Font size
WorksheetsGBS 7 8
Total questions: 100
Worksheet time: 2hrs 9mins
More expansion of foreign direct investment (FDI) can boost:
Employment
Unemployment
Money circulation
Demand
What is the relationship between foreign direct investment (FDI) and Multinational Corporations (MNCs)?
A MNC is never involve FDI
FDI is never done by MNCs
MNCs involve FDI
All FDI is done by MNCs
A company that establishes a new operation in a foreign country has made:
An acquisition
A merger
A greenfield investment
A brownfield investment
Benefit of foreign direct investment (FDI) include all of the following EXCEPT:
The resource transfer effect
The employment effect
The balance of payments effect
National sovereignty and autonomy
Which of the following methods would NOT attract FDI into a country?
Tax breaks and subsidies
Grants and low interest loans
Relaxed regulations and reduced restrictions
Political instability and uncertainty
When Multinational Corporations (MNCs) set up in new countries, they may use legal creative accounting to minimize the tax burden in the recipient countries (host countries). This is an example of:
Tax avoidance
Tax evasion
Repatriation
Moving profit abroad
Tax assistance
Select options below that represent reasons for the emergence of Multinational Corporations (MNCs) and Foreign direct investment (FDI):
Higher transport and communication costs
Increase protectionism and trade restrictions
Access to cheap materials
Large customer populations in foreign markets
Which of the following best defines a multinational corporation (MNC)?
A company that exports to many countries.
A large company that import from many countries.
A company that operates in more than two different countries.
A company that produces goods and services for a large market.
Which of the following best describes the term Foreign Direct Investment (FDI)?
When a country makes an investment into a company
When a domestic country invests into its own companies
When a company makes an investment into a foreign country and has right to control
When foreign individuals invest in domestic stock markets
Job creation is a significant advantage for countries that receives FDI. Which situation below indicates that a foreign country has created jobs in the United States?
American car manufacturer Ford closes down its car production plant in Detroit, Michigan and moves to Mexico
Apple partners with electronics producer Foxconn in Shenzhen to produce its iPhone and iPad products
Japanese car manufacturer Honda builds a production plant in Marysville, Ohio and expands to 11 other locations as well
American company Toys R Us closes down its retail stores in the US and starts opening them in China
Forms of international investment are:
Investing in enterprises with 100% international capita
International franchising
International franchising
Exporting goods
A company that invests investment (in the form of product marketing or manufacturing subsidiaries) into many countries is called ________.
Direct export company
Foreign company
Multinational company
Company with global business relationship
What types of risks are insured through?
Deprived of ownership, Damage due to war
Inability to return profits to the country itself, Deprived of ownership
Damage due to war, Inability to return profits to the country itself
Deprived of ownership, Damage dut to war, Inability to return profits to the country itself
How does the UK have policies to control outward FDI over time ?
Prohibition of FDI
Promote liberalization of FDI management regulations
Exchange control to limit the amount of capital that businesses can take out of the country.
Remove certain fields
Why do people think franchising is preferred to FDI?
The business has a valuable secret that the licensing contract cannot adequately protect
Less expensive, less risky
Strictly control foreign business entities
The skills of the business follow a franchise
The establishment of a wholly new operation in a foreign country is called:
An acquisition
A merger
A greenfield investment
A multinational venture
Most FDI is direct toward:
China
The United States
Emerging economies
Developed countries
Benefits of FDI include all of the following except:
The resource transfer effect
The employment effect
The balance of payments effect
National sovereignty and autonomy
What does the Gross Fixed Capital Formation describe?
Comparison of the inflows and outflows of FDI
Summarization of the total amount invested in facilities (such as factories, stores, buildings, etc…)
Summarization of the total amount invested in other nations
Differentiation between the flow and the stock of FDI
Which of the following is not a cost of outward FDI for host countries?
The effect on employment is FDI is a substitute for domestic production
When FDI is a substitute for direct exports
The initial capital outflow required to finance the FDI
Gains from learning valuable skills from foreign markets
Which is NOT TRUE about the primary costs of FDI to host countries are:
Loss of sovereignty and patriotism
Capital outflow
Adverse effects on competition and exports.
A low-cost production location
What is the most important concerns of home country costs?
The balance of payments.
Resource – Transfer Effects
Adverse Effects on Competition
Effect on Economic Growth
What impact could increased productivity growth, product and process innovations, and greater economic growth?
Resource – Transfer Effects
Balance of Payments Effects
Employment Effects
Effect on Competition and Economic Growth
What are the benefits of FDI to host countries?
Repatriated earnings from profits from FDI
Learning via FDI from operations abroad
Increased exports of components and services to host countries
Access to management expertise, skills and technology
Identify the theory that seeks to explain why firms often prefer FDI over licensing as a strategy for entering foreign market
Internationalization theory
Raymond Vernon’s theory
Dunning’s theory
Knickerbocker’s theory
Historically, political ideology toward FDI within a nation has ranged from a dogmatic radical stance that is hostile to all inward FDI at one extreme to an adherence to the noninterventionist principle of free market economics at the other. Between these two extremes is an approach that might be called :
The Radical View
Pragmatic Nationalism
The Free Market View
Shifting Ideology
Choose the wrong answer
The free market view argues that :
FDI by the MNE increases the overall efficiency of the world economy.
International production should be distributed among countries according to the theory of comparative advantage
The multinational enterprise (MNE) is an instrument of imperialist domination
the MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe
Radical writers argue that :
MNEs extract profits from the host country and take them to their home country, giving nothing of value to the host country in exchange
International production should be distributed among countries according to the theory of comparative advantage
The MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe
FDI by the MNE increases the overall efficiency of the world economy
The pragmatic nationalist view is that FDI has
benefits
boths benefits and costs
cost
brought nothing
Which form is not FDI?
investment made to develop a production or manufacturing plant from the ground up (“greenfield investments”)
mergers and acquisitions
licensing
joint ventures
Foreign Direct Investment or FDI occurs when a company from one country invests in another country as an effort to secure lasting interest in the other country's enterprises to produce and/market a product or service.
True
False
Which of the following best describes the term "Foreign Direct Investment"?
when a country makes an investment into a company
when a company makes an investment into a foreign country
when a domestic country invests into its own companies
when foreign individuals invest in domestics stock market
Which of the following is the example of FDI?
The takeover of a parts supplier in Japan by Nissan
A large clothes manufacturer in Bangladesh selling clothes to a German retailer
The construction of a factory in Shanghai by an America MNC
a us $200,000 investment by a government in the nation's infrastructure.
A company that establishes a new operation in a foreign country has made
An acquisition
A merger
A greenfield investment
A joint venture
Motives for Foreign Direct Investment (FDI) are as below except:
Supply Factor
Government Factor
Demand Factor
Political Factor
When firms invest in the same industry overseas as it operate back at home is called...
Vertical FDI
Horizontal FDI
Vertical FDI occurs when firms locate different phases of production in different countries.
True
False
Which situation below indicates that foreign company has created jobs in the United States?
American car manufacturer Ford closes down its car production plant in Detroit, Michigan and moves to mexico.
Japanese car manufacturer Honda builds a production plant in Marysville, Ohio and expand to 11 other location as well.
Apple partners with electronic producer Foxconn in Shenzhen to produce its iphone and ipad products.
American company Toys R us closes down its retail stores in the US and starts opening them in china.
Which of the following methods would NOT attract FDI into a countrty?
Tax breaks and subsidies
Relaxed regulations and reduced restrictions
Grants and low interest loan
Political instability and uncertainty
Which of the following are not the positive impact of FDI on Host Country?
Resource Transfer Effect
Employment Effect
Income Disparity Impact
Competition and Growth
Which of the following are benefits of Foreign direct investments?
Job creation
Non- improved new technology
Helping countries with limited resources
No difference in government policies
What is Foreign direct investment?
This is when a country makes an investment into a company.
This is when a company makes an investment into a foreign country and has the right to control.
When a domestic country invest into its own companies.
When a foreign individual invest in domestic stock markets
One reason direct investment may be prefered to portfolio is
it fills the savings investment gap.
it doesn't pose a threat to national sovereignty
it doesn't create an outflow on primary income.
it is more long term and stable.
One possible disadvantage of FDI is
transfer pricing and tax avoidance.
interest payments rising.
the DSR rising.
increased foreign ownership.
What does the acronym FDI mean?
Free Daily Inputs
Foreign Dividends Investment
Foreign Direct Intervention
Foreign Direct Investment
What is a joint venture?
A fancy name for a tourism deal
Public deal
Two or more private investors
Private and public investors
Which is repatriation?
An overseas address
Sending a foreigner to his/her country
Transferring profits to the home country
Transferring belongings to your home country
Which is a negative aspect of FDI
Job creation across the nation
Cash infusion into the local economy
Transfer of technology
Potential of a monopoly
What kind of economic integration arrangement has common policies on product regulation, and free movement of goods, services, capital and labour?
Common markets
Preferential trading area
Free trade areas
Custom unions
It is correct to say that countries within a customs union have...
Common external barriers
Common currency and a common central bank
Common policies on product regulation.
None of the above
The EU is better seen as an example of...
A Economic and monetary union
Free trade area
A Customs Union
A Complete Economic integration
1. Which of the following is an example of regional economic integration?
The European Union
The British Commonwealth
The Cingular and AT&T merger
The Commonwealth of Independent States
2. The General Agreement on Tariffs and Trade (GATT) expanded considerably into a multilateral trading system called _____.
EU
NAFTA
UN
WTO
3. Which of the following agreements was in direct violation of the principles of GATT?
Trade policy review
Multifibre Arrangement
General Agreement on Trade in Services
Trade-Related Aspects of Intellectual Property Rights
4. A free trade area _____.
imposes common external policies on nonparticipants in order to combat trade diversion
permits the free movement of goods and people among member nations
comprises a group of countries that remove trade barriers among themselves
coordinates and harmonizes economic policies in order to blend their economies into a single economic entity
5. NAFTA is an example of a(n) _____.
free trade area
customs union
common market
economic union
6. Which of the following characterizes a customs union?
It requires each member to maintain different external policies regarding non-members.
It imposes common external policies on
non-members.
It integrates the political and economic affairs of a region.
It permits the free movement of goods and people among its members.
7. Which of the following is an example of a political union?
The EU
The United States
The British Commonwealth
The Andean Community
8. The Euro is currently used in _____.
all EU member countries
all European countries
19 EU countries
Schengen countries only
9. Which of the following regions describes the euro zone?
A region that comprises EU members without a common currency
A region that comprises all EU members
A region that has passport-free traveling
A region that has a common currency
10. In which of the following types of economic integration systems will the establishment of a common currency be possible?
Customs union
Economic union
Free trade area
Common market
How do organizations around the world capitalize on global and regional economic integration?
Discuss how regional economic integration can assist their members to deal with Covid-19?
Multiple Answers Possible: Select all the options below that are characteristics of the Economic Union stage of economic integration:
No internal trade barriers
Common External Tariff/CET
Free movement of labour and capital
Common currency and economic policies
Political, social and cultural integration
Multiple Answers Possible: Select all the options below that are characteristics of the Free Trade Area stage of economic integration:
No internal trade barriers
Common External Tariff/CET
Free movement of labour and capital
Common currency and economic policies
Political, social and cultural integration
Multiple Answers Possible: Select all the options below that are characteristics of the Common Market stage of economic integration:
No internal trade barriers
Common External Tariff/CET
Free movement of labour and capital
Common currency and economic policies
Political, social and cultural integration
Multiple Answers Possible: Select all the options below that are characteristics of the Custom Union stage of economic integration:
No internal trade barriers
Common External Tariff/CET
Free movement of labour and capital
Common currency and economic policies
Political, social and cultural integration
Caricom is an example of a/an:
Free Trade Area
Custom Union
Common Market
Economic Union
NAFTA is an example of a/an:
Free Trade Area
Custom Union
Common Market
Economic Union
The coming together of national economies to operate as one economy
Economic Integration
Globalization
Teamwork
CARICOM
The global integration of international trade, investment, information technology (IT), and cultures.
Economic Integration
Globalization
Trading bloc
CARICOM
What type of economic measure is being shown here?
Economic Integration
Globalization
Protectionism
Trade Liberalization
Groups of nations that come together to trade under a trading agreement
Economic Integration
Globalization
Trading bloc
CARICOM
Regional economic integration involves agreements among countries in a
geographic region to reduce, and ultimately remove, tariff and nontariff barriers to
the free flow of goods, services, and factors of production between each other.
True
False
In a customs union, trade barriers are eliminated among member countries, and
each country maintains its own external trade polices with nonmember countries
True
False
Trade diversion occurs when higher-cost external producers are replaced by lower-
cost external producers within the free trade area
True
False
Country X and Country Y reach an agreement to boost bilateral trade. They agree to remove all barriers to the trade of goods and services. They, however, are free to determine their own trade policies with regard to nonmembers. Which level of economic integration is this an example of?
Free Trade Area
Custom Union
Common Market
Common Union
A _____ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between
members.
free trade area
common market
custom union
economic union
Which feature of an economic union differentiates it from a common market?
Free flow of products and factors of production among countries
A common monetary and fiscal policy
A common external policy towards nonmembers
Ability of factors of production to move among members
The move toward economic union raises the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations. Which of the following
offers a solution to this problem?
A common market
A free trade area
An economic union
A political union
To ensure that a free trade agreement does not result in trade diversion, which of
the following has to come within the scope of WTO?
Non tariff barriers
Energy market
Services
Tax rates
The European Community was established by:
the Single European Act of 1987
the Masstricht Treaty 1994
the Masstricht Treaty 1991.
the Treaty of Rome signed in
1957
The _____ is responsible for proposing EU legislation, implementing it, and
monitoring compliance with EU laws by member states.
European Commission
European Parliament
Court of Justice
Council of European Union
Which of the following is directly elected by the populations of the member states
and is primarily a consultative rather than legislative body?
European Commission
European Parliament
Council of European Union
Court of Justice
Which of the following is seen as a benefit of the euro?
Lowering foreign exchange and hedging costs
Zero interest expense for businesses
Reduced competition in most industries
Goverment gaining better control over their monetary policies
What was the main objection raised by those in the United States and Canada who
opposed the ratification of the NAFTA?
Balance of payment problems
Job losses
Threat of competition from Asian companies
Threat of a loss of national sovereignty
Which of the following is true of ASEAN?
China, India, South Korea are among its members
Collectively, member states account for 55% of world trade
It is slowly progressing toward a free trade area
It has been successful in filling basic objectives of fostering a freer trade among members
Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of:
Mercosur
EU
NAFTA
Andean Pact
A group of countries that agree to reduce or eliminate trade barriers but each can have its own trade policy toward other countries have established a
monetary union
free trade area
customs union
common market
A group of countries that allow free movement of labor and capital within the group have a
customs union
free trade area
common market
perferential trade agreement
A trading bloc may be a
free trade area, customs union or common market
customs union or common market
common market or monetary union
customs union or monetary union
Trade creation and trade diversion may result from the creation of a trading bloc. Trade creation refers to the idea that _____________________ while trade diversion means that _____________________.
lower cost producers are replaced by higher cost producers / higher cost producers are replaced by lower cost producers
higher cost producers are replaced by lower cost producers / lower cost producers are replaced by higher cost producers
trade expands through more exports and imports / trade contracts through fewer exports and imports
imports from efficient producers are replaced by imports from inefficient producers / imports from inefficient producers are replaced by imports from efficient producers
Each of the following statements describes monetary union except
a group of countries that adopt a common currency
a group of countries that have a common central bank
a group of countries that have a common fiscal policy
a group of countries that have a common monetary policy
Countries in a monetary union
can exchange their various currencies at no cost between member states
often face convergence requirements
have greater flexibility when conducting monetary policy
can revalue or devalue their currency
The World Trade Organization (WTO) does not
monitor national trade policies
help member countries with technology and training in relation to trade
administer trade agreements
monitor the quality of goods traded across borders
A(n) ________ combines the elimination of internal trade barriers among member countries with the adoption of common external trade policies toward nonmembers.
free trade area
customs union
common market
economic union
Country X and Country Z have established a complete political and economic integration. The countries are most likely engaged in a(n) ________.
custom union
common market
economic union
political union
A free trade area ________.
is complete political and economic integration of two or more countries
eliminates trade barriers among member countries
allows workers to move freely among trade nations
avoids problems stemming from trade deflections
A common market ________.
is complete political and economic integration of two or more countries
requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, eliminate barriers to the movement of the factors of production, and coordinate economic policies
eliminates trade barriers among member countries
requires members to eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production
The ________ is an agreement to create a customs union among the governments of Argentina, Brazil, Paraguay, and Uruguay.
Mercosur Accord
ASEAN Free Trade Area
Andean Pact
Central America Common Market
