QUESTION Which of the following is NOT a constraint on a firm’s ability to disperse its productive activities to foreign countries? A. Tariff barriers raising the costs of exporting products to a country B. Quotas restricting the quantity of a good that can be imported into a country C. Local content requirements demanding a specific […]
QUESTION Economists refer to knowledge “spillovers” as externalities, and there is a well-established theory suggesting that firms can benefit from such externalities by locating close to their source. Indicate whether the statement is true or false. ANSWER TRUE Economists refer to knowledge “spillovers” as externalities, and there is a well-established theory suggesting that firms […]
QUESTION The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were: A. global telecommunication and financial services industries. B. scientific research and defense sector. C. pharmaceuticals and heavy metal industry. D. pharmaceuticals and biotechnology. […]
QUESTION According to the extreme version of radical view, no country should ever permit foreign corporations to undertake FDI, because they can never be instruments of economic development, only of economic domination. Indicate whether the statement is true or false. ANSWER TRUE Radical writers argue that the multinational enterprise (MNE) is an instrument of […]
QUESTION Which of the following is true regarding the difference between GATT and WTO? A. The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment unlike GATT. B. WTO operates on the basis of consensus unlike GATT. C. GATT gives trading partners the right to compensation or, in the last […]
QUESTION By the early 1990s, the radical position toward FDI was in retreat due to the rise of communism in eastern Europe. Indicate whether the statement is true or false. ANSWER FALSE By the early 1990s, the radical position was in retreat almost everywhere. There seem to be three reasons for this: (1) the […]
QUESTION Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997? A. It enhanced protection of patents, copyrights, and trademarks (intellectual property). B. It helped resolve deadlock situations arising out of the unwillingness to lower trade barriers between neighboring countries. C. It offered a greater ability for companies to offer a global, […]
QUESTION Myra is a firm producing premium handbags for women. These bags are manufactured and patented in the country of Ceria. Manufacturers in the country of Argonia create counterfeit Myra bags and sell them in the local markets of Argonia. These bags are sold at almost similar prices to the original in other countries. Which […]
QUESTION A government should use subsidies to support promising firms that are active in newly emerging industries, according to: A. strategic trade policy. B. public policy. C. absolute advantage. D. product life-cycle. E. industrialization. ANSWER A
QUESTION According to Paul Krugman, a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to: A. dominate the industry. B. move away from protectionism. C. provoke retaliation. D. incur huge financial debts. E. upset the special-interest groups within the […]
