A country has a trade surplus when


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World Economy Final


  1. The international agreement signed by the United States and 22 other countries in 1947 to promote the liberalization of foreign trade is known by its initials as;

  1. GATT

  2. WTO

  3. IMF

  4. GATS



  1. A country has a trade surplus when;

  1. Its government spending exceeds its tax revenues.

  2. Its exports exceed its imports.

  3. Its exports equal its imports.

  4. Its exports are less than its imports.



  1. If a country has a trade surplus of $40 billion, which of the following can be true?

  1. The country's exports are $110 billion, and its imports are $150 billion.

  2. The country's exports are $160 billion, and its imports are $120 billion.

  3. The country's exports are $120 billion, and its imports are $140 billion.

  4. The country's exports are $140 billion, and its imports are $40 billion.



  1. The theory of comparative advantage is credited to

  1. Adam Smith

  2. John Maynard Keynes

  3. Milton Friedman

  4. David Ricardo



  1. Country A would have an absolute advantage compared to Country B in the production of corn if

  1. Corn can be produced at lower cost in terms of other goods than it could be in Country B.

  2. Country A uses fewer resources to produce corn than Country B does.

  3. The demand for corn is higher in Country A than in Country B.

  4. Corn sells for a higher price in Country A than in Country B.



  1. China has a comparative advantage in textiles and an absolute advantage in both textiles and radios. Japan has a comparative advantage in radios. According to this scenario

  1. China should export textiles and import radios.

  2. Japan should import both radios and textiles.

  3. China should export both radios and textiles.

  4. Japan should export textiles and import radios.



  1. According to the theory of comparative advantage, a country should

  1. Specialize in and export goods with the highest opportunity cost.

  2. Specialize in and export goods with the lowest average cost.

  3. Specialize in and export goods with the lowest opportunity cost.

  4. Specialize in and export goods with the lowest production cost.



  1. The United States imports televisions from Japan and Japan imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that

  1. The United States has comparative advantage in producing computer chips.

  2. The opportunity cost of producing televisions in Japan is higher than that in the United States.

  3. The opportunity cost of producing computer chips in the United States is higher than that in Japan.

  4. The United States has comparative advantage in producing televisions.



  1. If the slopes of the ________ involving corn and wheat in the United States and Canada are equal, specialization does not benefit either country."

  1. Supply curves

  2. Demand curves

  3. Marginal revenue curves

  4. Production possibility frontiers



  1. The quantity and quality of labor, land, and natural resources of a country are its

  1. Factor endowments

  2. Capital stock

  3. Productive capacity

  4. Economic potential



  1. The software industry depends on highly trained workers, who are abundantly available in Country A. The heavy equipment industry depends on the availability of a large stock of physical capital with which Country B is well endowed. According to Heckscher-Ohlin theorem

  1. Country A should export heavy equipment

  2. Country B should import heavy equipment

  3. Country B should import software

  4. Country A should import software



  1. Which of the following phenomena cannot be explained by the simple comparative advantage theory?

  1. A country that does not have much farmland tends to import agricultural goods.

  2. A country imports and exports the same goods.

  3. A country with a lot of skilled labor tends to export highly technical goods.

  4. A country tends to export the goods that it can produce at a lower opportunity cost.



  1. The Heckscher-Ohlin theorem looks to ________ to explain trade flows.

  1. Acquired comparative advantage

  2. Relative factor endowments

  3. The existence of trade barriers

  4. The differences in preferences among consumers



  1. The quantity and quality of ________ of a country are its factor endowments.

  1. Imports and exports

  2. Deficits and surpluses

  3. Commodity money and fiat money

  4. Labor, land, and natural resources



  1. The case for free trade is based on the

  1. Theory of comparative advantage

  2. Theory of balanced growth

  3. Theory of absolute advantage

  4. Argument for a diversified economy



  1. Which country is the world's largest importer?

  1. Russia

  2. China

  3. United States of America

  4. England



  1. Followed by ________, the United States of America is the world's second largest exporter.

  1. Germany

  2. Japan

  3. Russia

  4. China



  1. Which of the following is not a disadvantage of international trade?

  1. Environmental degradation

  2. Cheaper products for consumers

  3. More waste

  4. Unfair working conditions



  1. Which of the following is among the most prominent international organizations that aims to eradicate protectionism?

  1. World Anti-Protectionism Organization

  2. World Barter Organization

  3. World Trade Organization

  4. World Open Market Organization



  1. Trade between countries is NOT dependent on...

  1. Currency exchange rate

  2. Demand for a country's goods

  3. Interest rates

  4. Social stability



  1. Price of one currency in relation to other currencies in the international exchange market is known as:

  1. Equilibrium rate

  2. Exchange rate

  3. Flexible exchange rate

  4. Fixed exchange rate



  1. According to adjustable peg system (or Bretton Woods system) of exchange rate

  1. Different currencies were pegged to one currency (US dollar)

  2. US dollar was assigned gold value at a fixed price

  3. Parity between two currencies was determined by the quantity of gold contained in them

  4. All of these



  1. Under which system, gold was taken as the common unit of parity between currencies of different countries in circulation?

  1. Managed floating system of exchange rate

  2. Gold Standard System of exchange rate

  3. Bretton woods system of exchange rate

  4. Flexible exchange rate system



  1. Out of the following, which is the most rigid exchange rate system, which does not allow any adjustment in the exchange rate?

  1. Gold Standard System of exchange rate

  2. Flexible exchange rate system

  3. Bretton Woods’s system of exchange rate

  4. None of these



  1. The rate which is determined by the government is known as:

  1. Flexible exchange rate

  2. Floating exchange rate

  3. Fixed exchange rate

  4. None of these



  1. The exchange rate at which demand for foreign currency becomes equal to its supply, is called:

  1. Equilibrium exchange rate

  2. Equal rate of exchange

  3. Mint parity

  4. All of the these



  1. Forward market is that market which:

  1. Handles current transactions

  2. Handles transactions of foreign exchange meant for future delivery

  3. Handles current as well as future transactions

  4. None of these



  1. Spot market is the market where;

  1. Forward rate of exchange is determined

  2. Future rate of exchange is determined

  3. Only current transactions are handled

  4. None of these



  1. When the exchange rate rises due to managed floating, it is called;

  1. Revaluation

  2. Devaluation

  3. Depreciation

  4. Appreciation



  1. Foreign Direct Investment is a source of;

  1. Demand for foreign exchange

  2. Supply of foreign exchange

  3. Both a and b

  4. None of these



  1. Due to depreciation of foreign currency, the supply of foreign currency in domestic economy will;

  1. Increase

  2. Not change

  3. Decrease

  4. Either increase or decrease



  1. When supply of foreign exchange increases, the equilibrium exchange rate will

  1. Rise

  2. Fall

  3. Either rise or fall

  4. Not change



  1. What is the relationship between demand for foreign exchange and exchange rate?

  1. Direct

  2. Inverse

  3. One to one

  4. No relation



  1. Equilibrium exchange rate occurs when:

  1. Supply of foreign exchange > demand of foreign exchange

  2. Supply of foreign exchange < demand of foreign exchange

  3. Supply of foreign exchange = demand of foreign exchange

  4. Both a and b



  1. What was one criticism regarding the passage of the North American Free Trade Agreement (NAFTA)?

  1. U.S. tariffs would decrease profits.

  2. U.S. companies would move jobs abroad.

  3. Establishment of similar treaties would hinder economic growth.

  4. Outsourced labor would increase prices of goods. 



  1. What is the purpose of OPEC?

  1. Encourage the use of oil throughout the Middle East

  2. Develop new ways to extract oil from the Earth

  3. Increase the sale of petroleum in 1st world nations

  4. Set the price of petroleum



  1. This is a result of a weak dollar

  1. US exports increase

  2. Americans start traveling abroad

  3. Foreigners stop investing in US companies

  4. Imports increase



  1. When 1 country makes a product at a lower opportunity cost than another country

  1. Trade surplus

  2. Comparative advantage

  3. Absolute advantage

  4. Trade deficit



  1. The Mexican peso depreciates relative to the Euro. Who would benefit from this?

  1. European consumes of Mexican goods

  2. European consumers of European goods

  3. Mexican consumers of European goods

  4. Mexican consumers of European goods



  1. What results in a positive balance of trade?

  1. Countries have similar population rates

  2. Country’s imports are greater than their exports

  3. Country’s exports greater than imports

  4. Country’s exports = imports



  1. What does absolute advantage compare?

  1. Balance of trade between nations

  2. 1 country's productivity to another country

  3. Nation’s trade deficit to another country's

  4. Opportunity cost between 2 countries



  1. Trade barriers protect who?

  1. Domestic consumers

  2. Foreign producers

  3. Foreign consumers

  4. Domestic producers



  1. Why does a country benefit from trade?

  1. Larger selection of goods

  2. People specialize

  3. Products are cheaper

  4. All listed



  1. Exchange rate is 25 Pesos per US dollar, what do you know

  1. 4 cents per peso

  2. 25 pesos for 1 Euro

  3. 25 dollars per peso

  4. None listed



  1. What do NAFTA, EU, and ASEAN have in common?

  1. Promotes free trade with all nations of the world

  2. Promotes protectionist policies

  3. Decrease trade barriers among neighboring countries

  4. Increase trade barriers among nations



  1. What is meant by infant industries?

  1. Industries produce children's clothing

  2. Industries produce baby-health related products

  3. Used by new industries for short time

  4. New industries need to be protected until they are mature



  1. If exchange rate goes from 10 to 15 cents in value, it has

  1. Negated

  2. Appreciated

  3. Lost purchasing power

  4. Depreciated



  1. What is a subsidy?

  1. Limit on amount of imports

  2. Tax on imported goods

  3. A law that sets a limit on goods imported

  4. Government payments to domestic producers



  1. A tariff on pineapples represents

  1. Increase in domestic production

  2. Trade barrier

  3. Subsidy to domestic production

  4. Balance of payment deficit



  1. What happens with depreciation?

  1. Domestic goods are cheaper

  2. Foreign goods are cheaper

  3. Foreign goods are more expensive

  4. Domestic goods are more expensive in other countries



  1. What is a trade surplus?

  1. Exports are greater than value of its imports

  2. Imports are greater than exports

  3. Trade deficit occurs

  4. Positive balance of payments



  1. If a country exports more than it imports, then what exists?

  1. Trade deficit

  2. Balance of trade

  3. No comparative advantage

  4. Trade surplus



  1. The balance of trade calculates

  1. GDP of a country

  2. Number of exports minus imports

  3. Exchange rate

  4. All the above



  1. Turkey trades textiles to Germany in exchange for German machinery. This is possible because 

  1. Countries share comparative advantage in the same goods

  2. Neither country has an absolute advantage in any good.

  3. Each country has comparative advantage in different goods.

  4. The countries are forced to trade with each other.



  1. Which headline below is an example of using standards as a trade barrier?

  1. Only professionally cleaned Oranges allowed in US

  2. Limit of 1 million tons of sugar to be imported

  3. Mexican imports completely abolished

  4. US producers of wheat get big payday from Congress.



  1. Someone who strongly opposes a trade barrier like a tariff would argue that the barrier

  1. Would lead to lower government involvement in the economy.

  2. Might cause more unemployment in domestic industries.

  3. Will lead to higher prices and fewer imported goods.

  4. Would completely eliminate imported goods.



  1. Having a comparative advantage in a good means that a country can produce the good

  1. At a lower opportunity cost

  2. Safer

  3. Faster

  4. Better



  1. What do the EU and ASEAN have in common?

  1. The United States is a member of all three

  2. They are all interested in promoting free trade.

  3. Each group attempts to enforce trade barriers rigidly.

  4. All the above



  1. Which BEST describes exchange rates?

  1. The price of one nation’s currency in terms of another.

  2. An interest rate charged to consumers who take out a loan.

  3. The difference between exports and imports

  4. An increase in the price of a market basket.



  1. What trade barrier is beneficial to both domestic producers AND domestic consumers of a good?

  1. Embargo

  2. Quota

  3. Tariff

  4. Subsidy



  1. What will happen to US imports & exports if the US $ becomes stronger than other currencies?

  1. Imports will decrease exports will increase

  2. Imports will increase, exports will decrease

  3. Both imports and exports will increase

  4. Both imports and exports will decrease



  1. Which role does money have in economic systems?

  1. A medium of exchange

  2. A good to consume

  3. A measure of satisfaction

  4. A resources for production



  1. Which of the following is not a trade bloc?

  1. ASEAN

  2. EU

  3. BANC

  4. NAFTA



  1. An advantage of a weak dollar is that...

  1. Imports are cheaper for Americans

  2. American exports increase

  3. American income tax rates go down

  4. Travel abroad is cheaper for Americans



  1. What trade barrier is the most restrictive?

  1. Standard

  2. Embargo

  3. Tariff

  4. Quota



  1. A flexible (or floating) exchange rate is altered by what forces?

  1. Supply and Demand

  2. Government order

  3. The price of gold and diamonds

  4. The World Bank



  1. How can a country maximize the benefits of trade?

  1. Making everything at home

  2. Importing everything

  3. Specializing and trading

  4. Exporting everything



  1. Which trade barriers is put into place to protect domestic consumers from harmful products?

  1. Quotas

  2. Embargoes

  3. Subsidies

  4. Standards



  1. What is the balance of payments?

  1. Accounts showing the record of all imports and exports

  2. A record of an economy’s international financial transactions

  3. The value of imported and exported goods

  4. Exports – Imports



  1. The balance of payments includes...

  1. Current account, financial account and capital account

  2. Current account and capital account

  3. Current account, capital account and trade account

  4. Trade account, credit account and capital account



  1. The implications of a current deficit are...

  1. Government must borrow money

  2. Consumers will buy more imports

  3. The economy must borrow and sell assets

  4. Banks must sell assets



  1. Why does the balance of payments ""balance""?

  1. The current account equals the financial and capital account

  2. The capital account equals imports and exports

  3. The current account equals the financial account

  4. Exports equals imports



  1. The financial account records...

  1. Flows of money relating to borrowing

  2. Flows of money relating to foreign currency exchange

  3. Flows of money relating to financial assets

  4. Flows of money relating to speculation



  1. The capital account...

  1. Records sale/purchases of businesses

  2. Records transfers, sale/purchases of all capital assets

  3. Records sales and purchases of capital goods

  4. Records all transactions of tangible capital assets



  1. Running a current account surplus could cause...

  1. The exchange rate to appreciate

  2. Unemployment to rise

  3. The economy to borrow and sell assets

  4. A fall in aggregate demand



  1. All of the following could help solve a current account deficit, EXCEPT...

  1. Putting tariffs on imported goods

  2. Lowering interest rates

  3. Depreciating the exchange rate

  4. Improving the competitiveness of exports



  1. What is the forex?

  1. Market that determines foreign exchange rates for some countries

  2. Market that determines foreign exchange rates for every country

  3. Market that determines foreign exchange rates for Asia and Oceania

  4. Market that determines foreign exchange rates for every currency



  1. One advantage to currency appreciation

Less expensive imports
Lower export levels
More expensive imports
Confidence


  1. The BOP on the current account plus the BOP on the financial account is equal to

0
One
The trade balance
Net capital flows


  1. A German receives rent from a property they own in the US. How does this affect the US BOP?

  1. Financial account, credit

  2. Current account, debit

  3. Current account, credit

  4. Financial account, debit



  1. Japanese firms purchasing production plants in Thailand will be recorded in Thailand's BoP as:

  1. A debit in its Financial Account

  2. A credit in its Current Account

  3. A debit in its Current Account

  4. A credit in its Financial Account



  1. An appreciation of the US Dollar in the FOREX market would be caused by a decrease in

  1. US interest rates

  2. Demand for the dollar by US residents

  3. Inflation

  4. A tariff on goods imported into the US



  1. Which of these is NOT included in the current account of the Balance of Payments?

  1. Net Primary Income from Overseas Assets

  2. Balance of Banking Flows

  3. Trade Balance in Services

  4. Trade Balance in Goods



  1. Finished Manufactured goods is included in?

  1. Trade Balance in Services

  2. Net Primary Income from Overseas Assets

  3. Trade Balance in Goods

  4. Net Secondary Income



  1. Tourism, transport & logistics are included in?

  1. Trade Balance in Services

  2. Trade Balance in Goods

  3. Net Primary Income from Overseas Assets

  4. Net Secondary Income



  1. Net Remittance flows from migrant workers are included in?

  1. Trade Balance in Services

  2. Net Primary Income from Overseas Assets

  3. Trade Balance in Goods

  4. Net Secondary Income



  1. Which of these would cause poor international competitiveness and impact on the trade balance

  1. Weakness in design, branding and product performance

  2. Low levels of investment and research

  3. Higher inflation than trading partners

  4. All of the above



  1. Which of these is unlikely to cause a deteriorating current account position?

  1. Poor price and non-price competitiveness

  2. A recession in one or more major trade partner countries

  3. A falling exchange rate

  4. Volatile global commodity prices



  1. Which of these is a likely consequence of a current account deficit?

  1. Loss of investor confidence if deficit is persistent

  2. Falling currency value

  3. Loss of Aggregate Demand as imports exceed exports

  4. All of the above

100. Which policies can help reduce a current account deficit?



  1. Supply side measures to improve productivity

  2. Reduce the exchange rate

  3. Tighten Aggregate Demand to reduce imports

  4. All of the above

101. In the years after World War II the world economy was dominated by which region or country?



  1. China

  2. Western Europe

  3. United States

  4. Russia

102. A trading account which records all the transactions made between one country and the rest of the world



  1. Financial Account

  2. Capital Account

  3. Balance of Payments

  4. Current Account

103. One-sided transaction transfers characterized by a resident entity in one nation providing a non-resident entity with an economic value.



  1. Current transfers

  2. Current Account

  3. Capital Account

  4. Account Balance

104. Records the net flow of investment transaction and the international undertakings of assets into an economy



  1. Current transfers

  2. Current Account

  3. Balance of Trade

  4. Capital Account

105. Any one of the types in which wealth can be held



  1. Bank account

  2. Money

  3. Asset

  4. Gold

106. Operated by a nation's central bank to buy and sell foreign currencies



  1. Bank account

  2. Current Account

  3. Capital Account

  4. Reserve account

107. The difference between the value of a country's exports and the value of its imports



  1. Balance of Payments

  2. Balance of Trade

  3. Balance Sheet

  4. Account Balance

108. An arrangement among nations that typically includes the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies.



  1. Balance of Trade

  2. Trade Liberalization

  3. Economic Integration

  4. Protectionism

109. In a ……….., countries would offer tariff reductions, though perhaps not eliminations, to a set of partner countries in some product categories.



  1. Preferential Trade Agreement

  2. Free Trade Area

  3. Economic Union

  4. Common market

110. A group of countries agrees to eliminate tariffs among themselves but maintain their own external tariff on imports from the rest of the world.



  1. Preferential Trade Agreement

  2. Single market

  3. Economic Union

  4. Free Trade Area

111. The criteria needed to determine the national source of a product



  1. Substantial transformation

  2. Rules of Origin

  3. Rules of etiquette

  4. Rules of Engagement

112. A group of countries agrees to eliminate tariffs among themselves, and set a common external tariff on imports from the rest of the world.



  1. Single Market

  2. Economic Union

  3. Free Trade Area

  4. Customs Union

113. A ……….. establishes free trade in goods and services, sets common external tariffs among members, and also allows for the free mobility of capital and labor across countries.



  1. Customs Union

  2. Common market

  3. Economic Union

  4. Free Trade Area

114. A monetary union establishes a common currency among a group of countries. This involves the formation of a central monetary authority that will determine monetary policy for the entire group.



  1. Monetary Union

  2. Common market

  3. Customs Union

  4. Free Trade Area

115. Determine the maximum amount of financial resources a member is obliged to provide to the IMF



  1. SDRs

  2. Reserves

  3. Quotas

  4. Voting Power

116. An international reserve asset created by the IMF to supplement the official reserves of its member countries



  1. SDRs

  2. Quotas

  3. Reserves

  4. Voting Power

117. An accounting unit for IMF transactions with member countries – and a stable asset in countries’ international reserves



  1. Quotas

  2. Reserves

  3. Voting Power

  4. SDRs

118. One of its functions to provide loans to member countries experiencing actual or potential balance of payments problems



  1. IMF

  2. World Bank

  3. EU

  4. WTO

119. Monitors the international monetary system and global economic developments to identify risks and recommend policies for growth and financial stability



  1. World Bank

  2. EU

  3. IMF

  4. WTO

120. An overall term for ownership of creative works



  1. Intellectual property

  2. Intellectual property rights

  3. Intellectual property law

  4. Intellectual property infringement

121. Original works of authorship, including books, movies, artwork, photos, web content



  1. Trademarks

  2. Patents

  3. Copyrights

  4. Trade secrets

122. Unique identifiers for a business products or services “names, symbols, words, devices, etc.



  1. Patents

  2. Copyrights

  3. Trademarks

  4. Trade secrets

123. Inventions, and the discovery of new and useful processes, industrial designs, computer code



  1. Trademarks

  2. Patents

  3. Trade secrets

  4. Copyrights

124. Confidential information owned exclusively by someone that can be sold or licensed



  1. Patents

  2. Trademarks

  3. Trade secrets

  4. Copyrights

125. The global forum for intellectual property (IP) services, policy, information and cooperation



  1. WTO

  2. WIPO

  3. WHO

  4. CIA

126. Aims to lead the development of a balanced and effective international IP system that enables innovation and creativity for the benefit of all.



  1. WTO

  2. WHO

  3. CIA

  4. WIPO

127. The most comprehensive multilateral agreement on intellectual property (IP).



  1. WIPO

  2. TRIPS

  3. WTO

  4. WHO

128. The movement of the able-bodied population from one country to another for more than a year for economic and other reasons.



  1. International capital migration

  2. International people migration

  3. International migration

  4. International labor migration

129. The international migration of highly qualified professionals.



  1. Brain drain

  2. International labor migration

  3. International people migration

  4. Emigration

130. A company that has business operations in two or more countries



  1. Corporation

  2. Holding Company

  3. Enterprise

  4. Multinational Corporation

131. This type of Multinational Corporation maintains a strong presence in its home country but without a central headquarters



  1. Decentralized Corporation

  2. International Division

  3. Global Centralized Corporation

  4. Transnational Corporation

132. A company that is owned by another, larger company, which is commonly called the parent or holding company



  1. Holding company

  2. Multinational Corporation

  3. Subsidiary company

  4. Transnational Corporation

133. Occurs when more units of a good or service can be produced on a larger scale with (on average) fewer input costs



  1. Economies of scope

  2. Diseconomies of scale

  3. Diseconomies of scope

  4. Economies of scale

134. Reasons for Protectionism



  1. Protecting Domestic Employment

  2. Protecting Consumers

  3. Protecting Infant Industries

  4. All the above

135. A deliberate attempt by a country to lower its currency value.



  1. Currency manipulation

  2. Currency appreciation

  3. Voluntary Export Restraints (VER)

  4. Embargoes

136. a sovereign state that has a high quality of life, developed economy and advanced technological infrastructure relative to other less industrialized nations.



  1. Developing country

  2. Newly industrialized country

  3. Developed country

  4. Emerging market

137. In which country the service sector provides more wealth than the industrial sector



  1. Developing country

  2. Developed country

  3. Least developed country

  4. Newly industrialized country

138. Tax to be paid on imports or exports



  1. Tariff

  2. Barter

  3. Income Tax

  4. Consumption

139. Level of wealth, comfort, material goods available to a certain class or a geographic area



  1. Human Resources

  2. Quality of Life

  3. Standard of Living

  4. Natural Resources

140. Materials like minerals, forests, water that occur in nature & can be used for economic gain



  1. Natural Resources

  2. Human Resources

  3. Standard of Living

  4. Scarcity

141. World-wide economic activities of countries that can affect other countries for good or bad



  1. Communism

  2. Economics

  3. Command Economy

  4. Global Economy

142. Which economic sector makes up 80% of the US economy?



  1. Manufacturing

  2. Natural Resources

  3. Service

  4. Government

143. International trade is made possible by



  1. The Fed

  2. Specialization

  3. The United Nations

  4. Self-sufficient countries

144. Occurs when a country sells more than it buys



  1. Trade deficit

  2. Budget surplus

  3. Budget deficit

  4. Trade surplus

145. All of the following where reasons for the Great Depression of 1929 except _________?



  1. Lack of technology

  2. Hyper Inflation

  3. Simultaneous price rise

  4. World War

146. Investment in a portfolio of foreign securities such as stocks and bonds



  1. Foreign Investment

  2. Foreign Direct Investment

  3. Foreign Indirect Investment

  4. International Trade

147. A firm duplicates its home country-based activities at the same value chain. "McDonald’s opening restaurants in Japan"



  1. Horizontal FDI

  2. Vertical FDI

  3. Direct FDL

  4. Government Investment

148. Amount of FDI moving in a given period (usually a year) in a certain direction



  1. FDI Flow

  2. FDI Inflow

  3. FDI Outflow

  4. FDI Stock

149. Disadvantage(s) of joint venture:



  1. Reputation of the firm is tied to the partner’s reputation

  2. The local partner often hires local staff

  3. Control issues may take precedence over getting the job done

  4. All answers are correct

150. What does the green in a Greenfield investment stand for?



  1. Agriculture

  2. High potential to make money

  3. In a transaction economy

  4. Something totally new

151. Total accumulation of FDI in/from a country



  1. Inbound FDI

  2. Outbound FDI

  3. FDI Stock

  4. FDI Flow

152. Knowledge diffused from one firm to others among closely located firms



  1. Market Failure

  2. Trading

  3. Knowledge Spillover

  4. Firm Trade

153. Advantage(s) of Greenfield investment:



  1. The company has 100% control over what it does

  2. There is reduced risk of attendant or unknown liabilities

  3. The company can build a corporate culture

  4. All answers are correct

154. Resources that cannot be transferred abroad



  1. Location-Bound Resources

  2. Inflow

  3. Outbound

  4. FDI Flow

155. Firm that engages in foreign direct investment and operates in multiple countries



  1. Enterprise Investment

  2. Countries

  3. Multinational Enterprise (MNE)

  4. Direct Investment

156. Imperfection of the market mechanism that make some transactions prohibitively costly



  1. Intra-Trade

  2. Market Disclosed

  3. Market Failure

  4. Market Good

157. Ability to extract a favorable outcome from negotiations due to one party's strengths



  1. Bargaining Power

  2. Sunk Cost

  3. Knowledge Calling

  4. Negotiations

158. An operation with shared ownership by several domestic or foreign companies



  1. Brownfield

  2. Joint-Venture

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