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1 | |
Once a firm undertakes foreign direct investment, the firm becomes |
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| | A) | a greenfield investor |
| | B) | a multinational enterprise |
| | C) | a foreign investor |
| | D) | a majority holder of foreign assets |
| | E) | a minority holder of foreign assets |
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2 | |
Which of the following statements about trends in foreign direct investment over the last twenty years is not true? |
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| | A) | there has been an increase in the flow and stock of foreign direct investment |
| | B) | foreign direct investment has grown faster than the growth in world trade |
| | C) | foreign direct investment has grown more slowly than world output |
| | D) | by 2002, the global stock of foreign direct investment exceeded $7 trillion |
| | E) | foreign direct investment outflows peaked in 2000 |
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3 | |
In 2000, the largest recipient of foreign direct investment was |
|
| | A) | China |
| | B) | Germany |
| | C) | the United Kingdom |
| | D) | the United States |
| | E) | Japan |
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4 | |
Which of the following is not an important source country for foreign direct investment? |
|
| | A) | Australia |
| | B) | the United States |
| | C) | France |
| | D) | the Netherlands |
| | E) | Japan |
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5 | |
When a foreign entity is given the right to produce and sell a firm's product in exchange for royalties, the firm has engaged in |
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| | A) | exporting |
| | B) | franchising |
| | C) | a management contract |
| | D) | a licensing agreement |
| | E) | a greenfield investment |
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6 | |
An industry composed of a limited number of large firms is known as |
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| | A) | an oligopoly |
| | B) | a monopoly |
| | C) | an MNE |
| | D) | a greenfield industry |
| | E) | multipoint competition |
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7 | |
All of the following make FDI more attractive than exporting as an entry strategy except |
|
| | A) | high transportation costs |
| | B) | more control over technological know how |
| | C) | high trade barriers |
| | D) | a mismatch between firm capabilities and exporting |
| | E) | little need for control over business strategy |
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8 | |
According to ______, location specific advantages are important in understanding why firms choose FDI. |
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| | A) | Vernon |
| | B) | Knickerbocker |
| | C) | Dunning |
| | D) | Ricardo |
| | E) | Smith |
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9 | |
The ________ of FDI suggests that international production should be distributed among countries according to the theory of comparative advantage. |
|
| | A) | radical view |
| | B) | free market view |
| | C) | product life cycle theory |
| | D) | pragmatic nationalism view |
| | E) | modern colonial philosophy |
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10 | |
FDI is beneficial to the host country in all of the following ways except |
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| | A) | resource transfer benefits |
| | B) | balance of payments effects |
| | C) | increased employment opportunities |
| | D) | greater competition |
| | E) | greater national sovereignty |
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11 | |
Direct investment in business operations in a foreign country is known as greenfield investment. |
|
| | A) | True |
| | B) | False |
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12 | |
Over the last twenty years, the world economy has seen an increase in the flow but not the stock of FDI. |
|
| | A) | True |
| | B) | False |
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13 | |
FDI is investments by individuals, firms, or public bodies in foreign financial instruments. |
|
| | A) | True |
| | B) | False |
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14 | |
Between 2000 and 2003 the value of FDI declined especially in developed nations. |
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| | A) | True |
| | B) | False |
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15 | |
Most FDI in developing nations is in the form of cross-border M&A. |
|
| | A) | True |
| | B) | False |
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16 | |
The argument that combining location specific assets or resource endowments and the firm's own unique assets often requires FDI is the basis for internalization theory. |
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| | A) | True |
| | B) | False |
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17 | |
A firm may choose FDI over licensing in order to maintain tight control over manufacturing, marketing, and strategy. |
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| | A) | True |
| | B) | False |
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18 | |
When two or more enterprises encounter each other in different regional markets, national markets, or industries, multipoint competition arises. |
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| | A) | True |
| | B) | False |
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19 | |
FDI in the U.S. biotech industry can be explained by the eclectic theory. |
|
| | A) | True |
| | B) | False |
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20 | |
According to the free market view of FDI, the MNE is an instrument to exploit host countries for the benefit of the capitalist-imperialist home country. |
|
| | A) | True |
| | B) | False |