BUSMHR 2000 STUDY GUIDE 2025/2026 QUESTIONS WITH
SOLUTIONS RATED A+
✔✔D - ✔✔Which factor of growth can be described as regional integration but between
good countries?
A. A fear of protectionism
B. political and economic changes
C. increase in tariffs worldwide
D. new bilateral investment treaties
E. globalization of the world economy
✔✔E - ✔✔Which factor of growth can be described as many companies now viewing
the world as their market?
A. A fear of protectionism
B. political and economic changes
C. increase in tariffs worldwide
D. new bilateral investment treaties
E. globalization of the world economy
✔✔B - ✔✔Which of the following is not a recent trend in FDI?
A. Developed nations still largest share of FDI inflows
B. Underdeveloped nations have the largest share of FDI outflows
C. Inflows are increasing in developing nations
D. Africa's inability to attract FDI is due to political unrest, armed conflicts, and frequent
changes in economic policies
✔✔greenfield investment - ✔✔establishment of a new operation abroad
✔✔acquisition - ✔✔purchase of an existing operation abroad
✔✔40-80 - ✔✔__-__% is mergers and acquisitions
✔✔mergers and acquisitions - ✔✔______ is better when investing in a developed
country
✔✔greenfield investment - ✔✔______ is better when investing in a developing country
✔✔vertical FDI - ✔✔firm locates different stages of production in different countries
(assembly in one country, parts from another country, etc.)
✔✔Horizontal FDI - ✔✔firm duplicates its home country-based activities at the same
value chain stage in a host country (Ex. all countries assemble cars)
✔✔FDI - ✔✔When transportation costs are high, tariffs are high, and there is a lack of
domestic capacity what is the best option?
, ✔✔Exports - ✔✔When there are low transportation costs, low tariffs, and low barriers to
entry what is the best option?
✔✔Licensing - ✔✔When technology and management practices can be protected by
contract what is the best option?
✔✔E - ✔✔Which of the following is not a benefit of FDIs to host and home countries?
A. boosting host economy
B. bringing new jobs
C. boosting host country and reducing unemployment rates
D. saving on foreign exchange and the issues regarding the differences of value per
currency
E. Removal of internal tariffs
✔✔free trade area - ✔✔regional integration with no internal tariffs and removal of
barriers to trade
✔✔customs union - ✔✔regional integration with no internal tariffs and common external
tariffs
✔✔common market - ✔✔regional integration with no internal tariffs, common external
tariffs, and factor (i.e. factors of production - labor, capital etc.) mobility allowed
✔✔economic union - ✔✔regional integration with no internal tariffs, common external
tariffs, factor mobility allowed, common currency, and monetary & fiscal policies
✔✔political union - ✔✔regional integration with no internal tariffs, common external
tariffs, factor mobility allowed, common currency, monetary & fiscal policies, and
common political institutions
✔✔trade creation - ✔✔resources shift from the least efficient producer to most efficient
producer
✔✔trade diversion - ✔✔discrimination against outside producers diverts trade to less
efficient producers within the country or group
✔✔A - ✔✔Which of the following is not part of the European Union?
A. European Trade Board
B. European Commission
C. European Council
D. European Parliament
E. The Court of Justice
✔✔European Commission - ✔✔represents the interests of EU
SOLUTIONS RATED A+
✔✔D - ✔✔Which factor of growth can be described as regional integration but between
good countries?
A. A fear of protectionism
B. political and economic changes
C. increase in tariffs worldwide
D. new bilateral investment treaties
E. globalization of the world economy
✔✔E - ✔✔Which factor of growth can be described as many companies now viewing
the world as their market?
A. A fear of protectionism
B. political and economic changes
C. increase in tariffs worldwide
D. new bilateral investment treaties
E. globalization of the world economy
✔✔B - ✔✔Which of the following is not a recent trend in FDI?
A. Developed nations still largest share of FDI inflows
B. Underdeveloped nations have the largest share of FDI outflows
C. Inflows are increasing in developing nations
D. Africa's inability to attract FDI is due to political unrest, armed conflicts, and frequent
changes in economic policies
✔✔greenfield investment - ✔✔establishment of a new operation abroad
✔✔acquisition - ✔✔purchase of an existing operation abroad
✔✔40-80 - ✔✔__-__% is mergers and acquisitions
✔✔mergers and acquisitions - ✔✔______ is better when investing in a developed
country
✔✔greenfield investment - ✔✔______ is better when investing in a developing country
✔✔vertical FDI - ✔✔firm locates different stages of production in different countries
(assembly in one country, parts from another country, etc.)
✔✔Horizontal FDI - ✔✔firm duplicates its home country-based activities at the same
value chain stage in a host country (Ex. all countries assemble cars)
✔✔FDI - ✔✔When transportation costs are high, tariffs are high, and there is a lack of
domestic capacity what is the best option?
, ✔✔Exports - ✔✔When there are low transportation costs, low tariffs, and low barriers to
entry what is the best option?
✔✔Licensing - ✔✔When technology and management practices can be protected by
contract what is the best option?
✔✔E - ✔✔Which of the following is not a benefit of FDIs to host and home countries?
A. boosting host economy
B. bringing new jobs
C. boosting host country and reducing unemployment rates
D. saving on foreign exchange and the issues regarding the differences of value per
currency
E. Removal of internal tariffs
✔✔free trade area - ✔✔regional integration with no internal tariffs and removal of
barriers to trade
✔✔customs union - ✔✔regional integration with no internal tariffs and common external
tariffs
✔✔common market - ✔✔regional integration with no internal tariffs, common external
tariffs, and factor (i.e. factors of production - labor, capital etc.) mobility allowed
✔✔economic union - ✔✔regional integration with no internal tariffs, common external
tariffs, factor mobility allowed, common currency, and monetary & fiscal policies
✔✔political union - ✔✔regional integration with no internal tariffs, common external
tariffs, factor mobility allowed, common currency, monetary & fiscal policies, and
common political institutions
✔✔trade creation - ✔✔resources shift from the least efficient producer to most efficient
producer
✔✔trade diversion - ✔✔discrimination against outside producers diverts trade to less
efficient producers within the country or group
✔✔A - ✔✔Which of the following is not part of the European Union?
A. European Trade Board
B. European Commission
C. European Council
D. European Parliament
E. The Court of Justice
✔✔European Commission - ✔✔represents the interests of EU
