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Multiple Choice Quiz
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1
_______ occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country.
A)Exporting
B)Importing
C)Foreign direct investment
D)Fixed capital formation
E)Oligopoly
2
The _______ refers to the total accumulated value of foreign-owned assets at a given time.
A)flow of FDI
B)outflow of FDI
C)fixed capital formation
D)stock of FDI
E)inflow of FDI
3
The total flow of FDI from all countries increased by _______ between 1990 and 2000.
A)fifty fold
B)twenty fold
C)ten fold
D)fifteen fold
E)five fold
4
The flow of FDI refers to:
A)The amount of FDI undertaken over a given time.
B)The totally accumulated value of foreign-owned assets at a given time.
C)The flow of FDI out of the country.
D)The flow of FDI into a country.
E)The establishment of a wholly new operation in a foreign country.
5
The stock of FDI refers to:
A)The amount of FDI undertaken over a given time.
B)The totally accumulated value of foreign-owned assets at a given time.
C)The flow of FDI out of the country.
D)The flow of FDI into a country.
E)The establishment of a wholly new operation in a foreign country.
6
A green-field investment involves:
A)The amount of FDI undertaken over a given time.
B)The totally accumulated value of foreign-owned assets at a given time.
C)The flow of FDI out of the country.
D)The flow of FDI into a country.
E)The establishment of a wholly new operation in a foreign country.
7
Much of the recent increases in FDI are being driven by the:
A)organization executives viewing FDI as way to minimize taxes.
B)governments of the developed nations desire for FDI outflows.
C)political and economic changes occurring in many of the world's developing nations.
D)political and economic changes occurring in the OECD nations.
E)developing countries taking over the developed nations.
8
_______ refers to the total amount of capital invested in factories, stores, buildings, and the like.
A)FDI outflow
B)flow of FDI
C)gross fixed capital formation
D)stock of FDI
E)oligopoly
9
_______ is the largest source country for FDI in Canada.
A)United Kingdom
B)China
C)Japan
D)Australia
E)The United States
10
Canada’s FDI outflows in the past years have went to:
A)Chinese companies operating in Canada.
B)Japanese companies operating in China.
C)Affiliates and subsidiaries in the U.S.
D)Affiliates and subsidiaries in the South Korea.
E)Canadian affiliates and subsidiaries in South America.
11
Which of the following involves producing goods at home and then shipping them to the receiving country for sale?
A)Licensing
B)Importing
C)Foreign direct investment
D)Oligopoly
E)Exporting
12
______ involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit the foreign entity sells.
A)Exporting
B)Oligopoly
C)Licensing
D)FDI
E)Importing
13
What often constrains the viability of an exporting strategy?
A)Managerial thinking
B)Transportation costs and trade barriers
C)Limited production potential
D)FDI stock
E)Viability of a firm to license
14
Internationalization theory seeks to explain why firms often prefer:
A)FDI over licensing.
B)licensing over exporting.
C)exporting over FDI.
D)FDI over exporting.
E)exporting over licensing.
15
Which of these is more profitable when a firm needs tight control over a foreign entity to maximize its market share and earnings in that country?
A)Exporting
B)Importing
C)Licensing
D)FDI
E)Franchising
16
All of these are benefits of inward FDI for a host country except the:
A)balance-of-payment effects.
B)employment effect.
C)national sovereignty effect.
D)resource-transfer effect.
E)all of these are benefits of inward FDI for a host country.
17
_______ is defined as a record of a country's payments to and receipts from other countries.
A)Current account
B)Balance-of-payment account
C)FDI account
D)Externalities account
E)National sovereignty account
18
Record of a country's export and import of goods and services is tracked by:
A)current account.
B)balance-of-payment account.
C)FDI account.
D)externalities account.
E)national sovereignty account.
19
Which of the following is not a main concern of inward FDI for host countries?
A)The possible loss of taxes that will be paid to the home country instead of the host country.
B)The perceived loss of national sovereignty and autonomy.
C)The possible adverse effects on competition with the host country.
D)Adverse effects on the balance of payments.
E)All of these are concerns.
20
When a Canadian textile firm shuts its plants and moves to Mexico:
A)imports into Canada rise and the trade position improves.
B)imports into Canada rise and the trade position deteriorates.
C)exports from Canada rise and the trade position improves.
D)exports from Canada rise and the trade position deteriorates.
E)exports and imports from Canada rise.
21
Hollywood has blamed _____ for the loss of jobs within its film industry.
A)Brazil
B)Japan
C)Canada
D)China
E)E.U.
22
Foreign ownership of the Canadian airline industry is:
A)unrestricted.
B)restricted to 25%.
C)restricted to 50% + 1.
D)restricted to NAFTA member countries.
E)unrestricted if the directors are Canadian.





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