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Study Resources (Business Management)

    21.Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them.      22.The Smoot-Hawley Act raised tariff barriers in the hope of protecting jobs and diverting consumer demand away from foreign products.      23.The Great Depression had roots in the failure of the.
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  Essay Questions  84.Discuss the two main forms of FDI.            85.Discuss the trends in FDI over the last 30 years. Be sure to differentiate between the stock of FDI and the flow if FDI.            86.Discuss the reasons for the growth in FDI over the last 30 years.            87.What is a greenfield investment? How does it.
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    41.To conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise.      42.Many firms of all national origins increasingly depend on globally dispersed production systems for their competitive advantage.      43.Business firms that lobby their governments to engage in protectionism have an.
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    71.Which of the following terms refers to the unit cost reductions associated with large sized outputs?    A. Absolute advantage of production   B. Economies of scale   C. Constant marginal returns   D. Diminishing marginal returns     72.Wal-Mart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors. This allows Wal-Mart to offer greater discounts.
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    71.Which of the following was required for new applicants to qualify for EU membership?    A. Minimum economy size of €1 trillion   B. Nationalization of private assets   C. Deregulation of markets   D. Sustained GDP growth of 10 percent for five years     72.Which of the following is seen to be a consequence of the size of the EU from 15 nations.
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  89.What is dumping? How do governments respond to charges of dumping?            90.Explain the notion of predatory behavior with regard to dumping.            91.What are the political reasons for governments to intervene in markets?            92.Discuss the economic reasons for government intervention in markets.                .
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  99.Discuss the benefits and costs of FDI from the perspective of a host country and from the perspective of the home country.            100.What are the possible adverse effects of FDI on a host country's balance-of-payments position?            101.Describe some of the home country policies that encourage outward FDI.                .
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  91.How easy is it for countries to integrate?            92.Some economists have expressed concerns that the benefits of regional integration have been touted while the costs have been ignored. Explain the view of these economists.            93.What prompted the formation of the European Union?                .
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    61.Which of the following is a major limitation of the simple Ricardian model of comparative advantage?    A. The model ignores the principle of diminishing marginal returns.   B. The model recommends excessive governmental intervention in trade.   C. The outcome of the model suggested by Ricardo is a zero-sum game.   D. The model is against the idea of engaging in.
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  Essay Questions  85.Compare and contrast import quotas and voluntary export restraints.            86.What is a quota rent? Provide an example of how an import quota affects price.            87.Discuss the Buy America Act and its connection with local content requirements.            88.Explain how governments use administrative trade policies to boost exports and restrict imports. Provide an example.
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    51.The move toward economic union raises the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations. Which of the following offers a solution to this problem?    A. A common market   B. A free trade area   C. A customs union   D. A political union     52.What is the most enduring free trade area in the.
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    11.A company that sells its product in a foreign market below the cost of production may be accused of dumping.      12.Antidumping policies are designed to punish foreign firms that are engaged in dumping.      13.Antidumping policies vary drastically from country to country.      14.Protecting industries deemed important for national security, and retaliating against unfair foreign.
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    41.New trade theorists stress the role of luck in giving a firm first-mover advantages.      42.Porter contends that government has little or no effect on the four components that shape the environment in which firms compete.      43.From a profit perspective, it makes sense for firms to disperse their productive activities to those countries.
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    61.According to ____, some specific fraction of a good must be produced domestically.    A. import quotas   B. voluntary export restraints   C. local content requirements   D. antidumping duties     62.According to the Buy America Act, if a company wishes to win a contract from a U.S. government agency to provide some equipment, it must ensure that at least 51 percent of.
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    51.Which of the following is a consequence of subsidies?    A. Subsidies make domestic producers vulnerable to foreign competition.   B. Subsidies lead to lowered production.   C. Subsidies protect inefficient domestic producers.   D. Subsidies produce revenue for the government.     52.According to the _____ policy, subsidies can help a firm achieve a first-mover advantage in an emerging industry.    A. strategic trade   B. antidumping   C. tariff quota   D. free trade     53._____ is.
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  94.Briefly describe the four main institutions that make up the political structure of the EU.            95.What is the Single European Act? What was the effect of the Single European Act on the EU economy? Did the Single European Act achieve its goals?            96.Discuss the Maastricht Treaty. What did it accomplish?                .
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  True / False Questions  1.Regional economic integration involves agreements among countries in a geographic region to reduce, and ultimately remove, tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other.      2.The movement toward regional economic integration been most successful in Asia.      3.In a customs union,.
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    11.Trade diversion occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area.      12.In theory, WTO rules should ensure that a free trade agreement results in trade diversion.      13.A regional free trade agreement will benefit the world only when the amount of trade it creates exceeds the.
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  102.What are first-mover advantages?            103.Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.            104.What are the four attributes that are discussed in Porter's diamond?            105.Explain how the rivalry within an industry affects international competence.                .
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    61.The _____ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states.    A. European Parliament   B. European Commission   C. Council of the European Union   D. Court of Justice     62.Why is the European Council said to be the ultimate controlling authority within the EU?    A. Since it is responsible for implementing EU legislation and monitoring.
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  90.Identify a major flaw associated with mercantilism.            91.Explain Smith's theory of absolute advantage.            92.Explain Ricardo's theory of comparative advantage.            93.What are the assumptions that we make when we discuss a simple Ricardian model to support free trade?                .
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    31.The product life-cycle theory argues that a large proportion of the world's new products had been developed by U.S. firms.      32.The product life-cycle theory argues that the developing nations will not produce a product if the product is highly standardized.      33.Some of the arguments made by the product life-cycle theory seem ethnocentric.
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    31.According to Alexander Yeats, the trade diversion effects of Mercosur outweigh its trade creation effects.      32.The Free Trade Area of the Americas that was established in 2005 has thus far proven to be a success.      33.The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an ASEAN preferential.
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  True / False Questions  1.Tariffs are unambiguously pro-consumer and anti-producer.      2.Specific tariffs are levied as a proportion of the value of the imported good.      3.Export tariffs are far less common than import tariffs.      4.A subsidy helps domestic producers to compete against foreign imports.      5.Under a tariff rate quota, a higher tariff rate is applied to.
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    71.When a company brings capital and/or technology to a host country, the host country benefits from the:    A. political effect of FDI.   B. resource-transfer effect of FDI.   C. balance-of-payments effect of FDI.   D. bandwagon effect of FDI.     72.A country's _____ keeps track of its payments to and its receipts from other countries.    A. federal payments ledgers   B. concurrent accounts   C. checks-and-balances accounts   D. balance-of-payments accounts     73.Which of the.
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  93.Discuss the infant industry argument for intervention in markets. What is GATT's position on the argument?            94.What is strategic trade policy? Provide an example.            95.What is Paul Krugman's position on strategic trade policy?            96.Discuss the establishment of GATT. What was GATT's objective?                .
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  94.Briefly differentiate between constant returns to specialization and diminishing returns to specialization.            95.Explain how the principle of diminishing returns weakens the Ricardian model.            96.Explain the dynamic gains that are generated by opening an economy to trade.            97.Explain the Paul Samuelson's critique.                .
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  98.What are factor endowments?            99.Briefly explain Vernon's product life-cycle theory.            100.Identify a major disadvantage of the product life-cycle theory.            101.What are the sources of economies of scale?                .
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  88.Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.            89.What is licensing? How does it work?            90.What are the major drawbacks of licensing according to the internalization theory?            91.What is an oligopoly? Discuss the impact of interdependence in an oligopoly.                .
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    41.From least integrated to most integrated, the levels of economic integration are:    A. a common market, a free trade area, an economic union, a customs union, and a political union.   B. a free trade area, a customs union, a common market, an economic union, and a political union.   C. a customs union, a free trade area,.
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  102.What are the ways in which host governments restrict inward FDI?            103.Describe the situations when licensing is not a good option for a firm.            104.When a firm is considering FDI, what are the some of the negotiating points it must weigh before making its decision?            105.When a firm is negotiating the terms of.
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  100.Why are tariff rates on agricultural products generally higher than tariff rates on manufactured products or services?            101.What is the TRIPS agreement? Why was it established?            102.Discuss the Doha Round of trade talks.                .
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    71.The infant industry argument is criticized because it relies on an assumption that:    A. new manufacturing industries in developing nations can initially compete with established industries in developed countries.   B. selling goods in a foreign market at below their "fair" market value is legally and ethically justified.   C. the domestic industry in a developing nation lacks.
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    41.FDI occurs when a firm:    A. ships its products from one country to another.   B. invests directly in facilities to produce a product in a foreign country.   C. invests in the shares of another company operating in the same country.   D. grants permission to another company in a different country to use its brand name.     42.Which of the following.
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    21.In practice only a few countries country have adopted the free market view in its pure form.      22.The pragmatic nationalist view highlights only the benefits of FDI.      23.Countries adopting a pragmatic stance pursue policies designed to maximize the national benefits and minimize the national costs.      24.An aspect of pragmatic nationalism is the tendency.
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  88.Compare and contrast a free trade area and a common market. Provide examples.            89.Discuss the economic case for economic integration. How does it relate to trade theory?            90.What is the political case for integration? How did political arguments influence the establishment of the European Union?                .
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    51.When contemplating FDI, why do firms apparently prefer to acquire existing assets rather than undertake greenfield investments?    A. Greenfield investments are characterized by reduced management control.   B. Mergers and acquisitions are preferred because most greenfield investments fail.   C. It is easier and less risky for a firm to build strategic assets than acquire similar assets.   D. Mergers and.
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    31.If the FDI is a substitute for imports of goods or services, the effect can be to improve the current account of the host country's balance of payments.      32.In general, FDI in the form of greenfield investments should increase competition.      33.FDI does not benefit the host country's balance of payments if the.
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    11.By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing.      12.Internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.      13.Licensing gives a firm tight control over manufacturing, marketing, and strategy.
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  Essay Questions  85.Discuss the trend toward increased regional economic integration.            86.What are the five levels of economic integration? Briefly describe each form.            87.Which is the most enduring free trade area in the world?                .
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  92.What is multipoint competition? How do firms respond to multipoint competition?            93.Why do many economists favor internalization theory as an explanation for FDI compared to Knickerbocker's theory?            94.Discuss an example that substantiates Dunning's argument about location-specific advantages.            95.What are location-specific advantages? How do they help explain FDI?                .
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    51.Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?    A. Comparative advantage theory   B. Ricardo's theory   C. New trade theory   D. Heckscher-Ohlin theory     52.Which of the following is the main principle of mercantilism?    A. Protection of domestic industries is not essential for a nation's welfare.   B. Government intervention.
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  103.Explain how trade barriers affect a firm's strategy.            104.What are the drawbacks of government intervention?            105.Explain the disadvantages of government protectionism as it relates to competitive advantage.                .
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  True / False Questions  1.A Japanese car manufacturer acquires an Italian producer of car tires. This is an example of a greenfield investment.      2.The amount of FDI undertaken over a given time period is known as the flow of FDI.      3.FDI has been declining in the last few decades because protectionist pressures have.
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    21.The establishment of the euro required participating countries to give up their monetary policy.      22.The Single European Act committed EU countries to adopting a common currency by January 1, 1999.      23.Establishment of the euro created the largest currency zone in the world, replacing the position the U.S. dollar had held for decades.      24.Great.
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  97.What happened to GATT during the 1980s and early 1990s?            98.What has been the experience of the WTO to date? What does the future look like for the organization?            99.What are the central issues facing the WTO at the present time?                .
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    61.According to Knickerbocker's theory:    A. when a firm has valuable know-how that cannot be adequately protected by a licensing contract it engages in FDI.   B. when a firm's skills and know-how are not amenable to licensing, it usually prefers the FDI route.   C. by placing tariffs on imported goods, governments indirectly increase the cost of exporting.
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  Essay Questions  86.Explain the concept of free trade.            87.How does the Heckscher-Ohlin theory explain international trade?            88.Explain how the theories of trade differ in terms of their support to governmental intervention.            89.What is the main principle of mercantilism?                .
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