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| 1.
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The adoption of the free market view in its purest form is very popular in today's global economy especially in South East Asia. |
| | A) | True |
| | B) | False |
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| 2.
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The free market view traces its roots to Marxist political and economic theory. |
| | A) | True |
| | B) | False |
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| 3.
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Research shows that in general, MNEs do not transfer significant technology when they invest in a foreign country. |
| | A) | True |
| | B) | False |
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| 4.
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When capital flows out of the U.S. it is recorded as a debit in the capital account. |
| | A) | True |
| | B) | False |
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| 5.
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The outcome of any negotiated agreement depends on the relative bargaining power of the parties involved. |
| | A) | True |
| | B) | False |
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| 6.
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The radical view of foreign direct investment |
| | A) | traces its roots to classical economics |
| | B) | suggests that FDI by the MNEs of advanced capitalist nations keeps the less developed countries of the world relatively backward and dependent on advanced capitalist nations for investment, jobs, and technology |
| | C) | argues that FDI has both benefits and costs |
| | D) | promotes the idea of aggressively courting FDI believed to be in the national interest |
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| 7.
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The ______ view of FDI was very influential in the world economy from 1945 until the 1980s. |
| | A) | the radical view |
| | B) | the non-radical view |
| | C) | pragmatic nationalism |
| | D) | the free market view |
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| 8.
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The free market view of FDI |
| | A) | promotes the idea of aggressively courting FDI believed to be in the national interest |
| | B) | argues that FDI has both benefits and costs |
| | C) | suggests that FDI by the MNEs of advanced capitalist nations keeps the less developed countries of the world relatively backward and dependent on advanced capitalist nations for investment, jobs, and technology |
| | D) | argues that international production should be distributed among countries according to the theory of comparative advantage |
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| 9.
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According to supporters of pragmatic nationalism, |
| | A) | FDI has both benefits and costs |
| | B) | FDI by the MNEs of advanced capitalist nations keeps the less developed countries of the world relatively backward and dependent on advanced capitalist nations for investment, jobs, and technology |
| | C) | international production should be distributed among countries according to the theory of comparative advantage |
| | D) | FDI believed to be in the national interest should be aggressively courted by countries |
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| 10.
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Which of the following is not true of pragmatic nationalism? |
| | A) | beneficial FDI should be aggressively courted through the use of incentives |
| | B) | governments should bargain for greater benefits and fewer costs with FDI |
| | C) | views the MNE as an instrument of imperialist domination |
| | D) | FDI should be restricted when costs outweigh benefits |
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| 11.
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Which of the following is true of the free market view? |
| | A) | FDI has both benefits and costs |
| | B) | it has Marxist roots |
| | C) | it views the MNE as an instrument for allocating production to most efficient locations |
| | D) | it suggests that subsidiaries of foreign-owned MNEs should be nationalized |
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| 12.
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Which of the following is not one of the four main benefits of FDI for a host country? |
| | A) | the resource transfer effect |
| | B) | the employment effect |
| | C) | the balance-of-payments effect |
| | D) | the exchange rate effect |
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| 13.
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Foreign management skills acquired through FDI is an example of a ___________ effect. |
| | A) | resource transfer |
| | B) | employment |
| | C) | balance-of-payments |
| | D) | competition and economic growth |
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| 14.
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When FDI is in the form of _________ the immediate effect may be _______ on host country employment. |
| | A) | acquisition, negative |
| | B) | Greenfield investment, negative |
| | C) | acquisition, positive |
| | D) | Greenfield, negative |
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| 15.
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Income from foreign investments and payments that have to be made to foreigners investing in a country is recorded in the ______ account. |
| | A) | current |
| | B) | capital |
| | C) | unilateral transfers |
| | D) | U.S. assets abroad |
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| 16.
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Every international transaction automatically enters the balance-of-payments |
| | A) | as a credit and a debit |
| | B) | in the current and the capital account |
| | C) | in the export of goods, services, and income account |
| | D) | as a unilateral transfer |
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| 17.
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FDI in the form of a Greenfield investment can result in all of following except |
| | A) | more consumer choice |
| | B) | less competition |
| | C) | lower prices |
| | D) | increased capital investment in plants, equipment, and R&D |
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| 18.
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Countries restricting outward FDI may use any of the following policies except |
| | A) | limiting capital outflows |
| | B) | manipulating tax rules to encourage domestic investment |
| | C) | establishing restrictions on investment to certain countries for political reasons |
| | D) | providing capital assistance to firms investing in foreign markets |
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| 19.
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Developed countries |
| | A) | never limit outward FDI |
| | B) | limit outward FDI as part of an ongoing policy |
| | C) | occasionally restrict outward FDI |
| | D) | have stringent regulations on outward FDI |
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| 20.
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All of the following are types of incentives designed to encourage foreign firms to invest in their countries except |
| | A) | tax concessions |
| | B) | low-interest loans |
| | C) | grants |
| | D) | double taxation |
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| 21.
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Controls to restrict inward FDI include all of the following except |
| | A) | subsidies |
| | B) | grants |
| | C) | ownership restraints |
| | D) | low-interest loans |
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| 22.
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The proposed Multilateral Agreement on Investment failed because ________ refused to sign the agreement. |
| | A) | South Korea |
| | B) | China |
| | C) | the U.S. |
| | D) | Great Britain |
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| 23.
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The four Cs of negotiation include all of the following except |
| | A) | conflicting interests |
| | B) | character |
| | C) | compromise |
| | D) | criteria |
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| 24.
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Reaching a decision that brings benefits to both parties, even though neither gets all of what it wants is which of the four Cs of negotiation? |
| | A) | conflicting interests |
| | B) | common interests |
| | C) | criteria |
| | D) | compromise |
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| 25.
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A firm's bargaining power is highest in all of the following situations except |
| | A) | when the government places a high value on what the firm has to offer |
| | B) | when the number of alternatives open to the firm is high |
| | C) | when the time frame involved is short |
| | D) | when the negotiation process is unhurried |
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