Chapter 5 assignments
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.
