globalization exam 1

If Vietnam exports vast quantities of cheap toys to France, selling them at below the cost of production, it would constitute:

Dumping

Which of these is an example of horizontal FDI?

Dunkin Donuts buys Tim Horton's pastry shops in Canada.

Which of the following is not a reason why firms prefer to acquire existing assets rather than undertake greenfield investments?

Even though greenfield investments are comparatively less risky for a firm, acquisitions always yield higher profits.

Clean Chemical Corp. recently moved its operations from Houston, Texas, to Somalia. The decision to move was the result of new federal regulations regarding clean air standards that all chemical corporations are subjected to. A critic of globalization would say this example demonstrates what concern?

Facilities in advanced nations are moving to less developed countries that have lower environmental regulations.

The United States accuse North Korea of pursuing nuclear weapons and imposes a trade embargo on the country. Which of the following political arguments for trade policy does this exemplify?

Furthering foreign policy objectives.

Which theory 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?

Heckscher-Ohlin.

According to Clash of Civilizations, one's civilization is important because conflict in the 21st Century will increasingly revolve around issues of:

Identity

Identify the incorrect statement pertaining to Raymond Vernon's product life-cycle theory.

In the early stage, the country where a product was invented or innovated will import it.

Which of the following was the weakness of the Bretton Woods system?

It could not work if the U.S. dollar was under speculative attack or mismanaged.

Contrary to what the Heckscher-Ohlin theory would predict, the United States has been a primary importer rather than an exporter of capital goods. This phenomenon is referred to as the ___________ paradox.

Leontief

All of the following theories show why it is beneficial for a country to engage in international trade even for products it is able to produce for itself except:

Mercantilism

Under Friedman's Flat World hypothesis, which of the following is not true of Globalization 3.0?

Military force will drive further integration.

According to Porter, all of the following are broad attributes of a nation that shape the environment in which local firms compete except:

Supply fluctuations

How do voluntary export restraints affect the prices of goods?

They tend to raise the prices of imported goods in a market.

According to Ricardo's theory of comparative advantage, there may be cases when it makes sense for a country to buy goods from another country that it can make more efficiently itself.

True

European colonialism and imperialism beginning in the 15th century has played a major role in shaping globalization as we see it today.

True

Kellen's Karpets is headquartered in Las Vegas, Nevada, and has production plants in Mexico and Indonesia. Kellen's Karpets is an example of:

a multinational enterprise

If lots of people want dollars and dollars are in short supply, and few people want Korean won and won are in plentiful supply, the dollars is likely to ________ against the won.

appreciate

Administrative trade policies are:

bureaucratic rules designed to make it difficult for imports to enter a country.

Tariffs do not benefit:

consumers

The foreign exchange market serves two main functions. These are:

convert the currency of one country into the currency of another and provide some insurance against foreign exchange risk.

Which of the following is not one of the main ways governments can intervene in trade?

credit portfolios

A macro factor underlying the trend toward greater globalization is the:

dramatic developments in information processing and other technologies.

Analysts who believe that the globalization of capital has serious inherent risks argue that:

due to deregulation and reduced controls on cross-border capital flows, individual nations are becoming more vulnerable to speculative capital and "easy money".

According to the new trade theorists, because early entrants are able to gain _________, the early entrants into an industry may get a lock on the world market that discourages subsequent entry.

economies of scale

According to many influential economists, the increase in international trade and cross-border investment will result in an increase in the prices of goods and services.

false

If a firm that makes bicycles in Germany acquires a French bicycle producer, a greenfield investment has taken place.

false

The main elements of the 1976 Jamaica agreement include all of the following except:

floating rates were declared unacceptable

The _____ of FDI refers to the amount of FDI undertaken over a given period (normally a year).

flow

Savvy Skin Care, a U.S.-based beauty products manufacturer, has set up a manufacturing plant in Hong Kong. This is an example of:

foreign direct investment

Agri-Corp manufactures large farm implements and currently sources component parts for these large machines from fifteen different companies around globe. They use these sources to take advantage of lower costs. This demonstrates the idea of:

globalization of production

In the United States, the only firms allowed to import cheese are certain trading companies, each of which is allocated the right to import a maximum number of pounds of cheese each year. Identify the trade restriction being imposed by the United States.

import quota

The principal function of the trade sanctions the United States has in place against Cuba is to:

impoverish Cuba to lead to the downfall of the communist government.

According to the _____ argument, governments should temporarily support new industries until they have grown strong enough to meet international competition.

infant industry

As a company policy, Alberton Consumer Products periodically grants foreign entities the right to produce and sell its products in return for a royalty fee on every unit sold. Alberton Consumer Products' approach is:

licensing

When two or more enterprises encounter each other in different regional markets, national markets, or industries, there is:

multipoint competition

According to the _____, the United States is a major player in the commercial jet aircraft industry because American firms were first movers in the world market.

new trade theory

The product life cycle suggests that:

often the same firms that pioneer a product in their home markets undertake FDI to produce a product for consumption in foreign markets.

A currency is said to be externally convertible when:

only nonresidents may convert it into a foreign currency without any limitations

According to the _____ view of FDI, MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange.

radical

When a company brings capital and/or technology to a host country, the host country benefits from which FDI effect?

resource transfer

The U.S. government using the threat of punitive trade sanctions to try to get the Chinese government to enforce American-style intellectual property laws is an example of government intervention based on:

retaliation against unfair trade practices.

Fast food chain restaurants promote different menu choices in different countries depending on a range of factors such as demographics, local taste, income levels, and cultural values. This demonstrates that:

significant differences still exist among national markets.

_____ states that for any two countries, the spot exchange rate should change in an equal amount but in the opposite direction to the difference in nominal interest rates between the two countries.

the international fisher effect

The market imperfections approach seeks to explain:

the preference for FDI over licensing by firms as a strategy to enter foreign markets.

A firm will favor FDI over exporting as an entry strategy when:

the transportation costs or trade barriers are high.

The extent to which the income from individual sales and purchases is affected by fluctuations in foreign exchange values is known as:

transaction exposure

Historically, most FDI has been directed at the developed nations of the world.

true

One criticism of globalization is that falling trade barriers encourage companies to locate manufacturing activities in another country to take advantage of lower wage rates.

true

According to globalization opponents, what has increased in wealthy advanced economies as a result of globalization?

unemployment