C211 OA QUESTIONS AND ANSWERS
view7that7claims7phenomenon7of7globalization7was7initially7driven7by7the7desire
7of7Western7economies7to7exploit7their7power7through7MNE's7-7ans-new
view7that7claims7globalization7is7a7long-
run7historical7evolution7since7the7dawn7of7humanity.7Says7it7is7nothing7new7an
d7that7it7will7always7exist7-7ans-evolutionary
view7that7claims7globalization7is7swinging7from7one7extreme7to7another7from7ti
me7to7time7-7ans-pendulum
investment7in,7controlling,7and7managing7value-
added7activities7in7other7countries7-7ans-foreign7direct7investment
political7view7hostile7to7FDI.7believes7it7is7an7instrument7of7imperialism7and7ve
hicle7for7exploitation7of7domestic7resources7by7foreign7capitalists7and7firms7-
7ans-radical
suggests7that7FDI,7unrestricted7by7government7intervention,7will7enable7countries
7to7tap7into7their7absolute7or7comparative7advantages7by7specializing7in7the7pr
oduction7of7certain7goods7and7services7-7ans-free7market
views7FDI7as7having7pros7and7cons7and7only7approving7FDI7when7its7benefits
7outweigh7costs7-7ans-pragmatic7nationalis
what7benefits7exist7to7a7country7receiving7FDI?7-7ans-
capital7inflow,7technology7spillovers,7advanced7management7know-
how,7creates7jobs
what7costs7exist7to7a7country7receiving7FDI?7-7ans-
loss7of7sovereignty,7adverse7effects7on7competition,7net7outflow7in7the7capital7a
ccount
The7aggregation7of7importing7and7exporting7that7leads7to7the7country-
level7trade7surplus7or7deficit.7-7ans-balance7of7trade
firms7with7a7_____7degree7of7resource7similarity7are7likely7to7have7similar7com
petitive7actions7-7ans-high
, a7high7degree7of7resource7similarity7but7low7market7commonality7=7_______7int
ensity7of7rivalry7-7ans-highest
little7resource7similarity7but7high7market7commonality7=7_____7intensity7of7rivalr
y7-7ans-lowest
mercantilism,7absolute7advantage7and7comparative7advantage7belong7to7what7th
eory7of7international7trade7-7ans-classical
theory7of7international7trade7that7relies7on7more7realistic7product7life7cycles7and
7first7mover7advantages7-7ans-modern
under7free7trade,7a7nation7gains7by7specializing7in7economic7activities7in7which
7it7has7_____advantage7-7ans-absolute
focuses7on7the7idea7that7if7a7country7does7not7have7absolute7advantage,7they
7can7still7choose7to7specialize7in7the7production7of7one7good7where7it7has7__
____7advantage7-7ans-comparative
comparative7advantage7and7absolute7advantage7stem7from7-7ans-
factor7endowments
theory7that7the7wealth7of7the7world7is7fixed7and7that7a7nation7that7imports7mo
re7and7exports7less7will7be7richer7-7ans-mercantilism
stage7of7the7product7life7cycle7where7production7of7a7new7product7that7comma
nds7a7price7premium7will7concentrate7in7the7US7-7ans-new
stage7of7the7product7life7cycle7where7demand7and7ability7to7produce7grow7in7
other7developed7nations7-7ans-maturing
stage7of7the7product7life7cycle7where7the7previously7new7product7is7commoditiz
ed7and7production7will7now7move7to7low-cost7developing7nations7-7ans-
standardized
comparative7advantage7may7change7over7time7because7patterns7of7______7cha
nge7over7time7-7ans-trade
theory7that7suggests7that7intervention7by7governments7in7certain7industries7can7
enhance7their7odds7for7international7success7-7ans-strategic7trade
if7a7company7seeks7to7limit7foreign7exchange7rate7exposure7in7the7forward7dir
ection,7what7is7the7most7effective7way7to7do7this?7-7ans-currency7hedging
exchange7rate7risk7associating7with7the7time7delay7between7entering7a7contract
7and7settling7it7-7ans-transaction7risk
view7that7claims7phenomenon7of7globalization7was7initially7driven7by7the7desire
7of7Western7economies7to7exploit7their7power7through7MNE's7-7ans-new
view7that7claims7globalization7is7a7long-
run7historical7evolution7since7the7dawn7of7humanity.7Says7it7is7nothing7new7an
d7that7it7will7always7exist7-7ans-evolutionary
view7that7claims7globalization7is7swinging7from7one7extreme7to7another7from7ti
me7to7time7-7ans-pendulum
investment7in,7controlling,7and7managing7value-
added7activities7in7other7countries7-7ans-foreign7direct7investment
political7view7hostile7to7FDI.7believes7it7is7an7instrument7of7imperialism7and7ve
hicle7for7exploitation7of7domestic7resources7by7foreign7capitalists7and7firms7-
7ans-radical
suggests7that7FDI,7unrestricted7by7government7intervention,7will7enable7countries
7to7tap7into7their7absolute7or7comparative7advantages7by7specializing7in7the7pr
oduction7of7certain7goods7and7services7-7ans-free7market
views7FDI7as7having7pros7and7cons7and7only7approving7FDI7when7its7benefits
7outweigh7costs7-7ans-pragmatic7nationalis
what7benefits7exist7to7a7country7receiving7FDI?7-7ans-
capital7inflow,7technology7spillovers,7advanced7management7know-
how,7creates7jobs
what7costs7exist7to7a7country7receiving7FDI?7-7ans-
loss7of7sovereignty,7adverse7effects7on7competition,7net7outflow7in7the7capital7a
ccount
The7aggregation7of7importing7and7exporting7that7leads7to7the7country-
level7trade7surplus7or7deficit.7-7ans-balance7of7trade
firms7with7a7_____7degree7of7resource7similarity7are7likely7to7have7similar7com
petitive7actions7-7ans-high
, a7high7degree7of7resource7similarity7but7low7market7commonality7=7_______7int
ensity7of7rivalry7-7ans-highest
little7resource7similarity7but7high7market7commonality7=7_____7intensity7of7rivalr
y7-7ans-lowest
mercantilism,7absolute7advantage7and7comparative7advantage7belong7to7what7th
eory7of7international7trade7-7ans-classical
theory7of7international7trade7that7relies7on7more7realistic7product7life7cycles7and
7first7mover7advantages7-7ans-modern
under7free7trade,7a7nation7gains7by7specializing7in7economic7activities7in7which
7it7has7_____advantage7-7ans-absolute
focuses7on7the7idea7that7if7a7country7does7not7have7absolute7advantage,7they
7can7still7choose7to7specialize7in7the7production7of7one7good7where7it7has7__
____7advantage7-7ans-comparative
comparative7advantage7and7absolute7advantage7stem7from7-7ans-
factor7endowments
theory7that7the7wealth7of7the7world7is7fixed7and7that7a7nation7that7imports7mo
re7and7exports7less7will7be7richer7-7ans-mercantilism
stage7of7the7product7life7cycle7where7production7of7a7new7product7that7comma
nds7a7price7premium7will7concentrate7in7the7US7-7ans-new
stage7of7the7product7life7cycle7where7demand7and7ability7to7produce7grow7in7
other7developed7nations7-7ans-maturing
stage7of7the7product7life7cycle7where7the7previously7new7product7is7commoditiz
ed7and7production7will7now7move7to7low-cost7developing7nations7-7ans-
standardized
comparative7advantage7may7change7over7time7because7patterns7of7______7cha
nge7over7time7-7ans-trade
theory7that7suggests7that7intervention7by7governments7in7certain7industries7can7
enhance7their7odds7for7international7success7-7ans-strategic7trade
if7a7company7seeks7to7limit7foreign7exchange7rate7exposure7in7the7forward7dir
ection,7what7is7the7most7effective7way7to7do7this?7-7ans-currency7hedging
exchange7rate7risk7associating7with7the7time7delay7between7entering7a7contract
7and7settling7it7-7ans-transaction7risk