International Business Quiz

Vertical integration refers to instances in which multinational corporations internalize (i.e., bring under their ownership and control) their transactions for intermediate goods

Suppose that Mexico has previously had restrictions on inflows of foreign direct investment from all sources, including the United States. Then suppose that they remove those restrictions on flows from the United States in a particular industry, say hammocks. As a result, several hammock producers in the U.S. move production to Mexico via FDI. Indicate for each of the groups below whether you expect them to gain or to lose from this flow of investment. a) Workers previously employed in hammock production in the U.S. Gain / Lose b) Workers previously employed in hammock production in Mexico. Gain / Lose c) Owners of firms that move production to Mexico. Gain / Lose d) Owners of U.S. hammock firms that do not move production to Mexico. Gain / Lose e) Owners of firms in Mexico that previously produced hammocks. Gain / Lose f) Consumers of hammocks (assume that there already was free trade in hammocks). Gain / Lose

Geocentric staffing policy ensures best qualified people at suitable positions irrespective of their national and cultural differences.

The Heckscher- Ohlin model is principally focused on what aspect of economics?

• International trade

• Supply and demand

• Normative economics

• Production possibility frontier

A no-trade world will have which of the following characteristics:

• Countries will have same relative endowments of production factors

• Consumers across countries will have identical and homogenous tastes

• There will be no distortions or externalities

• all of the above

How is comparative advantage defined?

• You produce the things you are especially good at, and buy from others, the goods you are less efficient in producing.

• To produce and consume all goods without trade.

• How the world actually works.

• Globalization, growing economic linkages among countries.

International Trade is most likely to generate short-term unemployment in:

• Industries in which there are neither imports nor exports

• Import-competing industries

• Industries that sell to domestic and foreign buyers.

• Industries that sell to only foreign buyers

Comparative Cost Trade Theory is given by

• Adam Smith

• David Ricardo

• Gottfried Haberle

• Heckscher Ohlin

Country A has an absolute advantage in

• Product X

• Product Y

• Neither X nor Y

• Both X and Y

The Theory of Relative Factor Endowments is given by

• David Ricardo

• Adam Smith

• F W Taussig

• Ohlin and Hecksher