Arizona State University

ECN 306

Quiz 9.2

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.

2. 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.

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

4. 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.

5.                                                 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.

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

7. 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.

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

9. 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: