When a multinational affiliate replicates elements of a production process in a foreign country it is called ________ foreign direct investment. A) vertical B) horizontal C) transitional D) bisectional E) direct ANSWER A
Date: September 10th, 2020
If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, then A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 4 percent. B) an investor should invest only in euros if the expected dollar depreciation against the euro is 4 percent. C) […]
Date: September 10th, 2020
Which of the following is NOT a problem in the implementation of industrial policies? A) Choosing the industry to target B) Knowing the optimum amount of resources to provide the targeted industry C) The encouragement of rent seeking by firms in other industries D) The benefits are partly captured by foreign firms. E) All of […]
Date: September 10th, 2020
Private capital flows in the form of both direct and portfolio investment began to return to Latin America after 1989, effectively marking the end of the Lost Decade. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
If inflation in the rest of the world is lower than inflation in Brazil, Brazil’s currency (the real) would tend to appreciate. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
MacDougall’s test provides evidence that exports are positively related to labor productivity. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
An example of how GNP accounts for services provided by foreign-owned capital (and GDP does not) is A) earnings of a Spanish factory with British owners counts only in Spain’s GDP. B) earnings of a Spanish factory with British owners counts only in Britain’s GNP. C) earnings of a Spanish factory counts in Spain’s GNP […]
Date: September 10th, 2020
Which of the following is most likely to be an untraded good in a Ricardian two-country, multi-good model? A) steel B) textiles C) haircuts D) petroleum E) telemarketer services ANSWER C
Date: September 10th, 2020
Is a depreciation of the dollar/euro exchange rate correlated with a decrease in the dollar return on U.S. deposits? What will be an ideal response? ANSWER No. Assume that the Interest Parity is maintained, i.e., R$ = + ( – )/ Holding constant, one would expect a depreciation of the dollar/euro exchange rate (i.e. […]
Date: September 10th, 2020
Define the official settlements balance. Is there any difference between the United States and other countries in terms of what this balance measures? How does this affect the ability of the countries to run current account deficits? What will be an ideal response? ANSWER For most countries it measures international reserve changes. For the […]
Date: September 10th, 2020
