Question 1

The stock of foreign direct investment refers to:

Accepted Answer

A)   the total accumulated value of foreign-owned assets at a given time.
B)   the number of shares of a foreign firm held by the local investors.
C)   to the amount of FDI undertaken over a given time period (normally a year) .
D)   the dividend amount paid by the foreign firm to local investors.
E)   the flow of foreign direct investment out of a country.F) A) and D)
G) All of the above

Question 2

Host governments use a range of controls to restrict inward FDI.The two most common are:

Accepted Answer

A)   monetary restraints and prohibition on investing in certain countries.
B)   voluntary export restrictions and employment restraints.
C)   ownership restraints and performance requirements.
D)   tax concessions and government-backed insurance.
E)   employment restraints and tax deductions.F) B) and D)
G) All of the above

Question 3

Services,such as telecommunications,retailing,and many financial services,where the service has to be produced where it is delivered,lend themselves well to exporting.

Accepted Answer

A) True 
 B)False

Question 4

The strategic behavior theory:

Accepted Answer

A)   explains the constrains of exporting and licensing.
B)   seeks to explain the challenges faced by a firm during the establishment of a new operation in a foreign country.
C)   seeks to explain the patterns of FDI flows based on the idea that FDI flows are a reflection of strategic rivalry between firms in the global marketplace.
D)   reviews the theories that have been used to explain foreign direct investment.
E)   explains how greenfield investments are better than FDI.Strategic behavior theory is based on the idea that FDI flows are a reflection of strategic rivalry between firms in the global marketplace. An early variant of this argument was expounded byF) D) and E)
G) None of the above

Question 5

A firm becomes a(n) _____,once it undertakes FDI.

Accepted Answer

A)   outsourcer
B)   retail chain
C)   offshore company
D)   multinational enterprise
E)   national corporationF) B) and E)
G) All of the above

Question 6

The market imperfections approach seeks to explain:

Accepted Answer

A)   the disadvantages associated with the adoption of a completely free market view.
B)   why different nations import goods from other countries even when they are more capable of producing them efficiently.
C)   the preference for FDI over licensing by firms as a strategy to enter foreign markets.
D)   the benefits of exercising protectionism coupled with partial adoption of free market approach.
E)   the pattern of sale of products from one country to another.F) C) and E)
G) A) and E)

Question 7

Which of the following is true regarding the pragmatic nationalist view of FDI?

Accepted Answer

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.
B)   The pragmatic nationalist view states that FDI always has a positive effect on the balance of payments which arises from the outflow of a foreign subsidiary's earnings and from the import of inputs from abroad.
C)   According to pragmatic nationalist view, international production should be distributed among countries based on the theory of comparative advantage.
D)   According to pragmatic nationalist view, FDI should not be allowed to enter into a country because its costs always outweigh its benefits.
E)   The pragmatic nationalist view of FDI accepts the Marxist theory, and suggests that FDI by MNEs is an instrument of imperialism.F) C) and D)
G) B) and D)

Question 8

Governments impose quotas to limit _____.

Accepted Answer

A)   FDI
B)   importing
C)   franchising
D)   outsourcing
E)   licensingF) B) and E)
G) A) and E)

Question 9

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 cement industry in Erbia?

Accepted Answer

A)   Perfect competition
B)   Monopoly
C)   Oligopoly
D)   Dual monopoly
E)   MonopsonyF) A) and B)
G) A) and C)

Question 10

A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan.This is an example of:

Accepted Answer

A)   insourcing.
B)   stock consolidation.
C)   foreign direct investment.
D)   product differentiation.
E)   market segmentation.F) All of the above
G) A) and B)

Question 11

As an incentive to encourage domestic firms to undertake FDI,many countries have:

Accepted Answer

A)   eliminated double taxation of foreign income.
B)   started imposing local content requirements.
C)   imposed higher import tariffs.
D)   abolished the use of custom duties.
E)   eliminated subsidies.F) C) and D)
G) None of the above

Question 12

Performance requirements are controls over the behavior of the MNE's local subsidiary.

Accepted Answer

A) True 
 B)False

Question 13

When a firm exports its products to a foreign country,foreign direct investment occurs.

Accepted Answer

A) True 
 B)False

Question 14

Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk like the risks of expropriation (nationalization),war losses,and the inability to transfer profits back home.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is most likely to involve establishment of a new operation in a foreign country?

Accepted Answer

A)   Consolidation
B)   Greenfield investment
C)   Acquisition
D)   Licensing agreement
E)   Mass customizationF) C) and D)
G) A) and C)

Question 16

Multipoint competition arises when two or more enterprises encounter each other in different regional markets,national markets,or industries.

Accepted Answer

A) True 
 B)False

Question 17

Firms for which licensing is not a good option include:

Accepted Answer

A)   low-technology industries.
B)   global oligopolies.
C)   industries characterized by low cost pressures.
D)   industries where transportation costs are high.
E)   industries which need to have low control over foreign operations.F) A) and B)
G) None of the above

Question 18

Describe Dunning's arguments regarding the location-specific advantages.

Accepted Answer

The eclectic paradigm has been champione...

Question 19

What are the benefits of FDI to the home (source)country?

Accepted Answer

The benefits of FDI to the home (source)...

Question 20

According to the U.S.Department of Commerce,in the United States _____ occurs whenever a U.S.citizen,organization,or affiliated group takes an interest of 10 percent or more in a foreign business entity.

Accepted Answer

A)   multilateral investment
B)   foreign direct investment
C)   reciprocal foreign investment
D)   international divestment
E)   asset divestmentF) B) and E)
G) B) and D)

Exam 8: Foreign Direct Investment

Services,such as telecommunications,retailing,and many financial services,where the service has to be produced where it is delivered,lend themselves well to exporting.

Correct AnswerverifiedShow Answer

Host governments use a range of controls to restrict inward FDI.The two most common are:

Correct AnswerverifiedShow Answer

A computer manufacturing firm from the United States invests in a microprocessor manufacturing plant in Taiwan.This is an example of:

Correct AnswerverifiedShow Answer

Performance requirements are controls over the behavior of the MNE's local subsidiary.

Correct AnswerverifiedShow Answer

Which of the following is most likely to involve establishment of a new operation in a foreign country?

Correct AnswerverifiedShow Answer

The market imperfections approach seeks to explain:

Correct AnswerverifiedShow Answer

What are the benefits of FDI to the home (source)country?

Correct AnswerverifiedThe benefits of FDI to the home (source)...View AnswerShow Answer

When a firm exports its products to a foreign country,foreign direct investment occurs.

Correct AnswerverifiedShow Answer

Describe Dunning's arguments regarding the location-specific advantages.

Correct AnswerverifiedThe eclectic paradigm has been champione...View AnswerShow Answer

Firms for which licensing is not a good option include:

Correct AnswerverifiedShow Answer

According to the U.S.Department of Commerce,in the United States _____ occurs whenever a U.S.citizen,organization,or affiliated group takes an interest of 10 percent or more in a foreign business entity.

Correct AnswerverifiedShow Answer

The stock of foreign direct investment refers to:

Correct AnswerverifiedShow Answer

Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk like the risks of expropriation (nationalization),war losses,and the inability to transfer profits back home.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the pragmatic nationalist view of FDI?

Correct AnswerverifiedShow Answer

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 cement industry in Erbia?

Correct AnswerverifiedShow Answer

As an incentive to encourage domestic firms to undertake FDI,many countries have:

Correct AnswerverifiedShow Answer

Multipoint competition arises when two or more enterprises encounter each other in different regional markets,national markets,or industries.

Correct AnswerverifiedShow Answer

The strategic behavior theory:

Correct AnswerverifiedShow Answer

Governments impose quotas to limit _____.

Correct AnswerverifiedShow Answer

A firm becomes a(n) _____,once it undertakes FDI.

Correct AnswerverifiedShow Answer

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The benefits of FDI to the home (source)...
View Answer

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The eclectic paradigm has been champione...
View Answer

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