IBUS-3500
The United States accused Libya and Iran of supporting terrorist action and building weapons of mass destruction. The U.S government, therefore, imposed trade sanctions against the two countries. which if the following political arguments does this exemplify?
B. Furthering foreign policy objectives
Which of the following supports the economic case for regional economic integration?
Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement
Which of the following are the two impediments to regional economic integration?
Costs and national sovereignty
Which of the following is true of the political case for regional economic integration?
Countries can enhance their political weight in the world by grouping their economies
Which of the following refers to a permanent bailout fund, worth about €500 billion, set up by the euro zone nations to restore confidence in the euro?
European Stability Mechanism
42.Why has the FDI grown more rapidly than world trade?
Executives of business firms see FDI as a way of circumventing future trade barriers
47.Which of the following involves producing goods at home and then shipping them to the receiving country for sale?
Exporting
41.Which of the following statements is true regarding foreign-owend assets at a given time.
FDI has grown more rapidly than world trade and world output
Which of the following is one of the four factors included in Porter's diamond?
Firm strategy, structure, and rivalry
According to Vernon, which of the following factor obviates the need for pioneering U.S. firms to look for low-cost production sites in other countries?
Firms can charge relatively high prices for new products
Which of the following helps a firm to preempt available demand, gain cost advantages related to volume, and build an enduring brand ahead of later competitors?
First-mover advantages
Which of the following countries has adopted the euro as its currency?
France
99. Which of the following is most likely to be the effect of FDI in the form of a greenfield investment on the host country?
A- it drives down prices and increases the economic welfare of consumers
Which of the following is consistent with the central beliefs of mercantilism?
A. A country's government should intervene to achieve a surplus in the balance of trade
Which of the following groups benefits the most from the imposition of tariffs?
A. Domestic Producers
which of the following terms best represents a situation in which a government does not attempt to influence through quotas or duties what its citizens can buy from another country, or what they can produce and sell to another country?
A. Free Trade
Which of the following multilateral agreements was established under U.S leadership in 1947, with the objective to liberate trade by eliminating tariffs, subsidies, import quotas, and the like
A. General Agreement of Tariffs and Trade(GATT)
Meitneria and Seaboria specialize in the production of heavy machinery and textiles respectively. While Meitneria doesn't produce textiles, Seaboria is not as technologically advanced as Meitneria. In this situation, according to the Heckscher-Ohlin theory:
A. Meitneria will import textiles from Seaboria and export heavy machinery to it
Which of the following refers to a 1969 Agreement among Bolivia, Chile, Ecuador, Colombia, and Peru o establish a customs union?
Andean Pact
Which of the following refers to an attempt to establish free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam?
Association of Southeast Asian Nations
Which of the following requires that some specific fraction of a good must be produced domestically?
B . Local content requirement
Which of the following is defined as a group of countries committed to removing all barriers to the free flow of goods and services between each other, but pursuing independent external trade policies?
Free trade area
Which of the following is an example of concerns over national sovereignty acting as an impediment to regional economic integration?
Great Britain refusing to adopt the common currency of the European Union, the euro
37.Which of the following is most likely to involve establishment of a new operation in a foreign country?
Greenfield investment
The new trade theory is at variance with which of the following theories, which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture?
Heckscher-Ohlin
Which of the following is a factor that resulted in the establishment of the European Union (EU)?
The devastation of Western Europe during two world wars and the desire for a lasting peace
Which of the following is true of the four attributes that make Porter's diamond?
The effect of one attribute is contingent on the state of others
Which of the following is a major consideration that underlay the establishment of the European Community?
The need for a united Europe to deal with the United States and the politically alien Soviet Union
According to Porter's diamond, what are factor endowments?
The position of a nation regarding the components of production necessary to compete in a given industry
Which of the following is true with regard to the Asian-Pasific Economic Cooperation (APEC)?
The stated aim of APEC is to increase multilateral cooperation in view of the economic rise of the Pacific nations
44.Which of the following is true regarding the inflow of FDI?
There has been an increase in the importance of China as a recipient of FDI
Which of the following is an empirically supported prediction of the new trade theory?
Trade increases the specialization of production within an industry.
According to the new trade theory, how does trade offer an opportunity for mutual gain when countries do not differ in their resource endowments or technology?
Trade increases the variety of goods available to consumers and lowers the costs of those goods
Which of the following best indicates the motive for foreign firms to engage in dumping?
Unloading excess production in foreign markets
43.The united States has been an attractive target for FDI party because of its
Stable and dynamic economy
Which of the following was a pervasive finding of Porter's study?
Successful industries within a country tend to be grouped into clusters of related industries.
Which of the following is true the Andean Pact during the mid-1980s?
The Pact had failed to achieve the objective of a common external tariff.
Which of the following is a major obstacle to the establishment of the Free Trade Area of the Americas?
The United States wants its southern neighbors to agree to tougher enforcement of intellectual property rights, which they do not want to embrace.
Which of the following creates a barrier to subsequent entries in an industry dominated by first movers?
The ability of first movers to benefit from increasing returns
Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages?
The ability to capture scale economies ahead of later entrants
106. To encourage inward FDI, it is increasingly common for governments to
a- offer tax concessions to foreign firms that invest in their countries
101. The most important concerns regarding the costs of FDI for the home country center on the
a-balance of payments and employment effects of outward fdi
104. As an incentive to encourage domestic firms to undertake FDI, many countries have:
a-eliminated double taxation of foreign income
79.According to the radical view of fdi, multinational enterprises(mnes) that already exist in a country should be
a-immediately nationalized
77. which view of FDI traces its roots to Marxist political and economic theory?
a-radical
94. If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence, a suitable mode of entry is a(n):
a. acquisition
46. The probability of survival for an international business increases if it:
a. enters a national market after several other foreign firms have already done so.
65. Which of the following is a drawback to licensing as a mode of entry into foreign markets?
b. licensing does not give a firm tight control over manufacturing, marketing, and strategy
79. Why should a high-tech firm avoid selecting licensing as a mode of entry?
b. risk of losing control over technology
59. In which of the following modes of entry into foreign markets does a firm agree to set up an operating plant for a foreign client and hand over the plant when it is fully operational?
b. turnkey project
64.The cement market in Erbia is dominated by four firms. These firms control 85 percent of selling and buying of the domestic market. Which of the following terms explains the market structure of the cement industry in Erbia?
c-Oligopoly
92.direct effects of FDI on employment in the host country arise when a foreign MNE:
c-employs several host country citezens
67.The interdependence between firms in an oligopoly leads to:
c-imitative behavior
64. Licensing is NOT attractive to which of the following firms?
c. Firms requiring tight control of operations for realizing experience curve and location economies
72. How can a wholly owned subsidiary be established in a foreign market?
c. by acquiring an established firm in the host nation
69. Which of the following is a disadvantage of franchising?
c. it is difficult to maintain quality control over foreign franchises that are distant from the franchisor
71. What triggers the conflict of interest over strategy and goals in joint ventures?
c. shifts in relative bargaining power of venture partners
56.A firm does not want to bear the costs of establishing production facilities in a foreign country should avoid:
fdi
One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that:
firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets
The economic and strategic advantages that accrue to early entrants in an industry are called:
first-mover advantages
One of the suggestions of the new trade theory is that:
nations may benefit from trade irrespective of resource endowments or technology
Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?
new trade
54.A firm will favor FDI over exporting as an entry strategy when:
the transportation costs or trade barriers are high
The new trade theory divers from its advocacy of free trade by suggesting that:
there is an economic rationale for a proactive trade policy.
Which of the following statements is true about import quotas?
A . Import quotas benefit domestic producers by limiting import competition
Which of the following is the economic level corresponding to the least integration?
A free trade area
Salcia is a country that depends heavily on domestic products. The Salcian government decides on the products that can be imported and ensures that any product that can be produced at home is not imported. A major part of Salcia's trade is concentrated on exporting agricultural produce and textiles. Which of the following influences Salcia's approach to international trade?
A. Mercantilism
68.QFresh, a brand for energy drinks, launched a healthy lime-based drink without preservatives. Immediately after this another brand, Fast Fizz, which manufactures energy drinks, also announced the launch of a new refreshing drink without preservatives. Then Ignite, a third brand of energy drinks, reduced the price of its apple-based drink. Which of the following is most likely to happen in this oligopolistic market setup?
A. QFresh and Fast Fizz will reduce the prices of their respective drinks
Which of the following is the term for when a lower tariff rate is applied to imports within the quota than those over the quota?
A. Tariff rate quota
Which if the following is true regarding the difference between GATT and WTO?
A. The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment unlike GATT
Which of the following indicated the difference between GATT and WTO?
A. WTO has strict time limits unlike GATT
Which of the following is a reason why Mercosur was temporarily suspended in 2001?
An economic crisis in Argentina
Which of the following is true of the relationship between trade and economic growth?
A. countries open to international trade display higher growth rates than those that close their economies to trade
By lowering production costs, subsidies help domestic producers to:
A. gaining export markets
The WTO was encouraged to extend its reach to encompass regulation governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were
A. global telecommunication and financial services industries
Vernon argues that pioneering firms in the United States kept production facilities closer to the market and centers of decision making because:
A. of the uncertainty and risks inherent in introducing new products
88. Which of the following is true regarding the pragmatic nationalist view of FDI?
A. one 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
One of the reasons why protectionist pressures arose around the world during the 1980s was
A. the different ways many countries found to get around the GATT regulations
The Palladian government required that all imported products that came from Lovaskiya be checked by Palladian customs inspectors. The inspection was done at a container freight station that was both remote and poorly staffed. This delayed the Lovaskiyan consignment from reaching the consumers in Palladia. The inspection strategy adopted by the customs offices in Palladia is an example of a(n):
Administrative trade policy
Diminishing returns to specialization occurs when
B. More units of resources are required to produce each additional unit
Myra is a firm producing premium handbags for women. These bags are manufactured and patented in the country of Ceria. Manufacturers in the country of Angora create counterfeit Myra bags and sell them in the local markets of Argon. The bags are sold at almost similar prices to the original in other countries. Which of the following is likely to happen?
B. Reduction in the export opportunities for Myra's hand bags in Argonia.
The country of Argonia imposes an ad valorem tariff of 10 percent on 1 million tons of rice imports, after which an outofquota tariff of 80 percent is applied. Which of the following trade policy instruments is Argonia using?
B. Tariff rate quota
Which of the following is a trade policy instrument that the GATT and WTO have been most successful in limiting?
B. Tariffs
Which of the following identifies an attribute of tariffs?
B. Tariffs reduce the overall efficiency of the world economy
U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance of capital in the country. What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called?
B. The Leontief paradox
Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States?
B. The United States has a special advantage in producing new products made with innovative technologies.
The economically damaging effect of the Great Depression were worsened in 1929 by the:
B. U.S stock market collapse
Neo-mercantilists equate political power with economic power and economic power with
B. a balance-of-trade surplus
Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in turn exports chemicals and medicines to Argonia. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates
B. a positive-sum game.
According to the product life-cycle theory, the high cost of U.S. labor gave U.S. firms an incentive to:
B. develop cost-saving process innovations
Considered to be the first theory of international trade, the principal assertion of mercantilism is that
B. gold and silver are the mainstays of a country's wealth and essential to vigorous commerce
Which of the following groups would benefit the most from receiving subsidies?
C . Domestic producers
Which of the following refers to a quota on trade imposed by the exporting country, typically at the request of the importing country's government?
C . Voluntary export restraint (VER)
According to the Heckscher-Ohlin theory, the pattern of international trade is determined by differences in:
C. Factor endowments
An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:
C. In the long run, no country could sustain a surplus on the balance of trade
Which of the following factors is taken into consideration by David Ricardo's theory of comparative advantage in order to explain the pattern of international trade?
C. International differences in labor productivity
The republic or Argonia, owning to it's vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than what it gains from exports. Which of the following theories prohibits such international trade?
C. Mercantilism
Palladia specializes in the production of beef and produces beef more efficiently than any other country. It buys wheat, which it produces less efficiently than beef, from Rhodia, even though it produces wheat more efficiently than Rhodia. Which of the following theories of international trade supports Palladia's decision to buy wheat from Rhodia?
C. Ricardo's theory of comparative advantage
Which of the following predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce?
C. The Heckscher-Ohlin theory
Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by this form of trade between Cadmia and Rhodia?
C. The concept of absolute advantage
Which of the following suggests that trade is a positive-sum game in which all participating countries fetch economic gains?
C. The theory of comparative advantage
The WTO's agreement on which of the following is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules.
C. Trade- Related aspects of intellectual property rights (
A zero-sum game is a situation in which:
C. an economic gain by one country results in an economic loss by another.
Which of the following refers to a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war?
Central American Common Market
Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement?
Customs union
Which of the following are bureaucratic rules designed to make it difficult for imports to enter a country?
D. Administrative trade policies
The difference in Ricardo's theory and the Heckscher-Ohlin theory is that the Hecksher-Ohlin theory:
D. Argues that the pattern of international trade is determined by differences in national factor endowments
Which of the following is a provision of the Uruguay Round Agreement
D. Barriers on trade in textiles were to be significantly reduced over 10 years.
Which of the following is a reason for diminishing rather than constant returns to specialization?
D. Different goods use different resources in different proportions
Animax Limited got an order to sell 50,000 central processing units (CPUs) to Palladia, but the Palladian government stipulated that 15 percent of the component parts of those CPUs must be produced in Palladia. This stipulation by the Palladian government would be example of a(n):
D. Local content required
Which of the following asserts that countries should simultaneously encourage exports and discourage imports?
D. Mercantilism
Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. United States is the world's third largest supplier of machinery and exports heavy machinery to Australia. What explains the trade equation between Australia and the United States?
D. Nations with an absolute advantage in producing certain goods trade them for goods produced by other
Which of the following suggests that consumers in all nations can consume more if there are no restrictions on trade?
D. Ricardo's theory of comparative advantage
Which of the following is NOT a constraint on a firm's ability to disperse its productive activities to foreign countries
D. The increasing integration of the world economy
which of the following best explains the reason for the rise in protectionist pressures arose around the world during the 1980s
D. The persistent trade deficit in the world's largest economy, the United States.
Which of the following is a loophole in antidumping laws that is being exploited by many countries to purse protectionism?
D. The rather vague definition of what constitutes "dumping
The threat of antidumping action:
D. limits the ability of a firm to use aggressive pricing to gain market share in a country.
Which of the following components of Porter's diamond is particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality?
Demand conditions
Which of the following formed the crux of Porter's study of national competitive advantage?
Determining why a country achieves international success in a particular industry
Which of the following is true of factor endowments according to Porter?
Disadvantages in basic factors can create pressures to invest in advanced factors
Which of the following is in a country's best interests, according to the main tenet of mercantilism?
E. Maintaining a trade surplus
Which of the following statements is true regarding GATT
E. The last round for tariff reduction, the Uruguay Round, was launched in 1986 and completed in December 1993
Sentoria is an island nation in the Pacific Ocean. its geographical location is advantageous since it has access to a variety of aquatic life forms and also a number of freshwater sources that provides for fisheries. The lack of arable land drives local demand for seafood. The competition in the domestic fishing industry is fierce and enables Sentoria to be one of the major exporters of seafood. which of the following theories of international trade best explains Sentoria's dominance as an exporter of seafood?
E. Theory of national competitive advantage
91. Which of the following statements is most likely to be true regarding the effects of FDI on employment
E. a beneficial employment effect claimed for FDI is that it brings jobs to a host country that would otherwise not be created there
According to the new trade theory, which of the following is most likely to be a result of market expansion due to trade?
Each nation may specialize in producing a narrower range of products, importing goods that it does not make.
48.Which of the following states that combing location-specific assets or resource endowments and the firm's own unique assets often requires FDI, and it also requires the firm to establish productions facilities where those foreign assets or resource endowments are located?
Eclectic paradigm
Which of the following are unit cost reductions associated with a large scale of output?
Economies of scale
Where has the movement toward regional economic integration been most successful?
Europe
Which of the following is considered to be the ultimate controlling authority within the European Union?
European Council
Which of the following has 754 members as of 2014, and is directly elected by the populations if the member-states?
European Parliament
Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to:
Infant industry argument
Which of the following is true of the treaty of rome?
It committed the European community to establish common policies in agriculture and transportation
Which of the following is as significant impact of the North American Free Trade Agreement (NAFTA)?
It helped create the background for increased political stability in Mexico
Which of the following is a major reason why many economists remain critical of the infant industry argument?
It makes the domestic industry inefficient
which of the following is true of the European Free Trade Association (EFTA)?
It was founded by those western European countries that initially decided not to be part of the European Community.
Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)?
It was founded in 1990 at the suggestion of Australia.
If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?
It would disperse its productive activities to those countries where they can be performed most efficiently
Which of the following is a result of certain products having small national markets, in the absence of trade?
Limited demand for such products leads to non-realization of economies of scale
Which of the following is the aim of the Central American Free Trade Agreement?
Lowering of trade barriers between the United States and the Central American Common Market countries
The European Community became the European Union in 1993 following the ratification of the:
Maastricht Treaty
38.Which of the following indicates that a firm has a full outright stake in an acquisition?
Maximus Corporations acquires 100 percent of a company
Which of the following refers to a pact that originated in 1988to establish a free trade area now including Argentina, Brazil, Paraguay, and Uruguay?
Mercosur
Which of the following factor endowments would be classified as a basic factor by Michael Porter?
Natural resources
According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends?
Over time, the United States switches from being an exporter of a product to an importer of the product
Which of the following is true of the Andean Pact of 1969?
Political and economic problems seem to have hindered cooperation among member countries of the Andean Pact
Which of the following is defined as a central political apparatus that coordinated the economic, social, and foreign policy of the member-states?
Political union
Cadmia banned imports of Mattel toys with high levels of toxic lead, manufactured in Argonia. The underlying motive for such a move could be:
Protecting consumers from unsafe products
Which of the following is considered to be the ultimate objective of antidumping policies?
Protecting domestic producers from unfair foreign competition
Which of the following is the most common political argument for government intervention in international trade?
Protecting jobs and industries from unfair foreign competition
Which of the following is true with regard to regional economic integration?
Regional economic integration is good for consumers because it lowers prices.
The European Community was established with the signing in 1957 of the Treaty of:
Rome
Which of the following is an expected consequence of the implementations of the North American Free Trade Agreement?
Some U.S. and Canadian firms would move production to Mexico to take advantage of lower labor costs
Porter, in his diamond model, suggested that there is a strong association between which of the following and the creation and persistence of competitive advantage in an industry?
Vigorous domestic rivalry
Which of the following led to the collapse of the Central American Common Market in 1969?
War between Honduras and El Salvador after a riot at a soccer match between teams from the two countries
According to the new trade theory:
a country may predominate in the export of a good because it has firms that were among the first to produce that good
95. If a firm is considering entering a country where incumbents exist, and if the competitive advantage of the firm is based on the transfer of organizationally embedded competencies, skills, routines, and culture, what would be the preferable mode of entry?
a. greenfield venture
67. Franchising as a mode of entry into foreign markets is employed primarily by:
a. service firms
70. Which of the following is an advantage of joint ventures as a mode of entry into foreign markets?
a. the foreign firm benefits from the local partner's knowledge of the host country.
68. Which of the following is an advantage of franchising as a mode of entry into foreign markets?
a. the franchisor is relieved of many costs and risks of opening a foreign market on its own
81. Jupiter Systems is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which of the following modes of entry would be most favorable to the firm if it wants to keep a tight control over its technology?
a. wholly owned subsidiary
Over time the euro will impact the pan-European capital market by leading to:
an increased efficiency with which investment funds are allocated
66.If one firm is an oligopoly cuts prices, then most likely, its competitors will:
b-also respond with similar price cuts
110. Although it normally involves much longer-term commitments, franchising is essentially the service industry version of
b-licensing
105. which of the following is a home-country policy for limiting outward fdi?
b-manipulate tax rules to encourage the firms to invest at home
66. Which of the following is an example of an industry in which cross-licensing agreements are increasingly becoming common?
b. biotechnology
78. Which of the following modes of entry into a foreign markets can result in a lack of control over quality?
b. franchising
82. Which of the following modes of entry is suitable for service firms where the risk of losing control over the management skills or technological know-how is not much of a concern, and where the firms' valuable asset is their brand name?
b. franchising
80. Axiom International, an Australian company, wants to expand its operations to China, a country that is politically, culturally, and economically different. The firm needs to select a mode of entry that would give it access to local knowledge, allow sharing of development costs and risks, and also be politically acceptable. Which of the following modes of entry into foreign markets is most suitable for Axiom International?
b. joint venture
62. Turnkey products being short-term propositions can be disadvantageous for a firm if a country subsequently proves to be a major market for the output of the process that has been exported. The firm can get around this problem by:
c. taking a minority equity interest in the operation
73. Which of the following entry modes into a foreign market best serves as a high-tech firm?
c. wholly owned subsidiary
Which of the following refers to an association of English-speaking Caribbean states that are attempting to establish a custom union?
caricom
Which of the following has no barriers of trade between member countries, include a common external trade policy, and allows factors of production to move freely between members?
common market
The Andean Community now operates as a(n):
customs union
75.Silicon Valley in California is the world center for the computer and semiconductor industry and has many of the world's major computer and semiconductor companies located close to each other, thus offering the location-specific advantage of:
d-externalities
65.A critical competitive feature of an oligopoly is the:
d-interdependence of the major players.
103. Which of the following is a major foreign investment risk that is insurable through government-backed programs?
d-risks of expropriation
73.Location-specific advantages for a firm are those that rise from:
d-utilizing resource assets that are tied to a particular foreign location and valuable enough to be combined with the firm's own unique assets
49. According to Christopher Bartlett and Sumatra Ghoshal, how can local companies differentiate themselves from multinationals?
d. by focusing on market niches
43. Which of the following is true of the costs and risks associated with doing business in a foreign country?
d. they are lower in economically advanced nations
According to the new trade theory, trade, through its impact on economies of scale, is most likely to:
decrease the average costs of goods
51.FDI is risky because of the problems associated with
doing business in a different culture where the rules of the game may be very different.
The European Council is considered to be the ultimate controlling authority within the European Union (EU) because:
draft legislation from the European Commission can become EU law only if the council agrees
If Argonia exports vast quantities of cheap toys to Cadmia, selling them at below their costs of production, it would constitute:
dumping
94.Which of the following are anatinal accounts that track both payments to ad receipts from other countries?
e-balance of payments
96. A current account defecit is also known as a(n):
e-trade defecit
63. In terms of licensing, which of the following is an intangible property?
e. patents
58. In exporting, problems with local marketing agents can be overcome by:
e. setting up wholly owned subsidiaries in foreign nations to handle local marketing
Which of the following entails a closer economic integration and cooperation than a common market?
economic union
Which of the following levels of economic integration involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy?
economic union
Dumping involves foreign producers:
eliminating competition by subsidizing prices in a foreign market with home market profits and eventually raising prices to earn substantial profits
49.3M, an American firm, manufactures adhesive tapes in St. Paul, Minnesota, and ships the tapes to South Korea for sale. According to this information, which of the following is being done by 3M?
exporting
35.According to the U.S Department of Commerce, which of the following, occurs whenever a U.S citizen, organization, or affiliated group take an interest of 10 percent or more in a foreign business entity?
foreign direct investment
34.A computer manufacturing firm from the United states invests in a microprocessor manufacturing plant in Taiwan. This is an example of
foreign direct investment.
Which of the following is a feature of a common market?
free movement of factors of production between member nations
57.Governments impose quotas to limit:
importing
New trade theory argues that, through its impact on economies of scale, trade can:
increase the variety of goods available to consumers
58.The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the:
internalization theory
61.According to the internalization theory, one of the drawbacks of licensing is that
it does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability
Which of the following is true of the provisions of the North American Free Trade Agreement?
it seeks the removal of the most barriers on the cross-border flow of services
50.Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?
licensing
60.According to the internalization theory:
licensing may result in a firm's giving away valuable technological know-how to a potential foreign competitor
An argument against the North American Free Trade Agreement centered on the fear that ratification would result in:
mass exodus of jobs from the United States into Mexico
radical writers argue that
mnes exploit their home countries for the exclusive benefit of their host countries
36.Once it undertakes FDI, a firm becomes a(n):
multinational enterprise
Which of the following refers to agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other?
regional economic integration
Vernon argues that early in the life cycle of a typical new product, while demand is starting to grow rapidly in the United States, demand in other advanced countries:
remains limited to high-income groups
Porter argues that a nation's firms gain competitive advantage if their domestic consumers are:
sophisticated and demanding
A government should use subsidies to support promising firms that are active in newly emerging industries, according to:
strategic trade policy
A regional free trade agreement will benefit the world only if:
the amount of trade it creates exceeds the amount it diverts.
62.A firm is most likely to favor foreign direct investment over exporting when:
the firm wishes to maintain control over its operations and business strategy
53.Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting?
the presence or threat of trade barriers
Vernon theorizes that as the market in the United States and other advanced nations matures:
the product becomes more standardized, and price becomes the main competitive weapon
The country of Argonia and the country of Berylia imposed tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Argonia now begins to import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a higher cost. Thus, Argonia benefits from this transaction. This is known as
trade creation
Suppose the country of Ceria and Lithinia imposed tariffs on imports from all countries, and then they set up a free trade area, scrapping all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Now Ceria begins to import sugar from Lithinia. However, Ceria had previously been importing sugar from another country, Cadnia, which produced sugar more cheaply than Ceria or Lithinia. This is known as :
trade diversion
45.Countries such as the United States, the United Kingdom, France, Germany, the Netherlands, and Japan dominate in the share of total global shock of FDI and FDI outflows and in the ranking of the world's largest multinationals because they:
were the most developed countries postwar and home to the largest and best-capitalized enterprises.
The new trade theory states that:
world trade in certain products may be dominated by countries whose firms were first movers in their production
