Deck 12: International Resource Movements and Multinational Corporations

Question 1

The most prominent form of private international economic organization today is the

A) European Union
B) World Trade Organization
C) multinational corporation
D) individual investor

Answer 1

C

Question 2

U.S.labor generally

A) opposes U.S. investments abroad
B) favors U.S. investments abroad
C) is indifferent to U.S. investments abroad
D) we cannot say without additional information

Answer 2

A

Question 3

Owners of capital in developing countries generally

A) oppose an inflow of foreign direct investments from abroad
B) favor an inflow of foreign direct investments from abroad
C) are indifferent to foreign direct investments from abroad
D) we cannot say without additional information

Answer 3

A

Question 4

The brain drain refers to the transfer of:

A) technology from developed to developing nations
B) skilled labor and professionals from developed to developing nations
C) unskilled labor from developing to developed nations
D) skilled labor and professionals from less advanced to more advanced nations

Question 5

Two-way international capital flows can be explained by the desire to:

A) earn higher yields abroad
B) avoid tariffs
C) diversify risks
D) all of the above

Question 6

Portfolio theory tells us that by investing in securities with yields that are inversely related over time:

A) a given yield can be obtained at a smaller risk
B) a higher yield can be obtained for the same level of risk
C) a two-way capital flow may be required to achieve a balanced portfolio
D) all of the above

Question 7

Foreign holdings of U.S.long-term securities (stocks and bonds)have ________ over the last fifty

A) decreased
B) increased
C) remained unchanged
D) been volatile, at times increasing and at time decreasing

Question 8

Direct investments usually involve the transfer of all of the above except:

A) capital
B) technology
C) management
D) bonds

Question 9

Which is not a reason for private foreign direct investments?

A) horizontal and vertical integration
B) to maximize profits and diversify risks
C) to stimulate development
D) to avoid tariffs

Question 10

Portfolio investments refer primarily to:

A) direct investments
B) bonds
C) liquid assets
D) short-term assets

Question 11

Labor in developing countries generally

A) opposes an inflow of foreign direct investments from abroad
B) favors an inflow of foreign direct investments from abroad
C) is indifferent to foreign direct investments from abroad
D) we cannot say without additional information

Question 12

Foreign direct investment benefits the host nation because it:

A) increases the K/L ration
B) increases the productivity of labor
C) increases per capita income
D) all of the above

Question 13

Which of the following is not true with regard to direct investments?

A) U.S. direct investments abroad and foreign direct investments in the U.S. grew very rapidly from 1950 to 2004
B) the amount of U.S. direct investments abroad is similar to the amount of foreign direct investments in the U.S.
C) U.S. direct investments in Canada are higher than in Europe
D) U.S. private holdings of foreign long-term securities grew very rapidly from 1950 to 2004

Question 14

Transfer pricing refers to:

A) risk diversification
B) the pricing of the technology transferred
C) the artificial overpricing of components shipped to an affiliate in a higher tax nation
D) portfolio theory

Question 15

U.S.holdings of foreign long-term securities (stocks and bonds)have ________ over the last fifty years.

A) decreased
B) increased
C) remained unchanged
D) been volatile, at times increasing and at time decreasing

Question 16

Which of the following is not a beneficial effect of direct investments on the investing country:

A) the transfer of technology
B) higher profits
C) risk diversification
D) avoids the possible loss of export markets

Question 17

The reason the residents of a nation do not borrow from other nations and themselves undertake real investments in their own nation is that:

A) multinationals want to retain control over their own technology
B) banks do not want to lend to foreigners
C) vertical integration is not possible for foreigners
D) multinationals want to avoid horizontal integration

Question 18

Today's multinational corporations account for roughly what percentage of world output

A) 10%
B) 25%
C) 50%
D) 75%

Question 19

In 2010 the percentage of Americans that were not born in the United States was roughly

A) 5 %
B) 12 ½ %
C) 25 %
D) 37 ½ %

Question 20

The basic reason for the existence of MNC is the:

A) competitive advantage of a global network of production and distribution.
B) incentives provided by the investing nation
C) incentives provided by the host nation
D) imperfections of international capital markets

Question 21

Most foreign assets in the U.S.are ___________; most U.S.assets abroad are ________.

A) direct investment; direct investment
B) direct investment; foreign securities
C) U.S. securities; direct investment
D) U.S. securities; foreign securities

Question 22

Explain how international capital transfers impact employment in the receiving and investing nation.

Question 23

Discuss the motives for international labor migration.

Question 24

The largest multinationals produce

A) motor vehicles.
B) petroleum.
C) financial products.
D) electronics.

Question 25

Which of the following areas accounts for the largest amount of U.S.foreign direct investment?

A) Asia and the Pacific
B) Europe
C) Latin America
D) Canada

Question 26

What are the primary reasons for the existence of multinational corporations?

Question 27

Discuss the changes in the magnitude of foreign investment into the U.S.and U.S.investment overseas over the last fifty years.

Question 28

What are the basic motives for international portfolio investments?

Question 29

What is vertical integration and how is it related to direct foreign investment?

Question 30

International capital flows

A) increase world social welfare.
B) increase the welfare of the host country but not the investing country.
C) increase the welfare of the investing country but not the host country.
D) decrease world social welfare.