Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

FDI does not benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports of capital equipment, intermediate goods, or complementary products.

Accepted Answer

A) True 
 B)False  False

Question 3

An aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

Accepted Answer

A) True 
 B)False  True

Question 4

The largest source country for FDI has been China.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following arises when a country is exporting more goods and services than it is importing?

Accepted Answer

A)  Current account surplus 
B)  Trade deficit 
C)  Trade surplus 
D)  Trade balance 
A)  Current account surplus 
B)  Trade deficit 
C)  Trade surplus 
D)  Trade balance

Question 6

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

Accepted Answer

An oligopoly is an industry composed of

Question 7

How does the free market view support FDI?

Accepted Answer

The intellectual case for the free marke

Question 8

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Accepted Answer

A)  If the foreign subsidiary imports a substantial number of its inputs from abroad 
B)  If the FDI reduces existing employment opportunities 
C)  If the FDI is a substitute for imports of goods or services 
D)  If the FDI results in substitution of products produced domestically 
A)  If the foreign subsidiary imports a substantial number of its inputs from abroad 
B)  If the FDI reduces existing employment opportunities 
C)  If the FDI is a substitute for imports of goods or services 
D)  If the FDI results in substitution of products produced domestically

Question 9

Licensing is usually a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance.

Accepted Answer

A) True 
 B)False

Question 10

When contemplating FDI, why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?

Accepted Answer

A)  Greenfield investments are characterized by reduced management control. 
B)  Mergers and acquisitions are preferred because most greenfield investments fail. 
C)  It is easier and less risky for a firm to build strategic assets than acquire similar assets. 
D)  Mergers and acquisitions are quicker to execute than greenfield investments. 
A)  Greenfield investments are characterized by reduced management control. 
B)  Mergers and acquisitions are preferred because most greenfield investments fail. 
C)  It is easier and less risky for a firm to build strategic assets than acquire similar assets. 
D)  Mergers and acquisitions are quicker to execute than greenfield investments.

Question 11

Developing nations currently account for the largest share of FDI inflows.

Accepted Answer

A) True 
 B)False

Question 12

Which view of FDI traces its roots to classical economics and the international trade theories of Adam Smith and David Ricardo?

Accepted Answer

A)  Imperialist 
B)  Conservative 
C)  Free market 
D)  Radical 
A)  Imperialist 
B)  Conservative 
C)  Free market 
D)  Radical

Question 13

Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.

Accepted Answer

Products with low value-to-weight ratios

Question 14

How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?

Accepted Answer

A)  By increased imports to the home country as a result of the FDI 
B)  By the subsequent inflow of foreign earnings 
C)  By substituting direct exports made earlier from the home country 
D)  By further investments usually made to expand foreign operations 
A)  By increased imports to the home country as a result of the FDI 
B)  By the subsequent inflow of foreign earnings 
C)  By substituting direct exports made earlier from the home country 
D)  By further investments usually made to expand foreign operations

Question 15

Which of the following is the prime reason why Africa has attracted FDI in recent years?

Accepted Answer

A)  Growth of the services sector 
B)  Complete deregulation of markets 
C)  Wave of privatization 
D)  Raw material availability 
A)  Growth of the services sector 
B)  Complete deregulation of markets 
C)  Wave of privatization 
D)  Raw material availability

Question 16

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 17

Which of the following observations concerning Knickerbocker's theory is true?

Accepted Answer

A)  It does not explain imitative FDI behavior by firms in oligopolistic industries. 
B)  Economists favor this theory as an explanation for FDI compared to the internalization theory. 
C)  It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad. 
D)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license. 
A)  It does not explain imitative FDI behavior by firms in oligopolistic industries. 
B)  Economists favor this theory as an explanation for FDI compared to the internalization theory. 
C)  It addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad. 
D)  It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.

Question 18

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Accepted Answer

A) True 
 B)False

Question 19

What are the possible adverse effects of FDI on a host country's balance-of-payments position?

Accepted Answer

The possible adverse effects of FDI on a

Question 20

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting?

Accepted Answer

A)  By implementing import quotas 
B)  By imposing FDI limits in industries 
C)  By increasing tax rates 
D)  By limiting free flow of capital 
A)  By implementing import quotas 
B)  By imposing FDI limits in industries 
C)  By increasing tax rates 
D)  By limiting free flow of capital

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

FDI does not benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports of capital equipment, intermediate goods, or complementary products.

An aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

The largest source country for FDI has been China.

Which of the following arises when a country is exporting more goods and services than it is importing?

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

How does the free market view support FDI?

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Licensing is usually a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance.

When contemplating FDI, why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?

Developing nations currently account for the largest share of FDI inflows.

Which view of FDI traces its roots to classical economics and the international trade theories of Adam Smith and David Ricardo?

Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.

How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?

Which of the following is the prime reason why Africa has attracted FDI in recent years?

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

Which of the following observations concerning Knickerbocker's theory is true?

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

What are the possible adverse effects of FDI on a host country's balance-of-payments position?

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of 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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 8: Foreign Direct Investment

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

FDI does not benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports of capital equipment, intermediate goods, or complementary products.

An aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

The largest source country for FDI has been China.

Which of the following arises when a country is exporting more goods and services than it is importing?

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

How does the free market view support FDI?

In which of the following situations would FDI improve the current account of the host country's balance of payments?

Licensing is usually a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance.

When contemplating FDI, why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?

Developing nations currently account for the largest share of FDI inflows.

Which view of FDI traces its roots to classical economics and the international trade theories of Adam Smith and David Ricardo?

Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.

How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?

Which of the following is the prime reason why Africa has attracted FDI in recent years?

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

Which of the following observations concerning Knickerbocker's theory is true?

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

What are the possible adverse effects of FDI on a host country's balance-of-payments position?

Which of the following is a way in which governments increase the attractiveness of FDI and licensing relative to exporting?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of 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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters