Deck 53: International Trade, Investment, and Finance How Instability Spreads Around the World

Question 1

Whats defention of terms:
-foreign investment

Answer 1

spending by foreign citizens on plant and equipment in a country

Question 2

Whats defention of terms:
-international finance

Answer 2

buying and selling of financial instruments (such as stocks, bonds, and government securities) of a country by citizens of another country

Question 3

Explain the mechanisms of global trade, investment, and finance by which instability in one country spreads to other countries.
-How does international trade transmit expansions and recessions from one country to another?

Answer 3

Economic growth in one country leads to less growth in imports The slower growth in imports means less demand for goods and services from other countries That lowered demand may help set off a recession in those countries

Question 4

Explain the mechanisms of global trade, investment, and finance by which instability in one country spreads to other countries.
-How does international investment transmit expansions and recessions from one country to another?

Question 5

Explain the mechanisms of global trade, investment, and finance by which instability in one country spreads to other countries.
-How does international finance transmit expansions and recessions from one country to another?

Question 6

Explain the mechanisms of global trade, investment, and finance by which instability in one country spreads to other countries.
-Explain why foreign investment is subject to wider fluctuations than domestic ?investment.

Question 7

Compare and contrast the impact of global trade, investment, and finance on small and large economies.
-What is the impact of changes in patterns of trade, investment and finance on smaller countries? Larger countries?

Question 8

Compare and contrast the impact of global trade, investment, and finance on small and large economies.
-What explains the differences in the impact on large and small economies?

Question 9

Discuss why capitalist economies in the global economy rise and fall roughly at the same time.
-How are business cycles transmitted from one country to another? Explain.

Question 10

What are the three mechanisms that transmit recessions and expansions from one country to another?

A) exports of goods, exports of services, and exports of currency.
B) international trade, international investment, and international finance.
C) by consumers, by businesses, and by governments.
D) through the United Nations, the World Bank, and the International Labor Organization.

Question 11

If the United States is the most important market for Bolivian exports, then a recession in the U.S. is likely to

A) increase demand for goods imported from Bolivia.
B) lead to an economic expansion in Bolivia.
C) lead to an economic downturn in Bolivia.
D) have no effect on Bolivia's economy.

Question 12

Assume Toyota builds a new plant in Mississippi to produce the Prius. This is an example of

A) international trade.
B) international investment.
C) economic imperialism.
D) international finance.

Question 13

A resident of Canada purchases 1000 shares of stock in Dell Computers. This is an example of

A) international trade.
B) international investment.
C) economic imperialism.
D) international finance.

Question 14

How does a recession in the US affect the level of foreign investment undertaken by American businesses?

A) businesses tend to increase the level of foreign investment during a recession.
B) businesses tend to decrease the level of foreign investment during a recession.
C) businesses tend to maintain the same level of foreign investment over the business cycle.
D) it is against the law businesses to engage in foreign investment during a recession.

Question 15

In general, what is the attitude of businesses toward foreign investments compared to domestic investment?

A) businesses are more cautious about making foreign investments.
B) businesses are more cautious about making domestic investment.
C) businesses are equally cautious about all investments.
D) businesses will engage either in foreign investment or domestic investment but not both.

Question 16

A resident of Dubai buys $1,000,000 in US government bonds. This is an example of

A) international investment
B) international finance.
C) international trade.
D) international subcontracting

Question 17

The global integration of the world economy means that

A) most industrial countries experience tend recessions at the same time.
B) a recession in one industrialized country will be offset by a boom in another country.
C) industrial countries are relatively immune from international financial instability.
D) most industrial countries now use the same currency.

Question 18

The US imports approximately $45 billion in automobiles from Japan. If there is a recession in the US, we can expect

A) US imports of automobiles from Japan will increase.
B) US imports of automobiles from Japan will decrease.
C) US imports of automobiles from Japan will remain the same.
D) US will import no automobiles from Japan.

Question 19

The US imports approximately $45 billion in automobiles from Japan. If there is a recession in the US, we can expect

A) that aggregate demand in Japan will increase
B) that aggregate demand in Japan will decrease.
C) that aggregate demand in Japan will remain the same
D) that Japan will have no aggregate demand.