Question 1

The theory that to obtain a higher return on its investment,a firm will transfer its superior knowledge to a foreign subsidiary that it controls,rather than sell it in the open market is known as

Accepted Answer

A)   internalization theory.
B)   internationalization theory.
C)   strategic behavior theory.
D)   dynamic capabilities theory.
E)   eclectic theory.F) C) and E)
G) A) and D)

Question 2

Regarding the nations and regions from which FDI originated,the ____________ invest primarily in one another,just as they trade more with one another.

Accepted Answer

industrialized nations
Explana...

Question 3

The purchase of sufficient stock in a firm to obtain significant management control is known as __________.

Accepted Answer

direct investment
Explanation:...

Question 4

The development of expanded regional trade agreements,such as the Association of Southeast Asian Nations,Mercosur,and the EU,can substantially alter the level and proportion of trade flows within and across regions.

Accepted Answer

A) True 
 B)False

Question 5

Regarding the value of the outstanding stock of foreign direct investment,which of the following is not true?

Accepted Answer

A)   During the prior three decades up to 2014, the proportion of FDI accounted for by the European Union increased.
B)   During the prior three decades up to 2014, the proportion of FDI accounted for by the European Union decreased by over half.
C)   Developing countries have dramatically increased their share of FDI stock, from 1 percent in 1980 to 19 percent at the beginning of 2014.
D)   The value of the outstanding stock of foreign direct investment of the European Union was more than 50 percent higher than the level for the United States at the beginning of 2014.
E)   The value of the outstanding stock of foreign direct investment of the developing countries was higher than the level for the United States at the beginning of 2014.F) A) and D)
G) D) and E)

Question 6

Portfolio investment is the purchase of sufficient stock in a firm to obtain significant management control.

Accepted Answer

A) True 
 B)False

Question 7

The proportion of world trade accounted for by Latin America has evidenced ____ since 1980.

Accepted Answer

A)   an increase of 20 percent
B)   a tripling
C)   an overall decline
D)   more than a fivefold increase
E)   no changeF) B) and E)
G) C) and D)

Question 8

The purchase of stocks and bonds to obtain a return on the funds invested is known as __________.

Accepted Answer

portfolio investment
Explanati...

Question 9

Regarding the major trading partners of the United States

Accepted Answer

A)   the top 10 accounted for nearly 50 percent of total U.S. goods exports.
B)   the top 10 accounted for nearly 50 percent of total U.S. goods imports.
C)   China was the largest recipient of U.S. goods exports.
D)   China, Canada, and Japan were the three largest sources of U.S. goods imports.
E)   China, Canada, and Mexico were the three largest markets for U.S. goods exports.F) B) and C)
G) C) and D)

Question 10

Regarding the direction of world trade

Accepted Answer

A)   approximately three-quarters of the exports from North American nations went to other nations in North America in 2014.
B)   approximately 25 percent of exports from Asian nations went to other Asian nations in 2014.
C)   approximately 70 percent of exports from European countries went to other European countries in 2014.
D)   nearly 20 percent of U.S. exports went to Canada in 2014.
E)   nearly half of all world trade occurred within regional trade agreements in 2014.F) C) and D)
G) All of the above

Question 11

The international product life cycle

Accepted Answer

A)   explains how international trade in manufactured goods will be linked to gross national income.
B)   states that a nation will trade goods that can be produced with the production factor that is most abundant.
C)   is concerned with the role of innovation in trade patterns.
D)   explains why mercantilism failed.
E)   requires perfect competition as an assumption underlying successful trade.F) A) and E)
G) A) and B)

Question 12

The __________ is a theory explaining why a product that begins as a nation's export eventually becomes its import.

Accepted Answer

international product life cyc...

Question 13

When considering where to export,advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include all of the following except

Accepted Answer

A)   the business climate in these importing nations is already relatively favorable.
B)   import channel members (merchants, banks, and customs brokers)  are experienced in handling import shipments from the exporter's area.
C)   satisfactory transportation facilities have already been established.
D)   export and import regulations are not insurmountable.
E)   the cultures of the two countries should be relatively similar and compatible.F) B) and D)
G) D) and E)

Question 14

A(n)____________ is an industry with a limited number of competing firms.

Accepted Answer

oligopolistic industry
Explana...

Question 15

The dynamic capability theory states that for a firm to invest overseas,it must have three kinds of advantages: ownership specific,internalization,and location specific.

Accepted Answer

A) True 
 B)False

Question 16

More than one-half of the exports from developing countries go to __________ countries,and this proportion has been _____________.

Accepted Answer

A)   developed; increasing
B)   developing; increasing
C)   developed; decreasing
D)   developing; decreasing
E)   developing; stable over timeF) A) and B)
G) A) and E)

Question 17

Dunning's Eclectic Theory of International Production provides an explanation for the choice by the international firm of its overseas production facilities.

Accepted Answer

A) True 
 B)False

Question 18

According to the international product life cycle

Accepted Answer

A)   innovation occurs in the U.S. and then goes to other nations.
B)   exporting begins in the second stage.
C)   exporting replaces direct investment in the second stage.
D)   foreign-produced products compete in export markets in the third stage.
E)   foreign producers eliminate U.S. producers through continued product innovation.F) None of the above
G) A) and C)

Question 19

A nation having absolute disadvantages in the production of two goods with respect to another nation has a/an ___________ in the production of the good in which its absolute disadvantage is less.

Accepted Answer

A)   comparative advantage
B)   absolute advantage
C)   mercantilist advantage
D)   competitive advantage
E)   monopolistic advantageF) C) and D)
G) B) and C)

Question 20

Regarding the annual outflows of foreign direct investment,which of the following is not true?

Accepted Answer

A)   The overall volume of outward FDI from developing nations in 2013 was nine times the level in 2003.
B)   The proportion of worldwide outward FDI that came from developing nations increased from under 5 percent in 1990 to over 32 percent in 2013.
C)   U.S. FDI outflows of $338 billion in 2013 were more than the combined outflows of the next three largest sources of FDI: Japan, China, and Saudi Arabia.
D)   The United States and the EU combined have continued to account for one-third to one-half of worldwide FDI in recent years.
E)   The United States was the leading single national source of FDI outflows through most of the period from 1990 to 2013, with an average of nearly one-quarter of total FDI outflows for 2010-2013.F) A) and B)
G) B) and D)

Exam 2: International Trade and Investment

Regarding the annual outflows of foreign direct investment,which of the following is not true?

Correct AnswerverifiedShow Answer

The purchase of stocks and bonds to obtain a return on the funds invested is known as __________.

Correct Answerverifiedportfolio investmentExplanati...View AnswerShow Answer

Dunning's Eclectic Theory of International Production provides an explanation for the choice by the international firm of its overseas production facilities.

Correct AnswerverifiedShow Answer

The international product life cycle

Correct AnswerverifiedShow Answer

The __________ is a theory explaining why a product that begins as a nation's export eventually becomes its import.

Correct Answerverifiedinternational product life cyc...View AnswerShow Answer

Regarding the value of the outstanding stock of foreign direct investment,which of the following is not true?

Correct AnswerverifiedShow Answer

The dynamic capability theory states that for a firm to invest overseas,it must have three kinds of advantages: ownership specific,internalization,and location specific.

Correct AnswerverifiedShow Answer

Portfolio investment is the purchase of sufficient stock in a firm to obtain significant management control.

Correct AnswerverifiedShow Answer

Regarding the nations and regions from which FDI originated,the ____________ invest primarily in one another,just as they trade more with one another.

Correct Answerverifiedindustrialized nationsExplana...View AnswerShow Answer

The development of expanded regional trade agreements,such as the Association of Southeast Asian Nations,Mercosur,and the EU,can substantially alter the level and proportion of trade flows within and across regions.

Correct AnswerverifiedShow Answer

According to the international product life cycle

Correct AnswerverifiedShow Answer

The purchase of sufficient stock in a firm to obtain significant management control is known as __________.

Correct Answerverifieddirect investmentExplanation:...View AnswerShow Answer

A(n)____________ is an industry with a limited number of competing firms.

Correct Answerverifiedoligopolistic industryExplana...View AnswerShow Answer

A nation having absolute disadvantages in the production of two goods with respect to another nation has a/an ___________ in the production of the good in which its absolute disadvantage is less.

Correct AnswerverifiedShow Answer

Regarding the direction of world trade

Correct AnswerverifiedShow Answer

The proportion of world trade accounted for by Latin America has evidenced ____ since 1980.

Correct AnswerverifiedShow Answer

More than one-half of the exports from developing countries go to __________ countries,and this proportion has been _____________.

Correct AnswerverifiedShow Answer

When considering where to export,advantages to managers of focusing on a nation that is already a sizable purchaser of goods coming from the home country include all of the following except

Correct AnswerverifiedShow Answer

The theory that to obtain a higher return on its investment,a firm will transfer its superior knowledge to a foreign subsidiary that it controls,rather than sell it in the open market is known as

Correct AnswerverifiedShow Answer

Regarding the major trading partners of the United States

Correct AnswerverifiedShow Answer

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portfolio investment
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international product life cyc...
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industrialized nations
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direct investment
Explanation:...
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oligopolistic industry
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More than one-half of the exports from developing countries go to countries,and this proportion has been ___.

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