Question 1

Unilateral investment treaties (UITs) obligate the host government to extend fair and nondiscriminatory treatment to investors from the other country.

Accepted Answer

Unilateral investment treaties do not exist; the correct term is bilateral investment treaties (BITs), which involve two countries agreeing to extend fair and nondiscriminatory treatment to each other's investors.

Question 2

are negotiated between two governments and obligate the host government to extend fair and nondiscriminatory treatment to investors from the other country.

Accepted Answer

Bilateral investment treaties are agreements between two governments that ensure fair and nondiscriminatory treatment of investors from the other country. Joint ventures, on the other hand, refer to partnerships between companies from two different countries. Act-of-state doctrines and sovereign immunity doctrines are legal principles that relate to the relationship between a government and its citizens, and do not directly pertain to investment treaties.

Question 3

International franchising can reduce the likelihood of political instability being a threat.

Accepted Answer

International franchising allows a company to operate in different countries through partnerships with local franchisees. This not only provides local employment opportunities but also enhances economic growth, ultimately reducing the likelihood of political instability in the countries. Therefore, international franchising can reduce the likelihood of political instability being a threat.

Question 4

Which of the following is subject to export controls?

Accepted Answer

Militarily sensitive goods are subject to export controls. Licensing agreements, franchising agreements, and intellectual property are not necessarily subject to export controls.

Question 5

Which of the following is a reason why nations set up import controls?

Accepted Answer

Nations set up import controls to prevent foreign companies from destroying home industries by flooding the local market with cheaper imports. This can lead to job losses and a decline in the competitiveness of domestic industries. The other options are not primary reasons for import controls. Antidumping duties are imposed to prevent foreign companies from selling goods below market value and hurting local producers. Import controls may also reduce the flow of foreign currency, but that is not the primary motivation for their implementation. Finally, preventing unfriendly nations from obtaining sensitive goods is a reason for export controls, not import controls.

Question 6

The theory of comparative advantage states that an individual nation should concentrate on exporting the goods that it can produce most efficiently.

Accepted Answer

The answer of The theory of comparative advantage states that...

Question 7

Joint ventures are used in host countries with fewer restrictions on foreign investment.

Accepted Answer

Joint ventures allow companies to collaborate and invest in a host country with fewer restrictions on foreign investment, as they are partnering with a local company. This can help overcome barriers to entry and facilitate access to local knowledge and expertise.

Question 8

Which of the following terms refers to the taking of private property by a host-country government for either political or economic reasons?

Accepted Answer

Expropriation is the taking of private property by a host-country government for either political or economic reasons. Licensing is when a company allows another company to use its products or intellectual property for a fee. Franchising is a type of licensing where the franchisor provides a proven business model and the franchisee operates the business using the model. Appropriation refers to the unauthorized taking or stealing of something.

Question 9

How are the licensing and franchising methods of engaging in international trade different from one another?

Accepted Answer

The answer of How are the licensing and franchising methods...

Question 10

A obligates the host government to extend fair and nondiscriminatory treatment to investors from the other country.

Accepted Answer

The statement describes a provision of a Bilateral Investment Treaty (BIT). BITs are agreements between two countries that establish the terms and conditions for private investment by individuals and companies of one country in the other country. One of the key provisions of a BIT is the fair and nondiscriminatory treatment of investors from the other country.

Question 11

Which of the following is not a reason for a multinational corporation to create a foreign subsidiary?

Accepted Answer

The answer of Which of the following is not a...

Question 12

In order to stimulate its local textile economy and promote the production of cotton, something that has traditionally been imported, a country decides to charge the importing agency a certain percentage of the value of the item being imported. By doing this, the government seeks to make such imported products more expensive and thus unattractive. This is an example of a(n) .

Accepted Answer

The government's action of charging the importing agency a certain percentage of the value of the item being imported is an example of a tariff. Tariffs are taxes levied on imported goods to make them more expensive and thus less attractive compared to domestically produced goods. The purpose of the tariff in this scenario is to stimulate the local textile economy and promote the production of cotton, which has traditionally been imported.

Question 13

Which of the following is a form of foreign direct investment?

Accepted Answer

The answer of Which of the following is a form...

Question 14

The holds that each nation is bound to respect the independence of every other sovereign state and that the courts of one nation will not sit in judgment on the acts of the courts of another nation.

Accepted Answer

The act-of-state doctrine holds that each nation must respect the independence of other sovereign states and that one nation's courts will not judge the acts of another nation's courts.

Question 15

Which of the following is true of the sovereign immunity doctrine?

Accepted Answer

Sovereign immunity doctrine is a legal principle that states that a foreign state is immune from being sued in the courts of another state or country. Option B refers to a situation where a host government refuses to permit a company to use the court system of the owner's country to sue the host government. This is an example of the sovereign immunity doctrine because the host government is protected from legal action by the foreign company in the court system of the foreign company's country. Options A, C, and D do not refer to situations that involve the sovereign immunity doctrine.

Question 16

Expropriation .

Accepted Answer

Expropriation refers to the action of a host-country government taking private property, often without consent, for political or economic reasons. It can also be referred to as nationalization.

Question 17

Which of the following statements is true of the Foreign Sovereign Immunities Act (FSIA)?

Accepted Answer

The Foreign Sovereign Immunities Act (FSIA) protects foreign governments and their agencies from being sued in U.S. courts for their public acts. It does not protect U.S. citizens or foreign companies doing business in the United States. It also does not protect joint ventures from liability for toxic accidents.

Question 18

Expropriation is one of the greatest risks companies take when they engage in international business.

Accepted Answer

Expropriation is the act of a government seizing property or assets from a foreign company without compensation. This can be a major risk for companies engaging in international business, as it can result in significant financial losses and damage to reputation.

Question 19

A large automobile manufacturer wants to expand its market for mid-size cars to a country with a large population and sizeable working class. In addition, this country is also known to be a source for cheap labor. This is something that could help the auto company significantly improve its production efficiency. Which of the following methods of engaging in international business will help the company best achieve these goals?

Accepted Answer

A foreign subsidiary would be the best choice for the automobile manufacturer as it would allow for the company to establish a physical presence in the country and take advantage of the large population and low labor costs. This would also allow for greater control over production and potentially minimize cultural differences in business practices. Joint ventures and international franchising may not provide the same level of control or potential cost savings, and international licensing may not allow for the physical presence needed to expand the market.

Question 20

Which of the following allows a government expropriating foreign-owned private property to claim that the jurisdiction of courts in the owner's country do not apply to it because it is a government rather than a private-sector entity?

Accepted Answer

The sovereign immunity doctrine allows a government to claim that it is not subject to the jurisdiction of foreign courts, as it is a sovereign entity rather than a private-sector entity.

Quiz 8: The International Legal Environment of Business