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.
Answer: B. global oligopolies
A. exporting.
B. licensing.
C. foreign direct investment.
D. greenfield investment.
E. diversifying.
Answer: B. licensing
A. offer tax concessions to foreign firms that invest in their countries.
B. exclude foreign companies from specific industries.
C. require that local investors own a significant proportion of the equity in a joint venture.
D. impose high custom duties on foreign firms.
E. prohibit MNEs from joining a cartel.
Answer: A. offer tax concessions to foreign firms that invest in their countries
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.
Answer: C. Ownership restraints and performance requirements
A. FDI
B. franchising
C. greenfield investment
D. exporting
E. outsourcing
Answer: D. exporting
A. onboard production
B. offshore production.
C. licensing.
D. contract manufacturing.
E. vertical integration.
Answer: B. offshore production
A. lack of funds
B. risk of transaction loss
C. poor strategic tie-ups
D. risks of expropriation
E. losses due to natural calamities
Answer: D. risks of expropriation
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.
Answer: A. eliminated double taxation of foreign income
A. eliminating double taxation of foreign income
B. manipulating tax rules to encourage the firms to invest at home
C. withdrawing government-backed insurance programs provided to local investors
D. reducing interest rates earned on domestic investments
E. prohibiting organizations from entering into a cartel
Answer: B. manipulating tax rules to encourage the firms to invest at home
A. to focus on extractive industries, such as oil and gas.
B. to serve the home market.
C. in shipping industries.
D. to decrease the prices of products in the host countries.
E. to capture tax benefits in the host country.
Answer: B. to serve the home market
A. It drives down prices and increases the economic welfare of consumers.
B. It raises unemployment levels.
C. It causes firms to fight for scarce capital investments.
D. It leads to an oligopolistic market and unfair pricing.
E. It leads to decreased productivity, product and process innovations, and lesser economic growth.
Answer: A. it drives down prices and increases the economic welfare of consumers
A. It decreases the level of competition in the host country.
B. It tends to increase the prices of the products.
C. It leads to a high rate of unemployment in the long run.
D. When a foreign subsidiary imports a substantial number of its inputs from abroad, it results in a debit on the current account of the host country's balance of payments.
E. When a foreign subsidiary sends its profits to its home country, it results in the depletion of gold reserves of the host country.
Answer: D. When a foreign subsidary imports a substantial number of its inputs from abroad, it results in a debit on the current account of the host country's balance of payments
A. current
B. foreign
C. internal
D. tariff
E. savings
Answer: A. current
A. stock deficit.
B. inventory deficit.
C. external deficit.
D. tariff deficit.
E. trade deficit.
Answer: E. trade deficit
A. trade surplus.
B. current account deficit.
C. positive balance of payment.
D. economic recession.
E. net capital inflow.
Answer: B. current account deficit
A. borrowing from the IMF
B. selling assets to foreigners
C. divesting stock in domestic corporations
D. purchasing stocks, bonds, and real estate in other countries
E. issuing negotiable instruments like the bills of exchange
Answer: B. selling assets to foreigners
A. FDI does not result in job creation.
B. FDI has only indirect effects on employment in the host country.
C. The indirect employment effects of FDI are always smaller than the direct effects.
D. When FDI takes the form of an acquisition of an established enterprise in the host economy as opposed to a greenfield investment, the immediate effect is always an increase in the employment.
E. A beneficial employment effect claimed for FDI is that it brings jobs to a host country that would otherwise not be created there.
Answer: E. A beneficial employment effect claimed for FDI is that it brings jobs to a host country that would otherwise not be creaeted
A. brings in managers trained in the latest management techniques from the home country.
B. creates jobs because of increased local spending by employees of the MNE.
C. employs a number of host country citizens.
D. causes local suppliers to hire more people.
E. creates jobs in the supporting industries.
Answer: C. employs a number of host country citizens
A. a foreign MNE employs a number of host-country citizens.
B. jobs are created because of increased local spending by employees of an MNE.
C. an MNE brings in managers from the home country for its operations in the host country.
D. an MNE recruits people from the host country for research and development.
E. an MNE sends home country employees to host countries for training.
Answer: B. jobs are created because of increased local spending by employees of an MNE
A. equity
B. dematerialized
C. balance of trade
D. asset
E. balance-of-payments
Answer: E. balance-of-payments