Question 1

Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?

Accepted Answer

A)   Fewer target firms to acquire in developing nations
B)   Fierce opposition to mergers and acquisitions in developed nations
C)   Unwillingness of foreign companies to invest in developing nations
D)   Presence of import quotas in developing nationsE) C) and D)
F) A) and C)

Question 2

In practice only a few countries country have adopted the free market view in its pure form.

Accepted Answer

A) True 
 B)False

Question 3

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?

Accepted Answer

A)   Acquisition
B)   Licensing
C)   Exporting
D)   Greenfield investmentE) A) and C)
F) B) and D)

Question 4

_____ is essentially the service-industry version of licensing,although it normally involves much longer term commitments.

Accepted Answer

A)   Franchising
B)   Subsidizing
C)   Greenfield investment
D)   PatentingE) B) and D)
F) A) and C)

Question 5

When a company brings capital and/or technology to a host country,the host country benefits from the:

Accepted Answer

A)   political effect of FDI.
B)   resource-transfer effect of FDI.
C)   balance-of-payments effect of FDI.
D)   bandwagon effect of FDI.E) A) and C)
F) All of the above

Question 6

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Accepted Answer

A)   Because of the uncertainty of the overall economic environment
B)   Because most of the job creation is indirect in nature
C)   Because jobs created by an investment may be offset by the jobs lost in domestic companies
D)   Because the unemployment rate more or less remains constant over the short-termE) All of the above
F) A) and C)

Question 7

The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

Accepted Answer

A) True 
 B)False  False

Question 8

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

Accepted Answer

A) True 
 B)False

Question 9

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Accepted Answer

A) True 
 B)False

Question 10

The pragmatic nationalist view highlights only the benefits of FDI.

Accepted Answer

A) True 
 B)False

Question 11

Describe some of the home country policies that encourage outward FDI.

Accepted Answer

Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk.The types of risks insurable through these programs include the risks of expropriation,war losses,and the inability to transfer profits back home.
In addition,several advanced countries also have special funds or banks that make government loans to firms wishing to invest in developing countries.As a further incentive to encourage domestic firms to undertake FDI,many countries have eliminated double taxation of foreign income.Last,and perhaps most significant,a number of investor countries (including the United States)have used their political influence to persuade host countries to relax their restrictions on inbound FDI.

Question 12

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Accepted Answer

The main benefits of inward FDI for a ho...

Question 13

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.

Accepted Answer

A)   imperialist
B)   conservative
C)   free market
D)   radicalE) A) and C)
F) A) and D)

Question 14

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Accepted Answer

A) True 
 B)False

Question 15

A country rejects FDI proposals in certain industries.It does so because the tangible advantages of such investments are lesser than potential costs like loss of employment and reduction of overall well-being.However,it aggressively pursues inviting foreign investments in sectors like infrastructure,education,and healthcare because of the benefits that accrue with them.Which political view of FDI is discussed in this example?

Accepted Answer

A)   The pure market view
B)   The free market view
C)   The radical view
D)   The pragmatic nationalist viewE) A) and B)
F) B) and D)

Question 16

Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Accepted Answer

A) True 
 B)False  True

Question 17

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

Accepted Answer

An oligopoly is an industry composed of ...

Question 18

Which of the following is a home-country policy aimed at limiting outward FDI flow?

Accepted Answer

A)   Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings
B)   Implementation of government-backed insurance programs to cover major types of foreign investment risk
C)   Eliminating double taxation of foreign income
D)   Persuading host countries to relax their restrictions on inbound FDIE) All of the above
F) A) and B)

Question 19

In which way can the source country's balance of payments benefit from an FDI made in a foreign country?

Accepted Answer

A)   From cash outflow during the initial investment to finance the FDI
B)   If the purpose of the foreign investment is to serve the home market from a low-cost production location
C)   From the inward flow of foreign earnings
D)   If FDI is a substitute for direct exportsE) None of the above
F) A) and D)

Question 20

The _____ of FDI refers to the amount of FDI undertaken over a year.

Accepted Answer

A)   stock
B)   net value
C)   accumulated value
D)   flowE) A) and C)
F) B) and D)

Exam 8: Foreign Direct Investment

Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?

Correct Answer
verified

In practice only a few countries country have adopted the free market view in its pure form.

Correct Answer
verified

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?

Correct Answer
verified

_____ is essentially the service-industry version of licensing,although it normally involves much longer term commitments.

Correct Answer
verified

When a company brings capital and/or technology to a host country,the host country benefits from the:

Correct Answer
verified

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Correct Answer
verified

The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

Correct Answer
verified
False

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

Correct Answer
verified

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Correct Answer
verified

The pragmatic nationalist view highlights only the benefits of FDI.

Correct Answer
verified

Describe some of the home country policies that encourage outward FDI.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Correct Answer
verified
The main benefits of inward FDI for a ho...
View Answer

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.

Correct Answer
verified

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Correct Answer
verified

Correct Answer
verified

Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Correct Answer
verified
True

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

Correct Answer
verified
An oligopoly is an industry composed of ...
View Answer

Which of the following is a home-country policy aimed at limiting outward FDI flow?

Correct Answer
verified

In which way can the source country's balance of payments benefit from an FDI made in a foreign country?

Correct Answer
verified

The _____ of FDI refers to the amount of FDI undertaken over a year.

Correct Answer
verified

Exam 8: Foreign Direct Investment

Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?

Correct AnswerverifiedShow Answer

In practice only a few countries country have adopted the free market view in its pure form.

Correct AnswerverifiedShow Answer

A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?

Correct AnswerverifiedShow Answer

_____ is essentially the service-industry version of licensing,although it normally involves much longer term commitments.

Correct AnswerverifiedShow Answer

When a company brings capital and/or technology to a host country,the host country benefits from the:

Correct AnswerverifiedShow Answer

Why is it said that not all the new jobs created by FDI represent net additions in employment?

Correct AnswerverifiedShow Answer

The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.

Correct AnswerverifiedFalse

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

Correct AnswerverifiedShow Answer

Direct effects of FDI arise when jobs are created in local suppliers as a result of the FDI and when jobs are created because of increased local spending by employees of the MNE.

Correct AnswerverifiedShow Answer

The pragmatic nationalist view highlights only the benefits of FDI.

Correct AnswerverifiedShow Answer

Describe some of the home country policies that encourage outward FDI.

Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.

Correct AnswerverifiedThe main benefits of inward FDI for a ho...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Correct AnswerverifiedTrue

What is an oligopoly? Discuss the impact of interdependence in an oligopoly.

Correct AnswerverifiedAn oligopoly is an industry composed of ...View AnswerShow Answer

Which of the following is a home-country policy aimed at limiting outward FDI flow?

Correct AnswerverifiedShow Answer

In which way can the source country's balance of payments benefit from an FDI made in a foreign country?

Correct AnswerverifiedShow Answer

The _____ of FDI refers to the amount of FDI undertaken over a year.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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False

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The main benefits of inward FDI for a ho...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified
An oligopoly is an industry composed of ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified