Review Questions from the instructor

Exam 2 Review from the Instructor.

Below is the review for Test 2. The test will be Tuesday Wednesday or Thursday of next week.
1. Why would a firm prefer to execute a green-field investment instead of acquiring an existing asset?
2. There has been a(n) _______ during the past 20 years.

3. During the 1980s and 1990s, __________ was often the favorite target for FDI inflows.

4. Most recent inflows into developing nations have been targeted at the emerging economies of all of the following except ___________.

5. The inability of ________ to attract greater investment is in part a reflection of the political unrest, armed conflict, and frequent changes in economic policy in the region.
6. During the 1998-2004 period, FDI accounted for about __________ worldwide, suggesting that FDI had become an increasingly important source of investment in the world's economy.
7. Since World War II, ___________ has been the largest source country for FDI.
8. The largest recipient of FDI in the world in 2001 was
9. The United States have been an attractive target for FDI because all of these EXCEPT:
10. The _______ is a theory of foreign direct investment that combines two other perspectives into a single holistic explanation of FDI.
11. The top three countries in cumulative FDI outflows from 1997 to 2002 are:
12. Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?
13. When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that have a(n):
14. If a firm want to avoid bearing the costs of establishing production facilities in a foreign country, which of the following would be LEAST advisable?
15. By limiting imports through quotas, governments increase the attractiveness of:
16. In the 1960s, RCA licensed its leading-edge color television technology to a number of Japanese companies, which later took over the market. This demonstrates:
17. According to internationalization theory, licensing has three major drawbacks as a strategy for exploiting foreign market opportunities. Each of the following is a drawback of licensing except:
18. A firm will favor foreign direct investment over exporting as an entry strategy when:
19. Advantages that arise from using resource endowments or assets that are tied to a particular location and that a firm finds valuable to combine with its own unique assets are referred to as:
20. The __________ view traces its roots to Marxist political and economic theory.
21. By early 2006, ____________ WTO members had notified the organization of participation in one or more regional trade agreements.
22. The European Union effectively became a single market with 340 million consumers in
23. The free trade area known as MERCOSUR consists of the following four countries:
24. Which of the following has the highest level of integration?
25. The European Free Trade Association currently includes the following four countries:
26. Which of the following provides the closest example to a political union?
27. The European Community was established in
28. The two main reasons that have made economic integration difficult to achieve are
29. As a result of the 1994 establishment of NAFTA, some Canadian and U.S. workers in industries which employ _______ labor lost their jobs as Canadian and U.S. firms moved production to Mexico.
30. In 1992, the _________ government won the right to opt out of any single currency agreement, and as of 2006, its government had yet to reverse its decision.
31. There are now two trade blocs in Europe. These are the
32. The original forerunner of the EU, the __________ was formed in 1951 by Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands.
33. With the signing of the _____ in 1957, the European Community was established.
34. How many countries are members of the European Union?
35. The _____, which now accounts for 732 members, is directly elected by the populations of the member states.
36. Where does the European Parliament meet at in the European Union?
37. Currently, the euro is being used by _____ member states of the European Union.
38. When were euro notes and coins issued across Europe, replacing national currencies?
39. Which of the following countries has not yet joined the EU because of an impliedLOss of national sovereignty?
40. The ____ was formed in 1969 when Bolivia, Chile, Ecuador, Columbia, and Peru signed the Cartagena Agreement.
41. The foreign exchange market serves two main functions. These are
42. _____ typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates.
43. _____ are reported daily in financial pages of newspapers.
44. A ______ exchange occurs when two parties agree to exchange currency and execute the deal at some specific date in the future.
45. The foreign exchange market:
46. The largest trading center in the foreign exchange market is __________.
47. If the demand for dollars outstrips the supply of them and if the supply of Japanese yen is greater than the demand for them, the dollar will:
48. Most economic theories suggest that three import factors have an important impact on future exchange rate movements in a country's currency. These factors are
49. By comparing the prices of _____________ products in different countries, it would be possible to determine the PPP exchange rate that would exist if markets were efficient.
50. In essence, PPP theory predicts that changes in relative prices will result in a change in:
51. According to our textbook, when the growth in a country's money supply is faster than the growth in its output, _____ is fueled.
52. ______ determines whether the rate of growth in a country's money supply is greater than the rate of growth in output.
53. The PPP theory tells us that a country with a high inflation rate will see:
54. If a government seems committed to controlling the rate of growth in money supply, the country's future inflation rate will probably:
55. The failure to find a strong link between relative inflation rates and exchange rate movements has been referred to as:
56. The ____________ states that a country's nominal interest rate is the sum of the required "real" rate of interest and the expected rate of inflation over the period for which the funds are to be lent.
57. According to the Fisher effect, if the real rate of interest in a country is 5 percent and the annual inflation is expected to be 10 percent, the nominal interest rate will be
58. Many economists believe the foreign exchange market is _________ at setting forward rates.
59. Running a deficit on a balance-of-payments current account creates pressures that result in:
60. _____ uses price and volume data to determine past trends, which are expected to continue into the future.
61. Some countries try to hold the value of their currency within some range against an important reference currency. This is referred to as:
62. The value of a set of currencies that are fixed against each other at some mutually agreed on exchange rate in what type of system?
63. The Bretton Woods system called for ______ exchange rates against the U.S. dollar.
64. The gold standard has it origin in
65. The gold standard was abandoned in
66. When discussion on the Bretton Woods system commenced, there was general consensus that:
67. Under the Bretton Woods agreement, only the dollar remained convertible to gold, at a price of:
68. An increase in money supply typically leads to an increase in
69. The aim of the Bretton Woods agreement was to try to avoid chaos through a combination of:
70. In the context of the global monetary system, the IBRD stands for the ______.
71. The IDA is an acronym for:
72. In the context of the global money system, in August 1971 President Nixon made the following two announcements: (1) a new 10 percent tax on imports would remain in effect until the trading partners of the U.S. agreed to revalue their currency against the dollar and (2):
73. In 1971, U.S. trade figures showed that for the first time since 1945, the United States was importing more than it was exporting. This set off massive purchases of:
74. Under the Jamaica Agreement, which types of countries were given greater access to IMF funds?
75. The case for floating exchange rates has two main elements. These are
76. In recent history the value of the dollar has been determined by:
77. ____________ requires high interest rates to reduce the demand for money, and to allow an inflow of money from abroad.
78. According to our textbook, those in favor of floating exchange rates argue that floating rates
79. Which of the following countries DOES NOT currently operate under the currency board system?
80. IMF research suggests that developing nations were ______________ as likely to experience currency and banking crises over developed nations.
81. The two conditions that determine a firm's profits are:
82. There are two basic strategies for improving a firm's profitability. These are:
83. The ____________ of a firm is measured by the difference between value and cost.
84. Value chain activities can be categorized as:
85. Which of the following is NOT a support activity in the value chain?
86. The term ____________ can be used to refer to the totality of a firm's organization, including its organizational structure, control systems and incentives, and people.
87. The manner in which decisions are made and work is performed within the organization refers to:
88. Which of the following is NOT part of the strategic fit model?
89. Location economies are important because locating in an optimal location can:
90. Which of the following is NOT an important caveat that is likely to discourage global expansion?
91. Learning effects tend to be more significant when a ______ task is repeated because there is more that can be learned about the task.
92. The two phenomenon that help explain the experience curve are:
93. Cost reduction pressures tend to be particularly intense in industries that:
94. All of these countries have a similar per capita income on a purchasing power parity basis except
95. Firms use four basic strategies to compete in the international environment. These are:
96. Which strategy makes the most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal?
97. MTV is a company that had to pursue a(n) _______________.
98. Which strategy makes the most sense when cost pressure are intense, and demands for local responsiveness is limited?
99. Firms that pursue a(n) _____ strategy try to create value by transferring valuable skills and products to foreign markets where indigenous competitors lack those skills and products.
100. One of the principle risks with strategic alliances is: