Homework answers / question archive / Arizona State University ECN 306 1)When an investor or lender in one country provides funds for a venture in another country and controls that venture, the transaction is called a(n)     investment

Arizona State University ECN 306 1)When an investor or lender in one country provides funds for a venture in another country and controls that venture, the transaction is called a(n)     investment

Economics

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Arizona State University

ECN 306

1)When an investor or lender in one country provides funds for a venture in another country and controls that venture, the transaction is called a(n)     investment.

•             foreign direct

•             passive

•             covered

•             international portfolio

 

2. The price at which units within a single MNE sell goods and services to other units within the MNE is the           price.

•             foreign exchange

•             international

•             arm's-length

•             transfer

 

 

3.            is the means by which a firm sells or rents its firm-specific advantages to independent foreign firms for their use in their own foreign production.

•             FDI

•             Licensing

•             Internalization

•             Comparative advantage

 

4. The profits of foreign affiliates of multinational enterprises generally result in corporate income taxes being paid:

•             to neither the host country of the affiliate nor the home country of the multinational enterprise.

•             about equally to the host country of the affiliate and the home country of the multinational

enterprise.

•             to only the host country of the affiliate.

•             to only the home country of the multinational enterprise.

 

5. Comparative advantage, economies of scale, government barriers to trade, and trade blocs are all

                that MNEs must consider in determining whether or not to enter a new foreign market.

•             location factors

•             internalization advantages

•             inherent disadvantages

•             internationalization advantages

 

6. As long as       and        are low enough, foreign direct investment can be used to reduce total costs by locating different stages of overall production in different countries.

•             foreign demand; transportation costs

•             domestic taxes; foreign demand

•             trade barriers; domestic demand

 

•             transportation costs; trade barriers

 

7. While                is the largest source of direct foreign investment,

                is the only major home country that is not also a major host to foreign direct investment.

•             Japan; Japan also

•             Japan; Germany

•             the United States; Japan

•             the United States; China

 

8. One way that firms can reduce the political risks involved in foreign direct investment is to:

•             finance their investments only with equity capital from the parents.

•             use transfer pricing to show more profit in the foreign affiliates.

•             borrow money for the venture from lending institutions in the country where the investment is made.

•             provide all of the capital needed for the undertaking so no outsiders have any control of the

investment.

 

9. Which of the following would not increase the chances that an individual will migrate?

•             An increase in the expected wage rate in the receiving country

•             A decrease in the expected wage in the home country

•             Being older

•             A decrease in the cost of traveling between countries

 

10. When a firm resists pressures to allow outsiders to use the firm's firm-specific advantages and retains and uses those advantages, the firm tries to benefit from:

•             international trade.

•             licensing.

•             internalization advantages.

•             oligopolistic rivalry.