1. Which of the following is an example of Foreign Direct Investment (FDI)? a US
ID: 1125164 • Letter: 1
Question
1. Which of the following is an example of Foreign Direct Investment (FDI)? a US firm …..
a. starting a joint venture in Korea with a Korean firm
b. buying a bond floated by a Korean firm
c. selling products in Korea through a Korean distributor
d. subcontracting work to a firm in Korea
2. Which of the following statements about culture is FALSE:
a. A country can have multiple cultures.
b. Culture is socially learned
c. A culture can spread across multiple countries.
d. Culture is inherited
3. Which of the following statements is FALSE?
a. “free” trade implies zero tariffs or quotas
b. Consumers gain from free trade by having access to a greater variety of lower priced goods
c. Free trade does not necessarily reduce unemployment
d. The WTO enforces zero tariffs among its members
4. Which of the following is NOT an example of trade?
a. a US consumer buying downloadable music from a German website
b. a US building contractor buying a drilling tool from a manufacturer in Germany
c. IBM Singapore shipping components made in its plant to an IBM plant in the US
d. IBM building a sales office in Mumbai
5. For two floating currencies like the US dollar $ and European Euro € what determines the $ to € exchange rate?
a. Supply and demand in the foreign exchange market
b. The US Federal Reserve and European Central Bank negotiate the $ to € exchange rate
c. The treaty of Bretton Woods determines these exchange rates
d. The World Bank specifies the exchange rate
6. Name two blocs of countries in the world that are pursuing trade integration?
a. North Atlantic Treaty Organization (NATO) and Association of Southeast Asian Nations (ASEAN)
b. Central America Free Trade Area (CAFTA) and North America Free Trade Area (NAFTA)
c. Mercosur and the Organization of American States
d. NATO and the European Union
e. Organization of Economic Cooperation and Development (OECD) and the British Commonwealth
7. What is a multinational company?
a. A company that has foreign direct investment in more than one country
b. A company that is owned by citizens of more than one country
c. A company that exports its products
d. A company that pays taxes in more than one country
e. None of the above
8. Arguments in favor of a company following a global integration strategy include all of the following except:
a. It enhances corporate abilities to transfer products and technologies abroad
b. World markets are more open than before
c. Differences in customer preferences of goods and services are growing
d. Transportation costs over long distances have been falling.
9. Which of the following ways of doing business in a country may have tariffs as a cost of doing business?
a. licensing
b. joint venture
c. exporting
d. acquisition
e. greenfield
10. In 2012, IBM, a US HQ MNE, sells $11M in computers to Brazil through non-IBM distributors. In 2013, IBM invests $90M in Brazil to build a factory from which $19M of computers is sold in Brazil in 2014. This factory also sells $6M of computers through non-IBM distributors in Chile in 2015, and ships $23M of computer parts to the US. Based on this, which of the following statements is TRUE?
Trade between the US and Chile increased in 2015
Brazil FDI in the US increased in 2015
Trade between the US and Brazil increased in 2014
US FDI in Brazil increased in 2012
Trade between the Brazil and Chile increased in 2015
none of the above
Explanation / Answer
1. Option A. starting a joint venture in Korea with a Korean firm
Explanation:
In simple words, Foreign Direct Investment (FDI) refers to a type of investment made by an individual or a firm in one country in one country in a business interest in another country in the form of setting up business operations or acquiring business assets. The joint venture involves setting up business operations and acquiring business assets. So, it is an example of FDI.
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