Question 1

Joint ventures may lead to

Accepted Answer

The answer of Joint ventures may lead to
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Question 2

"Guest worker" programs generally result in temporary migration of workers from:

Accepted Answer

Guest worker programs are designed to bring temporary workers from one country to another to meet labor demands. These programs mostly target skilled or unskilled workers from impoverished nations to wealthy nations where there is a shortage of workers in certain industries. Therefore, choice C is the best answer.

Question 3

Horizontal integration would occur if General Motors sets up a subsidiary in Mexico to produce automobiles identical to those that it produces in the United States.

Accepted Answer

Horizontal integration refers to a company expanding its operations at the same level of the supply chain by acquiring or merging with another company that produces similar products or services. In this case, General Motors would be expanding horizontally by setting up a subsidiary in Mexico to produce identical automobiles as those produced in the United States.

Question 4

Critics of U.S.trade and immigration policy maintain that

Accepted Answer

Critics of U.S. trade and immigration policy argue that it has depressed wages for many Americans by increasing the supply of less educated workers, both domestically and from abroad. Additionally, they argue that it has an adverse impact on the employment opportunities of less-skilled, American workers. Therefore, all of the given options A, B, and C are correct.

Question 5

Forward vertical integration would occur if a U.S.automobile manufacturer acquired a German subsidiary.

Accepted Answer

The question does not relate to the information presented in Figure 9.3 or the Mexican labor market. It is a separate question about vertical integration and the nationality of the subsidiary being acquired. The correct answer is false, as vertical integration would only occur if the subsidiary involved in the acquisition was involved in the same industry or supply chain as the acquiring company. Nationality alone does not determine whether an acquisition would constitute vertical integration.

Question 6

____ refers to highly educated and skilled people who migrate from poor developing countries to wealthy industrial countries.

Accepted Answer

Brain drain refers to the emigration of skilled and educated individuals from developing countries to developed countries, leaving a shortage of qualified professionals in their home country. This can have negative impacts on the economy and development of the home country, while benefiting the receiving country by providing a skilled workforce.

Question 7

Conglomerate integration would occur if General Motors Inc.of the United States acquired a controlling interest in a British chemical company.

Accepted Answer

Conglomerate integration refers to the combination of firms that operate in unrelated business areas, so General Motors (an automotive company) acquiring a British chemical company (unrelated industry) exemplifies this.

Question 8

Vertical integration occurs if a parent multinational corporation establishes foreign subsidiaries to produce intermediate goods or inputs that go into the production of a finished good.

Accepted Answer

Vertical integration involves a multinational corporation establishing foreign subsidiaries to produce intermediate goods or inputs that go into the production of a finished good.

Question 9

Figure 9.2 represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by S? and consists entirely of native U.S. workers. The demand schedule of labor is denoted by D?.
Figure 9.2. U.S. Labor Market
 
-Consider Figure 9.2.Policies that permit Mexican workers to freely migrate to the United States would likely be resisted by:

Accepted Answer

Native U.S. workers would likely resist policies that permit Mexican workers to freely migrate to the United States because it would increase the supply of labor, leading to a decrease in wages for native workers. This would harm their economic interests since they would face greater competition for available job opportunities. On the other hand, U.S. capital owners may benefit from the lower labor costs associated with increased immigration, as it would reduce their production costs and boost their profits.

Question 10

International trade in goods and services and flows of productive factors are substitutes for each other.

Accepted Answer

The answer of International trade in goods and services and...

Question 11

Figure 9.2 represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by S? and consists entirely of native U.S. workers. The demand schedule of labor is denoted by D?.
Figure 9.2. U.S. Labor Market
 
-Consider Figure 9.2.As the result of the Mexican migration to the United States:

Accepted Answer

The increase in the supply of labor from Mexican migration will shift the supply curve to the right from S0 to S1, leading to a decrease in the equilibrium wage rate from W0 to W1. This decrease in wage rate will benefit the capital owners as they can hire labor at a lower cost, but it will negatively affect the native U.S. workers as their wages decrease and they face increased competition for jobs. Therefore, the native U.S. workers lose in this scenario.

Question 12

Exxon Oil Co.would undertake forward vertical integration if its retailing division acquired oil wells in the Middle East.

Accepted Answer

The answer of Exxon Oil Co.would undertake forward vertical integration...

Question 13

Foreign direct investment would occur if Mobile Inc.of the United States acquired sufficient common stock in a foreign oil company to assume voting control.

Accepted Answer

Foreign direct investment refers to an investment made by a multinational company in a foreign company that allows the multinational company to exercise significant control over the operations of the foreign company. Acquiring sufficient common stock in a foreign oil company to assume voting control would qualify as foreign direct investment.

Question 14

Foreign direct investment would occur if Microsoft Inc.of the United States purchased securities of the French government.

Accepted Answer

Foreign direct investment refers to the physical investment by a foreign company in a domestic company or the establishment of a new subsidiary in the foreign country. Purchasing securities of a foreign government does not qualify as foreign direct investment.

Question 15

Multinational corporations sometimes locate manufacturing subsidiaries abroad to avoid tariff barriers which would place their products at a competitive disadvantage in a foreign country.

Accepted Answer

This statement is true. By locating manufacturing subsidiaries abroad, multinational corporations can circumvent tariff barriers and avoid the additional costs associated with them, making their products more competitive in foreign markets.

Question 16

Mexico's ____ refer to an assemblage of U.S.-owned companies that use U.S.-owned parts and Mexican assembly to manufacture goods that are exported to the United States.

Accepted Answer

Maquiladoras are factories in Mexico that import materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing, and then export the assembled or manufactured goods back to the United States. The term "maquiladora" is derived from the Spanish term maquila, which means the portion of the corn harvest that is paid to the miller as his fee. The maquiladora industry began in the mid-1960s and grew rapidly in the 1980s and 1990s. The majority of the maquiladoras are U.S.-owned and are concentrated in the Mexican border region.

Question 17

Most multinational corporations have a low ratio of foreign sales to total sales,usually 5 percent or less.

Accepted Answer

This statement is false. Many multinational corporations have a much higher ratio of foreign sales to total sales, sometimes reaching upwards of 50 percent or more.

Question 18

Most vertical foreign investment,as implemented by multinational corporations,is "forward" in nature rather than "backward."

Accepted Answer

Most vertical foreign investment by multinational corporations is "backward" in nature, meaning it is primarily focused on accessing raw materials or inputs for their production processes, rather than "forward" investments which would involve investing in distribution or sales operations in foreign markets.

Question 19

Foreign direct investment typically occurs when

Accepted Answer

Foreign direct investment occurs when a company invests in a foreign country by establishing operations such as manufacturing facilities or sales offices, or by expanding its existing operations in that country. The earnings of the parent company are often invested in the plant expansion overseas. Choice B and C are not correct because transferring jobs overseas or closing foreign production plants do not necessarily involve investments in the foreign country. Choice D is incorrect because purchasing bonds of foreign governments is not considered foreign direct investment.

Question 20

American critics of U.S.multinational enterprises contend that they promote

Accepted Answer

American critics of U.S. multinational enterprises argue that these companies promote all of the above: runaway jobs, technology transfers abroad, and tax evasion. They believe that these practices harm the U.S. economy and workers by shifting jobs overseas, transferring valuable technology to foreign countries, and avoiding taxes that could otherwise be used for public services and infrastructure.

Quiz 9: International Factor Movements and Multinational Enterprises