16. Three costs of FDI concerns of host countries arise from all of the followin

Question

16. Three costs of FDI concerns of host countries arise from all of the following except: A. adverse effects on competition within the host nation. B. adverse effects on the balance of payments C. the perceived loss of national sovereignty and autonomy. D. debit on the current account of the home country's balance of 17. Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated? A. Economic union, common market, customs union, free trade area, and full political union. B. Common market, economic union, full political union, free trade area, and customs union. C. Free trade area, customs union, common market, economic union, and full political union. D. Full political union, free trade area, common market, customs union, and economic union. 18. Trade diversion occurs when: A. low-cost producers within the free trade area replace high-cost domestic producers. B. lower-cost suppliers replace higher-cost external suppliers within the free trade area. C. higher-cost external suppliers replace lower-cost domestic D. higher-cost suppliers replace lower-cost external suppliers within the free trade area. 19. The simultaneous purchase and sale of a given amount of foreign exchange for two different value dates is referred to as a: A. fiscal barter B. liquid trade. C. currency exchange D. currency swap. 20. Identify the incorrect statement about the PPP theory. A. It predicts that exchange rates are determined by relative B. It yields accurate predictions in C. It best predicts exchange rate changes for countries with high rates of inflation. D. It assumes away transportation costs and barriers to trade. 21. A currency is said to be externally convertible when: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency

Explanation / Answer

16. Option D
Debit on the current account of home country’s balance of payment.
Option D is merely a nature of an FDI transaction than cost of an FDI.

17. Option C
In terms of least integrated to most integrated, the order is – Free trade area, customs union, common market, economic union and full political union.

18. Option D
In a Free Trade Area, when higher cost suppliers replace lower cost external suppliers it is called trade diversion.

19. Option D- currency swap
Currency swap refers to procedure when parties exchange interest and/or principal in one currency for another currency.

PS: According to chegg guidelines in event of multiple MCQs, only first four are attempted. However, you may repost it asking for solution of specific questions/parts.

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