ECO 305 Week 7 Quiz – Strayer



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Quiz 6 Chapter 9

INTERNATIONAL FACTOR MOVEMENTS AND MULTINATIONAL ENTERPRISES

MULTIPLE CHOICE

            1.         "Risk spreading" is a motive most likely to be served when firms undergo:
a.         Horizontal integration
b.         Vertical integration
c.         Conglomerate integration
d.         None of the above


           

            2.         The source (home) location of most of the world's leading multinational enterprises is:
a.         North America and Europe
b.         North America and Asia
c.         Europe and South America
d.         Europe and Asia


           

            3.         Which type of multinational diversification occurs when the parent firm establishes foreign subsidiaries to produce intermediate goods going into the production of finished goods?
a.         Forward vertical integration
b.         Backward vertical integration
c.         Forward horizontal integration
d.         Backward horizontal integration


           

            4.         Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles. This practice is referred to as:
a.         Forward vertical integration
b.         Forward conglomerate integration
c.         Backward vertical integration
d.         Backward conglomerate integration


           

            5.         Suppose that a steel manufacturer headquartered in Japan sets up a subsidiary in Canada to produce steel. This practice is referred to as:
a.         Conglomerate integration
b.         Forward vertical integration
c.         Backward vertical integration
d.         Horizontal integration


           

            6.         During the 1970s, American oil companies acquired nonenergy companies (e.g., copper, auto components) in response to anticipated decreases in investment opportunities in oil. This type of diversification is referred to as:
a.         Horizontal integration
b.         Conglomerate integration
c.         Forward vertical integration
d.         Backward vertical integration


           

            7.         Which of the following best refers to the outright construction or purchase abroad of productive facilities, such as manufacturing plants, by domestic residents?
a.         Direct investment
b.         Portfolio investment
c.         Short-term capital investment
d.         Long-term capital investment


           

            8.         In recent years, the largest amount of U.S. direct investment abroad has occurred in:
a.         Central America
b.         South America
c.         Europe
d.         Japan


           

            9.         In recent years, most foreign direct investment in the United States has come from:
a.         Western Europe
b.         Central America
c.         South America
d.         Asia


           

            10.       Most U.S. direct investment abroad occurs in:
a.         Communications
b.         Petroleum
c.         Finance and insurance
d.         Manufacturing


           

            11.       Most foreign direct investment in the United States occurs in:
a.         Public utilities
b.         Communications
c.         Manufacturing
d.         Mining and smelting


           

            12.       Which of the following is not a significant motive for the formation of multinational enterprises?
a.         Avoiding tariffs by obtaining foreign manufacturing facilities
b.         Obtaining the benefits from overseas comparative advantages
c.         The acquisition of natural resource supply sources
d.         Subsidies granted by the home government to overseas corporations


           

            13.       Suppose General Motors charges its Mexican subsidiary $1 million for auto assembly equipment that could be purchased on the open market for $800,000. This practice is best referred to as:
a.         International dumping
b.         Cost-plus pricing
c.         Transfer pricing
d.         Technological transfer


           

            14.       Multinational enterprises may provide benefits to their source (home) countries because they may:
a.         Secure raw materials for the source country
b.         Shift source country technology overseas via licensing
c.         Export products which reflect source-country comparative disadvantage
d.         Result in lower wages for source-country workers


           

            15.       Trade analysis involving multinational enterprises differs from our conventional trade analysis in that multinational enterprise analysis emphasizes:
a.         Absolute cost differentials rather than comparative cost differentials
b.         The international movement of factor inputs rather than finished goods
c.         Purely competitive markets rather than imperfectly competitive markets
d.         Portfolio investments rather than direct foreign investments


           

            16.       Direct foreign investment has taken all of the following forms except:
a.         Investors buying bonds of an existing firm overseas
b.         The creation of a wholly owned business enterprise overseas
c.         The takeover of an existing company overseas
d.         The construction of a manufacturing plant overseas


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