must undertake FDI. Clearly this explains the FDI undertaken by many of the world's oil companies, which have to invest where oil is located in order to combine their technological and managerial capabilities with this valuable location-specific resource.

Question 3

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold. Which business practice is this an example of?

Accepted Answer

A)  acquisition 
B)  licensing 
C)  exporting 
D)  greenfield investment 
A)  acquisition 
B)  licensing 
C)  exporting 
D)  greenfield investment B

Question 4

What has made the United States an attractive target for foreign direct investment?

Accepted Answer

A)  its unstable economy 
B)  its unfavorable political environment 
C)  its wealthy domestic markets 
D)  its closed society 
A)  its unstable economy 
B)  its unfavorable political environment 
C)  its wealthy domestic markets 
D)  its closed society

Question 5

________ and its extensions can help to explain imitative FDI behavior by firms in oligopolistic industries.

Accepted Answer

A)  Internalization theory 
B)  The eclectic paradigm 
C)  The noninterventionist theory 
D)  Knickerbocker's theory 
A)  Internalization theory 
B)  The eclectic paradigm 
C)  The noninterventionist theory 
D)  Knickerbocker's theory

Question 6

What is the term that describes when two or more enterprises encounter each other in different regional markets, national markets, or industries?

Accepted Answer

A)  multipoint competition 
B)  monopoly 
C)  location-specific competition 
D)  oligopoly 
A)  multipoint competition 
B)  monopoly 
C)  location-specific competition 
D)  oligopoly

Question 7

How can FDI undertaken to serve the home market stimulate economic growth in the home country?

Accepted Answer

A)  by freeing home-country resources to concentrate on activities where the home country has a comparative advantage 
B)  by importing more goods and services than it is exporting 
C)  by circumventing trade barriers that may have prevented direct exports in the past 
D)  by reducing demand for home-country exports of capital equipment, intermediate goods, and complementary products 
A)  by freeing home-country resources to concentrate on activities where the home country has a comparative advantage 
B)  by importing more goods and services than it is exporting 
C)  by circumventing trade barriers that may have prevented direct exports in the past 
D)  by reducing demand for home-country exports of capital equipment, intermediate goods, and complementary products

Question 8

Which branch of economic theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets?

Accepted Answer

A)  internalization theory 
B)  product life-cycle theory 
C)  multipoint competition theory 
D)  strategic behavior theory 
A)  internalization theory 
B)  product life-cycle theory 
C)  multipoint competition theory 
D)  strategic behavior theory

Question 9

When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that

Accepted Answer

A)  have a low value-to-weight ratio. 
B)  have a high value-to-weight ratio. 
C)  can be produced only in one region. 
D)  require locally sourced raw materials. 
A)  have a low value-to-weight ratio. 
B)  have a high value-to-weight ratio. 
C)  can be produced only in one region. 
D)  require locally sourced raw materials.

Question 10

Governments normally are concerned when their country is running a surplus on the current account of their balance of payments.

Accepted Answer

A) True 
 B)False

Question 11

One way countries have encouraged firms to undertake FDI is through double taxation.

Accepted Answer

A) True 
 B)False

Question 12

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely to choose? Explain your answer.

Accepted Answer

FDI can take the form of a greenfield in

Question 13

________ argues that FDI is a benefit to both the source country and the host country.

Accepted Answer

A)  Pragmatic nationalism 
B)  The free market view 
C)  The noninterventionist principle 
D)  The radical view 
A)  Pragmatic nationalism 
B)  The free market view 
C)  The noninterventionist principle 
D)  The radical view

Question 14

According to the ________ view of FDI, multinational enterprises (MNE) extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

Accepted Answer

A)  imperialist 
B)  conservative 
C)  free market 
D)  radical 
A)  imperialist 
B)  conservative 
C)  free market 
D)  radical

Question 15

The British advanced corporation tax system taxed British companies' foreign earnings at a higher rate than their domestic earnings. This tax code created an incentive for British companies to invest abroad.

Accepted Answer

A) True 
 B)False

Question 16

A country's ________ accounts keep track of both its payments to and its receipts from other countries.

Accepted Answer

A)  current 
B)  offshore 
C)  balance-of-payments 
D)  currency 
A)  current 
B)  offshore 
C)  balance-of-payments 
D)  currency

Question 17

Host country citizens that are employed by an MNE following an FDI are an example of

Accepted Answer

A)  an internality. 
B)  a direct effect. 
C)  an externality. 
D)  an indirect effect. 
A)  an internality. 
B)  a direct effect. 
C)  an externality. 
D)  an indirect effect.

Question 18

FDI has been declining in the last few decades because protectionist pressures have become less intense.

Accepted Answer

A) True 
 B)False

Question 19

The ________ of FDI refers to the amount of FDI undertaken over a year.

Accepted Answer

A)  stock 
B)  net value 
C)  accumulated value 
D)  flow 
A)  stock 
B)  net value 
C)  accumulated value 
D)  flow

Question 20

FDI undertaken to serve the home market is known as

Accepted Answer

A)  outsourcing. 
B)  FDI substitution. 
C)  offshore production. 
D)  home market FDI. 
A)  outsourcing. 
B)  FDI substitution. 
C)  offshore production. 
D)  home market FDI.

As transportation costs or trade barriers increase, exporting becomes unprofitable, and the choice is between FDI and

Discuss an example that substantiates Dunning's argument about location-specific advantages.

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold. Which business practice is this an example of?

What has made the United States an attractive target for foreign direct investment?

________ and its extensions can help to explain imitative FDI behavior by firms in oligopolistic industries.

What is the term that describes when two or more enterprises encounter each other in different regional markets, national markets, or industries?

How can FDI undertaken to serve the home market stimulate economic growth in the home country?

Which branch of economic theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets?

When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that

Governments normally are concerned when their country is running a surplus on the current account of their balance of payments.

One way countries have encouraged firms to undertake FDI is through double taxation.

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely to choose? Explain your answer.

________ argues that FDI is a benefit to both the source country and the host country.

According to the ________ view of FDI, multinational enterprises (MNE) extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

The British advanced corporation tax system taxed British companies' foreign earnings at a higher rate than their domestic earnings. This tax code created an incentive for British companies to invest abroad.

A country's ________ accounts keep track of both its payments to and its receipts from other countries.

Host country citizens that are employed by an MNE following an FDI are an example of

FDI has been declining in the last few decades because protectionist pressures have become less intense.

The ________ of FDI refers to the amount of FDI undertaken over a year.

FDI undertaken to serve the home market is known as

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 8: Foreign Direct Investment

As transportation costs or trade barriers increase, exporting becomes unprofitable, and the choice is between FDI and

Discuss an example that substantiates Dunning's argument about location-specific advantages.

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold. Which business practice is this an example of?

What has made the United States an attractive target for foreign direct investment?

________ and its extensions can help to explain imitative FDI behavior by firms in oligopolistic industries.

What is the term that describes when two or more enterprises encounter each other in different regional markets, national markets, or industries?

How can FDI undertaken to serve the home market stimulate economic growth in the home country?

Which branch of economic theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets?

When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that

Governments normally are concerned when their country is running a surplus on the current account of their balance of payments.

One way countries have encouraged firms to undertake FDI is through double taxation.

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely to choose? Explain your answer.

________ argues that FDI is a benefit to both the source country and the host country.

According to the ________ view of FDI, multinational enterprises (MNE) extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

The British advanced corporation tax system taxed British companies' foreign earnings at a higher rate than their domestic earnings. This tax code created an incentive for British companies to invest abroad.

A country's ________ accounts keep track of both its payments to and its receipts from other countries.

Host country citizens that are employed by an MNE following an FDI are an example of

FDI has been declining in the last few decades because protectionist pressures have become less intense.

The ________ of FDI refers to the amount of FDI undertaken over a year.

FDI undertaken to serve the home market is known as

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters