Exam 7: Foreign Direct Investment

Scenario: Global Manufacturing Inc. (GMI) Global Manufacturing Inc., a fast-growing U.S. company, plans for a production system in which two components of its product will be manufactured in locations where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI plans to purchase an existing company in Brazil to produce component A and build a subsidiary in Thailand to produce component B. -Which of the following systems of production is used by GMI?

If a Japanese citizen invests in the Australian stock market,the transaction would show up on the capital account in the balance of payments of ________.

The requirement that a sufficient portion of a product's content must originate within a certain market to escape tariff charges is an example of a(n)________.

Which of the following theories states that firms undertake foreign direct investment,when the features of a particular location combine with ownership and internalization advantages,to make the location appealing for investment?

The extension of a company's activities into stages of production that absorb the company's outputs is known as ________.

Which of the following occurs in a country's balance of payments when a country exports more goods and services and receives more income from abroad than it imports and pays abroad?

The balance of payments is useful to international business people for which of the following reasons?

Which of the following accounts within the current account of the United States' balance of payments includes financial gains earned on U.S.assets held abroad?

Why is it important to assess R&D costs when considering FDI? Given its costs,how can FDI benefit the host country with access to technology,management skills,and employment?

Explain the market power theory of FDI,and discuss why the decision whether or not to follow rivals into a new international market is important.

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?

Which of the following is used by home-country governments to promote outbound foreign direct investment?

Which of the following countries would a watchmaker most prefer to manufacture its watches in,in order to capitalize on buyer perceptions of high quality?

The income payments account includes income earned on home country assets held abroad.

Exports and imports of tangible goods are included in the ________ account of a country's balance of payments.

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

Which of the following is the type of production illustrated in the automobile industry?

Which of the following is recorded in the capital account of a country's balance of payments?

Which of the following statements is true of rationalized production?

Increasing globalization is causing a growing number of international companies from emerging markets to undertake FDI.