Question 1

International joint ventures can lead to welfare losses when the newly established firm:

Accepted Answer

A)  Adds to the preexistent productive capacity 
B)  Enters markets neither parent could have entered individually 
C)  Yields cost reductions unavailable to parent firms 
D)  Gives rise to increased amounts of market power 
A)  Adds to the preexistent productive capacity 
B)  Enters markets neither parent could have entered individually 
C)  Yields cost reductions unavailable to parent firms 
D)  Gives rise to increased amounts of market power

Question 2

Figure 9.1.International Joint Venture  
-Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC1=AC1,which result from changes in work rules by Venture Company employees that led to higher worker productivity.The net effect of Venture Company's formation on the welfare of the domestic economy is:

Accepted Answer

A)  No change 
B)  Gain of $2 
C)  Gain of $4 
D)  Loss of $2 
A)  No change 
B)  Gain of $2 
C)  Gain of $4 
D)  Loss of $2

Question 3

During the 1980s and 1990s,Japanese auto firms established manufacturing facilities in the United States known as "transplants."

Accepted Answer

A) True 
 B)False

Question 4

A joint venture along two large competing companies tends to yield a market-power effect,which results in a reduction in consumer surplus,that is not offset by a corresponding gain to producers.

Accepted Answer

A) True 
 B)False

Question 5

Both Coca-Cola Co.and Pepsi-Cola Co.are multinational firms in that their soft drinks are bottled throughout the world.This practice illustrates:

Accepted Answer

A)  Backward vertical integration 
B)  Forward vertical integration 
C)  Horizontal integration 
D)  Conglomerate integration 
A)  Backward vertical integration 
B)  Forward vertical integration 
C)  Horizontal integration 
D)  Conglomerate integration

Question 6

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

Accepted Answer

A)  Direct investment 
B)  Portfolio investment 
C)  Transfer pricing 
D)  Brain drain 
A)  Direct investment 
B)  Portfolio investment 
C)  Transfer pricing 
D)  Brain drain

Question 7

Direct foreign investment has taken all of the following forms except:

Accepted Answer

A)  Investors buying bonds of an existing firm overseas 
B)  The creation of a wholly owned business enterprise overseas 
C)  The takeover of an existing company overseas 
D)  The construction of a manufacturing plant overseas 
A)  Investors buying bonds of an existing firm overseas 
B)  The creation of a wholly owned business enterprise overseas 
C)  The takeover of an existing company overseas 
D)  The construction of a manufacturing plant overseas

Question 8

Figure 9.2.U.S.Labor Market  
-Consider Figure 9.2,at labor market equilibrium,_____ workers are hired at a wage rate of $____ per hour,while total wages equal ____.

Accepted Answer

A)  2,$12,$24 
B)  2,$12,$36 
C)  3,$9,$27 
D)  3,$9,$36 
A)  2,$12,$24 
B)  2,$12,$36 
C)  3,$9,$27 
D)  3,$9,$36

Question 9

In the United States,labor unions have generally resisted efforts to implement restrictions on the number of foreigners allowed into the country.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles.This practice is referred to as:

Accepted Answer

A)  Forward vertical integration 
B)  Forward conglomerate integration 
C)  Backward vertical integration 
D)  Backward conglomerate integration 
A)  Forward vertical integration 
B)  Forward conglomerate integration 
C)  Backward vertical integration 
D)  Backward conglomerate integration

Question 11

In recent years,the largest amount of U.S.direct investment abroad has occurred in:

Accepted Answer

A)  Central America 
B)  South America 
C)  Europe 
D)  Japan 
A)  Central America 
B)  South America 
C)  Europe 
D)  Japan

Question 12

Figure 9.2.U.S.Labor Market  
-Consider Figure 9.2.At labor market equilibrium,the payment to U.S.capital owners equals:

Accepted Answer

A)  $3 
B)  $6 
C)  $9 
D)  $12 
A)  $3 
B)  $6 
C)  $9 
D)  $12

Question 13

International joint ventures tend to yield a welfare increasing market-power effect and a welfare decreasing cost-reduction effect.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would best explain why foreign direct investment might be attracted to the United States?

Accepted Answer

A)  U.S.price ceilings that hold down the price of energy 
B)  U.S.wage rates exceeding the productivity of U.S.labor 
C)  Artificially high prices being charged for the stock of U.S.firms 
D)  Anticipations of future reductions in U.S.tariff levels 
A)  U.S.price ceilings that hold down the price of energy 
B)  U.S.wage rates exceeding the productivity of U.S.labor 
C)  Artificially high prices being charged for the stock of U.S.firms 
D)  Anticipations of future reductions in U.S.tariff levels

Question 15

Figure 9.1.International Joint Venture  
-Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC1=AC1,which result from wage concessions accepted by Venture Company employees.The net effect of Venture Company's formation on the welfare of the domestic economy is:

Accepted Answer

A)  No change 
B)  Gain of $2 
C)  Loss of $2 
D)  Loss of $4 
A)  No change 
B)  Gain of $2 
C)  Loss of $2 
D)  Loss of $4

Question 16

Which term best describes the Iran Oil Investment Co.?

Accepted Answer

A)  Multinational enterprise 
B)  International joint venture 
C)  Multilateral contract 
D)  International commodity agreement 
A)  Multinational enterprise 
B)  International joint venture 
C)  Multilateral contract 
D)  International commodity agreement

Question 17

Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a significant motive for the formation of multinational enterprises?

Accepted Answer

A)  Avoiding tariffs by obtaining foreign manufacturing facilities 
B)  Obtaining the benefits from overseas comparative advantages 
C)  The acquisition of natural resource supply sources 
D)  Subsidies granted by the home government to overseas corporations 
A)  Avoiding tariffs by obtaining foreign manufacturing facilities 
B)  Obtaining the benefits from overseas comparative advantages 
C)  The acquisition of natural resource supply sources 
D)  Subsidies granted by the home government to overseas corporations

Question 19

Exxon Oil Co.would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

Accepted Answer

A) True 
 B)False

Question 20

Firms undertake multinational operations in order to:

Accepted Answer

A)  Hire low-wage workers 
B)  Manufacture in nations they have difficulty exporting to 
C)  Obtain necessary factor inputs 
D)  All of the above 
A)  Hire low-wage workers 
B)  Manufacture in nations they have difficulty exporting to 
C)  Obtain necessary factor inputs 
D)  All of the above

International joint ventures can lead to welfare losses when the newly established firm:

During the 1980s and 1990s,Japanese auto firms established manufacturing facilities in the United States known as "transplants."

A joint venture along two large competing companies tends to yield a market-power effect,which results in a reduction in consumer surplus,that is not offset by a corresponding gain to producers.

Both Coca-Cola Co.and Pepsi-Cola Co.are multinational firms in that their soft drinks are bottled throughout the world.This practice illustrates:

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

Direct foreign investment has taken all of the following forms except:

Figure 9.2.U.S.Labor Market -Consider Figure 9.2,at labor market equilibrium,_ workers are hired at a wage rate of $ per hour,while total wages equal .

In the United States,labor unions have generally resisted efforts to implement restrictions on the number of foreigners allowed into the country.

Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles.This practice is referred to as:

In recent years,the largest amount of U.S.direct investment abroad has occurred in:

Figure 9.2.U.S.Labor Market -Consider Figure 9.2.At labor market equilibrium,the payment to U.S.capital owners equals:

International joint ventures tend to yield a welfare increasing market-power effect and a welfare decreasing cost-reduction effect.

Which of the following would best explain why foreign direct investment might be attracted to the United States?

Which term best describes the Iran Oil Investment Co.?

Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

Which of the following is not a significant motive for the formation of multinational enterprises?

Exxon Oil Co.would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

Firms undertake multinational operations in order to:

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

Exam 9: International Factor Movements and Multinational Enterprises

International joint ventures can lead to welfare losses when the newly established firm:

During the 1980s and 1990s,Japanese auto firms established manufacturing facilities in the United States known as "transplants."

A joint venture along two large competing companies tends to yield a market-power effect,which results in a reduction in consumer surplus,that is not offset by a corresponding gain to producers.

Both Coca-Cola Co.and Pepsi-Cola Co.are multinational firms in that their soft drinks are bottled throughout the world.This practice illustrates:

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

Direct foreign investment has taken all of the following forms except:

Figure 9.2.U.S.Labor Market -Consider Figure 9.2,at labor market equilibrium,_____ workers are hired at a wage rate of $____ per hour,while total wages equal ____.

In the United States,labor unions have generally resisted efforts to implement restrictions on the number of foreigners allowed into the country.

Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles.This practice is referred to as:

In recent years,the largest amount of U.S.direct investment abroad has occurred in:

Figure 9.2.U.S.Labor Market -Consider Figure 9.2.At labor market equilibrium,the payment to U.S.capital owners equals:

International joint ventures tend to yield a welfare increasing market-power effect and a welfare decreasing cost-reduction effect.

Which of the following would best explain why foreign direct investment might be attracted to the United States?

Which term best describes the Iran Oil Investment Co.?

Multinational corporations often locate manufacturing operations abroad in order to take advantage of foreign resource endowments or wage scales.

Which of the following is not a significant motive for the formation of multinational enterprises?

Exxon Oil Co.would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

Firms undertake multinational operations in order to:

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

Figure 9.2.U.S.Labor Market -Consider Figure 9.2,at labor market equilibrium,_ workers are hired at a wage rate of $ per hour,while total wages equal .