Question 1

Which of the following factors of production DO NOT flow freely between countries?
A)raw materials
B)financial capital
C)(non-military)technology
D)All of the above factors of production flow freely among countries.

Accepted Answer

Raw materials often face trade barriers, tariffs, and regulations that can restrict their free flow between countries, unlike financial capital and technology, which can move more freely in the global economy.

Question 2

The concept of relative comparative advantage's origins lie in:
A)Adam Smith's work of 1776.
B)David Ricardo's work of 1776.
C)The Wealth of Nations book,published in 1887.
D)On the Principles of Political Economy and Taxation book,published in 1817.

Accepted Answer

The concept of relative comparative advantage was first introduced by David Ricardo in his book "On the Principles of Political Economy and Taxation" in 1817.

Question 3

It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.

Accepted Answer

Modern telecommunications, such as video conferencing and remote collaboration tools, allow for remote work and virtual meetings, enabling businesses to connect with employees and clients from anywhere, thereby taking business activities to labor instead of requiring labor to be physically present in a specific location.

Question 4

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

Accepted Answer

The theory of comparative advantage was first introduced by economist David Ricardo in his book "On the Principles of Political Economy and Taxation" in 1817. Ben Bernanke is a contemporary economist who served as the Chairman of the Federal Reserve from 2006 to 2014.

Question 5

Which of the following is not always understood by MNE management?
A)Culture,history,and institutions
B)Political risk
C)Foreign exchange risk
D)Financial instruments

Accepted Answer

MNE (Multinational Enterprise) management may not always fully understand culture, history, and institutions of the countries they operate in, as these aspects can be deeply complex and vary significantly across regions.

Question 6

The concept of absolute comparative advantage's origins lie in:
A)Adam Smith's work of 1776.
B)David Ricardo's work of 1776.
C)The Wealth of Nations book,published in 1887.
D)On the Principles of Political Economy and Taxation book,published in 1817.

Accepted Answer

The concept of absolute comparative advantage was first introduced by Adam Smith in his book The Wealth of Nations, published in 1776. David Ricardo also expanded on this concept in his book On the Principles of Political Economy and Taxation, published in 1817, but the origins lie with Adam Smith.

Question 7

As the general principle of comparative advantage is still valid,complete specializatoin remains a realistic case.

Accepted Answer

While comparative advantage is still a valid principle, complete specialization is not a realistic case due to varying factors such as changes in technology, trade agreements, and unexpected events such as natural disasters. It is more common for countries to focus on producing certain goods or services in which they have a comparative advantage while also maintaining some level of diversification in their economy.

Question 8

When discussing comparative advantage,it is apparent that today at least two of the factors of production,capital and technology,now flow directly and easily between countries,rather than only indirectly through traded goods and services.

Accepted Answer

Capital and technology can now be easily transferred between countries through various means such as foreign direct investment, technology licensing agreements, and cross-border collaboration. This has facilitated greater specialization and trade, leading to increased efficiency and productivity for countries that can take advantage of their comparative advantages.

Question 9

________ investments are designed to promote and enhance the growth and profitability of the firm.________ investments are designed to deny those same opportunities to the firm's competitors.
A)Conservative;Aggressive
B)Defensive;Proactive
C)Proactive;Defensive
D)Aggressive;Proactive

Accepted Answer

Proactive investments are those that promote and enhance the growth and profitability of the firm, while defensive investments are designed to deny those same opportunities to the firm's competitors. Therefore, the best answer is choice C.

Question 10

Although international trade might have approached the comparative advantage model during the nineteenth century,it certainly does not today,for a variety of reasons.Develop an argument as to why this is not happening today.

Accepted Answer

The answer of Although international trade might have approached the...

Question 11

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

Accepted Answer

As less developed countries become more developed, they may acquire new resources, improve their infrastructure, and develop new technologies, which can change their comparative advantage in certain industries. This means that their latent opportunities can change, and they may be able to compete more effectively in different markets. Therefore, comparative advantage can shift over time as countries develop and adapt to changing global conditions.

Question 12

Comparative advantage is one of the underlying principles driving the growth of global business.

Accepted Answer

Comparative advantage means that countries can produce goods and services more efficiently than others, leading to trade and specialization. This principle is often used to explain why companies and countries engage in international trade and why businesses outsource production to locations with lower costs and greater expertise.

Question 13

Which of the following would NOT be a way to implement comparative advantage?
A)IBM exports computers to Egypt.
B)Computer hardware is designed in the United States but manufactured and assembled in Korea.
C)Water of the greatest purity is obtained from wells in Oregon,bottled,and exported worldwide.
D)All of the above are examples of ways to implement comparative advantage.

Accepted Answer

All of the options given are examples of implementing comparative advantage. Option A shows how IBM can utilize their expertise in producing computers to export to a country, instead of trying to produce everything in-house. Option B shows how the US can focus on designing computer hardware and outsourcing its manufacturing to Korea, which can produce it at a lower cost due to their expertise in manufacturing. Option C shows how Oregon can utilize their expertise in producing pure water to export it worldwide. All these examples show how countries or firms can utilize their strengths to produce efficiently and trade with other countries, which is the essence of comparative advantage.

Question 14

Comparative advantage was once the cornerstone of international trade theory,but today it is archaic,simplistic,and irrelevant for explaining investment choices made by MNEs.

Accepted Answer

Comparative advantage theory still has relevance in explaining international trade and investment decisions made by multinational enterprises (MNEs). However, it is not the sole determinant and must be considered in conjunction with other factors such as economies of scale, market size, and local regulations, among others. Therefore, while it may be considered outdated in isolation, it remains a useful concept in understanding the complexities of international trade and investment.

Question 15

Of the following,which would NOT be considered a way that government interferes with comparative advantage?
A)tariffs
B)managerial skills
C)quotas
D)other non-tariff restrictions

Accepted Answer

Managerial skills are not a way that government interferes with comparative advantage. The other options (tariffs, quotas, and non-tariff restrictions) all involve government intervention in trade, either through taxes on imported goods, limiting the quantity of goods that can be imported, or imposing other barriers to trade. Managerial skills, on the other hand, are a factor of production that can contribute to a country's comparative advantage, but they are not directly controlled or influenced by the government.

Question 16

In determining why a firm becomes multinational there are many reasons.One reason is that the firm is a market seeker.Which of the following is NOT a reason why market-seeking firms produce in foreign countries?
A)satisfaction of local demand in the foreign country
B)satisfaction of local demand in the domestic markets
C)political safety and small likelihood of government expropriation of assets
D)All of the above are market-seeking activities.

Accepted Answer

The answer of In determining why a firm becomes multinational...

Question 17

International trade might have approached the comparative advantage model in the 19th century,and it does so even more today.

Accepted Answer

The answer of International trade might have approached the comparative...

Question 18

Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.

Accepted Answer

With the development of telecommunications and the Internet, it has become easier for services to be delivered across borders, making comparative advantage in the 21st century more reliant on the efficient cross-border facilitation of services.

Question 19

Which of the following is NOT a reason governments interfere with comparative advantage?
A)Governments attempt to achieve full employment.
B)Governments promote economic development.
C)national self-sufficiency in defense-related industries
D)All are reasons governments interfere with comparative advantage.

Accepted Answer

All of the options given are reasons why governments may interfere with comparative advantage, so none of them are incorrect.

Question 20

Which of the following domestic financial instruments have NOT been modified for use in international financial management?
A)currency options and futures
B)interest rate and currency swaps
C)letters of credit
D)All of the above are domestic financial instruments that have also been modified for use in international financial markets.

Accepted Answer

All the options listed (currency options and futures, interest rate and currency swaps, letters of credit) are domestic financial instruments that have been adapted for use in international financial markets to manage risks associated with currency exchange rates, interest rates, and international trade transactions.

Quiz 1: Multinational Financial Management: Opportunities and Challenges

Which of the following factors of production DO NOT flow freely between countries?

The concept of relative comparative advantage's origins lie in:

It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

Which of the following is not always understood by MNE management?

The concept of absolute comparative advantage's origins lie in:

As the general principle of comparative advantage is still valid,complete specializatoin remains a realistic case.

When discussing comparative advantage,it is apparent that today at least two of the factors of production,capital and technology,now flow directly and easily between countries,rather than only indirectly through traded goods and services.

investments are designed to promote and enhance the growth and profitability of the firm. investments are designed to deny those same opportunities to the firm's competitors.

Although international trade might have approached the comparative advantage model during the nineteenth century,it certainly does not today,for a variety of reasons.Develop an argument as to why this is not happening today.

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

Comparative advantage is one of the underlying principles driving the growth of global business.

Which of the following would NOT be a way to implement comparative advantage?

Comparative advantage was once the cornerstone of international trade theory,but today it is archaic,simplistic,and irrelevant for explaining investment choices made by MNEs.

Of the following,which would NOT be considered a way that government interferes with comparative advantage?

In determining why a firm becomes multinational there are many reasons.One reason is that the firm is a market seeker.Which of the following is NOT a reason why market-seeking firms produce in foreign countries?

International trade might have approached the comparative advantage model in the 19th century,and it does so even more today.

Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.

Which of the following is NOT a reason governments interfere with comparative advantage?

Which of the following domestic financial instruments have NOT been modified for use in international financial management?