Chapter 5 assignments

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A trade deficit occurs when a country exports more merchandise than it imports. a. True b. False

False

FDI is a zero-sum game. a. True b. False

False

FPI represents significant ownership rights but no management control rights. a. True b. False

False

Firms that engage in FDI are known as NGOs. a. True b. False

False

In the past decade, world trade growth has always matched GDP growth every year. a. True b. False

False

When a country restricts the amount of goods that can be brought into the country, this is called an export quota. a. True b. False

False

When a country restricts the amount of goods that can be brought into the country, this is called an import tariff. a. True b. False

False

The United States has the largest trade deficit when its deficit in merchandise trade is combined with its surplus in service trade. a. True b. False

T

16. A trade deficit occurs when a country imports more merchandise than it exports. a. True b. False

True

An FPI is a foreign indirect investment. a. True b. False

True

Between 1993 and 2013, world trade growth outpaced GDP growth each year. a. True b. False

True

FDI benefits home countries by facilitating learning from operations abroad. a. True b. False

True

Firms that engage in FDI are known as MNEs. a. True b. False

True

MNEs typically prefer to minimize host government intervention while maximizing the incentives provided by the host government. a. True b. False

True

OLI advantages relate to ownership, location, and internalization. a. True b. False

True

The benefits of FDI include both equity ownership rights and management control rights of the investing firm. a. True b. False

True

The perspective that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantages is called the "free market view." a. True b. False

True

The theory of national competitive advantage of industries is also called the diamond theory. a. True b. False

True

When a firm sells its products to a firm in a foreign country, this is an example of exporting. a. True b. False

True

Which of the following countries has the largest trade deficit when its deficit in merchandise trade is combined with its surplus in service trade? a. United States b. Russia c. China d. India

a. United States

Net losses that occur in an economy as a result of tariffs are called: a. a deadweight cost. b. an import quota. c. an export tariff. d. a trade deficit.

a. a deadweight cost.

When a firm sells its products to a firm in a foreign country, this is an example of: a. exporting. b. domestic trading. c. importing. d. resource mobility

a. exporting.

When a country considers both the pros and cons of FDI and approves FDI only when its benefits outweigh its costs, this is called: a. pragmatic nationalism on FDI. b. vertical FDI. c. free market on FDI. d. horizontal FDI.

a. pragmatic nationalism on FDI.

According to the United Nations, a firm must have at least what equity stake in a foreign-based enterprise to qualify as an FDI? a. 2 percent b. 10 percent c. 15 percent d. 5 percent

b. 10 percent

In 2013, which country led the world in merchandise exports? a. Africa b. China c. United States d. Germany

b. China

When a firm takes on a related business activity at a different value-chain stage from its home country activity through FDI, what type of FDI is involved? a. Limited FDI b. Vertical FDI c. Portfolio FDI d. Horizontal FDI

b. Vertical FDI

When a country imposes a tax on a good that is imported from another country, this is called: a. an import quota. b. an import tariff. c. an export tariff. d. a trade deficit.

b. an import tariff.

According to the World Trade Organization, between 1993 and 2013 world trade: a. shrank by nearly 3%. b. grew by an average of more than 5%. c. grew by nearly 3%. d. shrank by an average of more than 5%

b. grew by an average of more than 5%.

From an institutional-based view, internalization is a response to the imperfect rules governing international transactions known as: a. reverse FDI. b. market imperfections (or market failure). c. management. d. OLI disadvantage.

b. market imperfections (or market failure).

If BMW did not distribute its cars in Germany, but, instead, invested in car dealerships in Saudi Arabia, what type of FDI would this represent? a. Horizontal FDI b. Upstream vertical FDI c. Downstream vertical FDI d. Internalization FDI

c. Downstream vertical FDI

When a country relies on tariffs to discourage imports, this is an example of: a. an import tariff. b. an import quota. c. a tariff barrier. d. an import tax.

c. a tariff barrier.

FPI stands for: a. none of these answers. b. foreign production investment. c. foreign portfolio investment. d. foreign process investment.

c. foreign portfolio investment.

If a food and beverage distributor in the UK invested in grocery stores in western European countries, what type of FDI would this represent? a. Horizontal FDI b. Internalization FDI c. Upstream vertical FDI d. Downstream vertical FDI

d. Downstream vertical FDI

When a firm takes the same business activity at the same value-chain stage from its home country and duplicates it in a host country through FDI, what type of FDI is involved? a. Upstream FDI b. Downstream FDI c. Vertical FDI d. Horizontal FDI

d. Horizontal FDI

Firms that invest in foreign direct investment (FDI) are called: a. upstream vertical FDI. b. downstream vertical FDI. c. demonstration vertical FDI. d. MNEs.

d. MNEs.

In 2013, which country led the world in merchandise imports? a. China b. Africa c. Germany d. United States

d. United States

When a country financially subsidizes some of its own key manufacturers, this is an example of: a. an import tax. b. an import quota. c. an import tariff. d. a nontariff barrier.

d. a nontariff barrier.


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