business mod. 2

The proportion of merchandise exports from Asia has ________ since 1983.

almost doubled

In 2016, what was the included in the five largest categories of U.S. goods imported from China?

footwear

The majority of the world's outward FDI has been in the form of imports and exports.

False

What is the second stage in the international product life cycle theory?

Foreign production begins.

Theory based on ________ states that international and interregional differences in production costs occur because of differences in the supply of production factors.

resource endowments

A country ________ when it decides to use its resources to produce only the product in which it has an absolute advantage.

specializes

What is one of the reasons suggested by Alfred Marshall for why firms tend to cluster together on a geographic basis?

technological information can be readily shared.

The theory of resource endowment explains

that a nation will trade goods that can be produced with the production factor that is most abundant.

Currency devaluation helps a nation avoid losing markets and regain competitiveness in world markets.

true

The first formulation of international trade theory, by Adam Smith, was motivated by political considerations.

true

The international product life-cycle theory may have its greatest usefulness in explaining trade and investment behavior when international firms introduce their new products in home markets first. Group starts

true

According to Porter, the four variables he believes influence a firm's ability to gain a competitive advantage create a

virtuous circle.

Easy Play Audio/Video Corp. has been selling audio and video equipment to the international market for six years. Recently, the company decided to drop its line of televisions because the United States is importing televisions at a lower cost than the company can make their television. Which stage of the product life cycle theory is the company currently in?

Stage 4

Deals that do not result in a foreign investor obtaining at least ________ of the shareholdings are classified as portfolio investments.

10 percent

The three largest markets for American exports of goods in 2017 were

Canada, Mexico, and China.

A nation that is struggling to remain competitive in the world market may decide to reduce the value of the country's currency relative to other currencies. This process is called currency

Devaluation

Which statement describes economies of scale?

They are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.

Supporters of mercantilism would agree that

accumulation of precious metals is an activity essential to a nation's welfare.

According to the theory of comparative advantage, trade can benefit

both countries involved in a trade.

The theory of overlapping demand suggests that

international trade in manufactured goods will be more common between countries with similar levels of income.