Question 1

What are the basic motives for international portfolio investments?

Accepted Answer

Yield maximization and risk diversification

Question 2

Discuss the changes in the magnitude of foreign investment into the U.S.and U.S.investment overseas over the last fifty years.

Accepted Answer

Both the U.S.and foreigners hold far more of each others assets today than they did fifty years ago.The increase of foreign ownership of U.S.assets has increased much faster than the U.S.'s increase in ownership of foreign assets.This difference in these rates explains the U.S.'s growing trade deficit.

Question 3

U.S.holdings of foreign long-term securities (stocks and bonds)have ________ over the last fifty years.

Accepted Answer

A)  decreased 
B)  increased 
C)  remained unchanged 
D)  been volatile, at times increasing and at time decreasing 
A)  decreased 
B)  increased 
C)  remained unchanged 
D)  been volatile, at times increasing and at time decreasing B

Question 4

Foreign direct investment benefits the host nation because it:

Accepted Answer

A)  increases the K/L ration 
B)  increases the productivity of labor 
C)  increases per capita income 
D)  all of the above 
A)  increases the K/L ration 
B)  increases the productivity of labor 
C)  increases per capita income 
D)  all of the above

Question 5

In 2010 the percentage of Americans that were not born in the United States was roughly

Accepted Answer

A)  5 % 
B)  12 ½ % 
C)  25 % 
D)  37 ½ % 
A)  5 % 
B)  12 ½ % 
C)  25 % 
D)  37 ½ %

Question 6

Most foreign assets in the U.S.are ___________; most U.S.assets abroad are ________.

Accepted Answer

A)  direct investment; direct investment 
B)  direct investment; foreign securities 
C)  U.S. securities; direct investment 
D)  U.S. securities; foreign securities 
A)  direct investment; direct investment 
B)  direct investment; foreign securities 
C)  U.S. securities; direct investment 
D)  U.S. securities; foreign securities

Question 7

The reason the residents of a nation do not borrow from other nations and themselves undertake real investments in their own nation is that:

Accepted Answer

A)  multinationals want to retain control over their own technology 
B)  banks do not want to lend to foreigners 
C)  vertical integration is not possible for foreigners 
D)  multinationals want to avoid horizontal integration 
A)  multinationals want to retain control over their own technology 
B)  banks do not want to lend to foreigners 
C)  vertical integration is not possible for foreigners 
D)  multinationals want to avoid horizontal integration

Question 8

International capital flows

Accepted Answer

A)  increase world social welfare. 
B)  increase the welfare of the host country but not the investing country. 
C)  increase the welfare of the investing country but not the host country. 
D)  decrease world social welfare. 
A)  increase world social welfare. 
B)  increase the welfare of the host country but not the investing country. 
C)  increase the welfare of the investing country but not the host country. 
D)  decrease world social welfare.

Question 9

Today's multinational corporations account for roughly what percentage of world output

Accepted Answer

A)  10% 
B)  25% 
C)  50% 
D)  75% 
A)  10% 
B)  25% 
C)  50% 
D)  75%

Question 10

Labor in developing countries generally

Accepted Answer

A)  opposes an inflow of foreign direct investments from abroad 
B)  favors an inflow of foreign direct investments from abroad 
C)  is indifferent to foreign direct investments from abroad 
D)  we cannot say without additional information 
A)  opposes an inflow of foreign direct investments from abroad 
B)  favors an inflow of foreign direct investments from abroad 
C)  is indifferent to foreign direct investments from abroad 
D)  we cannot say without additional information

Question 11

Discuss the motives for international labor migration.

Accepted Answer

International labor migration can occur

Question 12

What are the primary reasons for the existence of multinational corporations?

Accepted Answer

The basic reason is the compet

Question 13

Portfolio theory tells us that by investing in securities with yields that are inversely related over time:

Accepted Answer

A)  a given yield can be obtained at a smaller risk 
B)  a higher yield can be obtained for the same level of risk 
C)  a two-way capital flow may be required to achieve a balanced portfolio 
D)  all of the above 
A)  a given yield can be obtained at a smaller risk 
B)  a higher yield can be obtained for the same level of risk 
C)  a two-way capital flow may be required to achieve a balanced portfolio 
D)  all of the above

Question 14

Which of the following is not true with regard to direct investments?

Accepted Answer

A)  U.S. direct investments abroad and foreign direct investments in the U.S. grew very rapidly from 1950 to 2004 
B)  the amount of U.S. direct investments abroad is similar to the amount of foreign direct investments in the U.S. 
C)  U.S. direct investments in Canada are higher than in Europe 
D)  U.S. private holdings of foreign long-term securities grew very rapidly from 1950 to 2004 
A)  U.S. direct investments abroad and foreign direct investments in the U.S. grew very rapidly from 1950 to 2004 
B)  the amount of U.S. direct investments abroad is similar to the amount of foreign direct investments in the U.S. 
C)  U.S. direct investments in Canada are higher than in Europe 
D)  U.S. private holdings of foreign long-term securities grew very rapidly from 1950 to 2004

Question 15

Portfolio investments refer primarily to:

Accepted Answer

A)  direct investments 
B)  bonds 
C)  liquid assets 
D)  short-term assets 
A)  direct investments 
B)  bonds 
C)  liquid assets 
D)  short-term assets

Question 16

What is vertical integration and how is it related to direct foreign investment?

Accepted Answer

Vertical integration occurs when a compa

Question 17

Which of the following is not a beneficial effect of direct investments on the investing country:

Accepted Answer

A)  the transfer of technology 
B)  higher profits 
C)  risk diversification 
D)  avoids the possible loss of export markets 
A)  the transfer of technology 
B)  higher profits 
C)  risk diversification 
D)  avoids the possible loss of export markets

Question 18

Two-way international capital flows can be explained by the desire to:

Accepted Answer

A)  earn higher yields abroad 
B)  avoid tariffs 
C)  diversify risks 
D)  all of the above 
A)  earn higher yields abroad 
B)  avoid tariffs 
C)  diversify risks 
D)  all of the above

Question 19

Explain how international capital transfers impact employment in the receiving and investing nation.

Accepted Answer

In the investing nation the relative sha

Question 20

Foreign holdings of U.S.long-term securities (stocks and bonds)have ________ over the last fifty

Accepted Answer

A)  decreased 
B)  increased 
C)  remained unchanged 
D)  been volatile, at times increasing and at time decreasing 
A)  decreased 
B)  increased 
C)  remained unchanged 
D)  been volatile, at times increasing and at time decreasing

Exam 12: International Resource Movements and Multinational Corporations

What are the basic motives for international portfolio investments?

Discuss the changes in the magnitude of foreign investment into the U.S.and U.S.investment overseas over the last fifty years.

U.S.holdings of foreign long-term securities (stocks and bonds)have ________ over the last fifty years.

Foreign direct investment benefits the host nation because it:

In 2010 the percentage of Americans that were not born in the United States was roughly

Most foreign assets in the U.S.are ___________; most U.S.assets abroad are ________.

The reason the residents of a nation do not borrow from other nations and themselves undertake real investments in their own nation is that:

International capital flows

Today's multinational corporations account for roughly what percentage of world output

Labor in developing countries generally

Discuss the motives for international labor migration.

What are the primary reasons for the existence of multinational corporations?

Portfolio theory tells us that by investing in securities with yields that are inversely related over time:

Which of the following is not true with regard to direct investments?

Portfolio investments refer primarily to:

What is vertical integration and how is it related to direct foreign investment?

Which of the following is not a beneficial effect of direct investments on the investing country:

Two-way international capital flows can be explained by the desire to:

Explain how international capital transfers impact employment in the receiving and investing nation.

Foreign holdings of U.S.long-term securities (stocks and bonds)have ________ over the last fifty

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters

Most foreign assets in the U.S.are ___; most U.S.assets abroad are .