Question 1

Are there any differences between the theory of multinational enterprises and conventional trade theory?

Accepted Answer

The answer of Are there any differences between the theory...

Question 2

In the short run,the home country of an MNE will likely experience an employment decline when production is shifted overseas.

Accepted Answer

When an MNE shifts production overseas, it often means that jobs previously held by domestic workers are moved to foreign workers. This can result in an employment decline in the home country in the short run.

Question 3

Due to transfer-pricing problems,multinational corporations must shift profits away from countries with low corporate tax rates to high tax-rate countries,thus absorbing a larger tax bite.

Accepted Answer

The statement relates to transfer pricing, which is not mentioned in the given information about the Mexican labor market. Therefore, it cannot be determined whether the statement is true or false based on the information provided.

Question 4

Developing countries have sometimes feared open immigration policies of developed countries on the grounds that highly educated and skilled people may emigrate to the developed countries,thus limiting the growth potential of the developing countries.

Accepted Answer

This fear is often referred to as "brain drain" and has been a concern for many developing countries. The emigration of highly educated and skilled individuals can limit the growth potential of a country as it loses valuable human capital.

Question 5

The operations of an MNE have little effect on employment in either the host country or the home country.

Accepted Answer

The operations of an MNE can have a significant impact on employment in both the host country and the home country. MNEs may create jobs in the host country and outsource jobs to other countries. They may also shift jobs from the home country to the host country or other countries where labor costs are lower. These factors can have significant effects on employment levels in both countries.

Question 6

What are the typical ways in which multinational enterprises have diversified their operations?

Accepted Answer

The answer of What are the typical ways in which...

Question 7

What are the disadvantages of forming joint ventures?

Accepted Answer

The answer of What are the disadvantages of forming joint...

Question 8

The theory of multinational enterprise is totally inconsistent with the principle of comparative advantage.

Accepted Answer

The theory of multinational enterprise is not inconsistent with the principle of comparative advantage. In fact, multinational enterprises often seek to take advantage of comparative advantages in different countries to improve their competitiveness and profitability.

Question 9

In the United States,labor unions have generally resisted efforts to implement restrictions on the number of foreigners allowed into the country.

Accepted Answer

This statement is false. Labor unions have often supported restrictions on immigration in the past, as they believe that new immigrants may lower wages and take jobs away from American workers. However, opinions on immigration vary among different unions and may depend on the specific circumstances.

Question 10

What are guest workers?

Accepted Answer

The answer of What are guest workers?...

Question 11

The United States has discouraged the "brain drain" problem by permitting the immigration of unskilled workers while restricting the immigration of skilled persons.

Accepted Answer

The statement is false. The United States has actually implemented policies to encourage the immigration of skilled workers, such as the H-1B visa program, while restricting the immigration of unskilled workers through measures like the RAISE Act.

Question 12

As workers migrate from low-wage Mexico to high-wage United States,wages tend to rise in Mexico and fall in the United States.

Accepted Answer

This phenomenon is known as the "wage equalization effect" and occurs due to the movement of labor from areas with lower wages to areas with higher wages. As Mexican workers migrate to the United States and participate in the labor market there, the supply of labor increases, which leads to a decrease in wages in the United States. Conversely, as the supply of labor decreases in Mexico, wages tend to rise. However, this effect may be small and take time to fully manifest.

Question 13

The effect of workers migrating from low-wage Mexico to high-wage United States is to redistribute income from capital to labor in the United States and from labor to capital in Mexico.

Accepted Answer

The answer of The effect of workers migrating from low-wage...

Question 14

The migration of workers from Mexico to the United States tends to exert downward pressure on the wages of native U.S.workers that compete against Mexican workers for jobs.

Accepted Answer

This is because the influx of workers increases the supply of labor in the market, leading to a decrease in wages due to greater competition for jobs.

Question 15

Labor migration tends to increase output and decrease wages in the country of immigration while decreasing output and increasing wages in the country of emigration.

Accepted Answer

Labor migration often leads to an increase in the labor supply in the country of immigration, which can result in lower wages. However, the increase in labor also leads to an increase in output. In the country of emigration, the decrease in labor supply can lead to higher wages and a decrease in output.

Question 16

Critics of multinational corporations maintain that they often abandon domestic workers in order to take advantage of lower wage scales abroad.

Accepted Answer

Critics argue that multinational corporations may relocate their production facilities to countries with lower labor costs to maximize profits, leaving behind domestic workers who may lose their jobs or face downward pressure on wages.

Quiz 9: International Factor Movements and Multinational Enterprises