Question 1

Rivals rarely imitate what a firm does in an oligopoly.

Accepted Answer

A) True 
 B)False  False

Question 2

Which political view allows FDI so long as the benefits outweigh the costs?

Accepted Answer

A)  The traditional view 
B)  The pragmatic nationalist view 
C)  The radical view 
D)  The free market view 
A)  The traditional view 
B)  The pragmatic nationalist view 
C)  The radical view 
D)  The free market view B

Question 3

Explain the product life-cycle theory and its connection with FDI.

Accepted Answer

The product life-cycle theory,developed by Raymond Vernon,suggests that the same firms that pioneer a product in their home country will undertake FDI to produce a product for consumption in foreign markets.According to the theory,firms will invest in industrialized countries when demand in those countries is sufficient to support local production.They subsequently shift production to developing countries when product standardization and market saturation give rise to price competition and cost pressures.Investment in developing countries,where labor costs are lower,is seen as the best way to reduce costs.

Question 4

The amount of FDI undertaken over a given time period is known as the flow of FDI.

Accepted Answer

A) True 
 B)False

Question 5

Offshore production refers to FDI undertaken to serve the host market.

Accepted Answer

A) True 
 B)False

Question 6

Recent years have seen a marked increase in the number of countries that adhere to a radical ideology regarding FDI.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a direct consequence of the interdependence between firms in an oligopoly?

Accepted Answer

A)  Increased regulation 
B)  Increased consumer welfare 
C)  Imitative behavior 
D)  Longer product life-cycles 
A)  Increased regulation 
B)  Increased consumer welfare 
C)  Imitative behavior 
D)  Longer product life-cycles

Question 8

What are the major drawbacks of licensing according to the internalization theory?

Accepted Answer

According to the internalization theory,

Question 9

In practice only a few countries country have adopted the free market view in its pure form.

Accepted Answer

A) True 
 B)False

Question 10

Licensing would be a good option for firms in which of the following industries?

Accepted Answer

A)  High-technology industries in which protecting firm-specific expertise is of paramount importance. 
B)  Global oligopolies,in which competitive interdependence requires that multinational firms maintain tight control over foreign operations. 
C)  Industries in which intense cost pressures require that multinational firms maintain tight control over foreign operations. 
D)  In fragmented,low-technology industries in which globally dispersed manufacturing is not an option. 
A)  High-technology industries in which protecting firm-specific expertise is of paramount importance. 
B)  Global oligopolies,in which competitive interdependence requires that multinational firms maintain tight control over foreign operations. 
C)  Industries in which intense cost pressures require that multinational firms maintain tight control over foreign operations. 
D)  In fragmented,low-technology industries in which globally dispersed manufacturing is not an option.

Question 11

Which of the following best describes an industry composed of a limited number of large firms?

Accepted Answer

A)  An oligopoly 
B)  A monopoly 
C)  An oligarchy 
D)  A perfectly competitive market 
A)  An oligopoly 
B)  A monopoly 
C)  An oligarchy 
D)  A perfectly competitive market

Question 12

A Japanese car manufacturer acquires an Italian producer of car tires.This is an example of a greenfield investment.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a major drawback of using the product life-cycle theory in explaining FDI?

Accepted Answer

A)  It ignores the fact that firms invest in a foreign country when demand in that country will support local production. 
B)  It does not explain why firms invest in developing countries when cost pressures become intense. 
C)  It fails to identify when it is profitable to invest abroad. 
D)  It ignores the fact that licensing as an entry strategy has its limitations. 
A)  It ignores the fact that firms invest in a foreign country when demand in that country will support local production. 
B)  It does not explain why firms invest in developing countries when cost pressures become intense. 
C)  It fails to identify when it is profitable to invest abroad. 
D)  It ignores the fact that licensing as an entry strategy has its limitations.

Question 14

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 15

The largest source country for FDI has been China.

Accepted Answer

A) True 
 B)False

Question 16

A country rejects FDI proposals in certain industries.It does so because the tangible advantages of such investments are lesser than potential costs like loss of employment and reduction of overall well-being.However,it aggressively pursues inviting foreign investments in sectors like infrastructure,education,and healthcare because of the benefits that accrue with them.Which political view of FDI is discussed in this example?

Accepted Answer

A)  The pure market view 
B)  The free market view 
C)  The radical view 
D)  The pragmatic nationalist view 
A)  The pure market view 
B)  The free market view 
C)  The radical view 
D)  The pragmatic nationalist view

Question 17

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 18

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

Accepted Answer

FDI can take the form of a greenfield in

Question 19

The two most common methods of restricting inward FDI are ownership restraints and performance requirements.

Accepted Answer

A) True 
 B)False

Question 20

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 have a high value-to-weight ratio.

Accepted Answer

A) True 
 B)False

Rivals rarely imitate what a firm does in an oligopoly.

Which political view allows FDI so long as the benefits outweigh the costs?

Explain the product life-cycle theory and its connection with FDI.

The amount of FDI undertaken over a given time period is known as the flow of FDI.

Offshore production refers to FDI undertaken to serve the host market.

Recent years have seen a marked increase in the number of countries that adhere to a radical ideology regarding FDI.

Which of the following is a direct consequence of the interdependence between firms in an oligopoly?

What are the major drawbacks of licensing according to the internalization theory?

In practice only a few countries country have adopted the free market view in its pure form.

Licensing would be a good option for firms in which of the following industries?

Which of the following best describes an industry composed of a limited number of large firms?

A Japanese car manufacturer acquires an Italian producer of car tires.This is an example of a greenfield investment.

Which of the following is a major drawback of using the product life-cycle theory in explaining FDI?

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

The largest source country for FDI has been China.

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

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

The two most common methods of restricting inward FDI are ownership restraints and performance requirements.

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 have a high value-to-weight ratio.

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

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Exam 8: Foreign Direct Investment

Rivals rarely imitate what a firm does in an oligopoly.

Which political view allows FDI so long as the benefits outweigh the costs?

Explain the product life-cycle theory and its connection with FDI.

The amount of FDI undertaken over a given time period is known as the flow of FDI.

Offshore production refers to FDI undertaken to serve the host market.

Recent years have seen a marked increase in the number of countries that adhere to a radical ideology regarding FDI.

Which of the following is a direct consequence of the interdependence between firms in an oligopoly?

What are the major drawbacks of licensing according to the internalization theory?

In practice only a few countries country have adopted the free market view in its pure form.

Licensing would be a good option for firms in which of the following industries?

Which of the following best describes an industry composed of a limited number of large firms?

A Japanese car manufacturer acquires an Italian producer of car tires.This is an example of a greenfield investment.

Which of the following is a major drawback of using the product life-cycle theory in explaining FDI?

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

The largest source country for FDI has been China.

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

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

The two most common methods of restricting inward FDI are ownership restraints and performance requirements.

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 have a high value-to-weight ratio.

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