GMS Test Bank 5 questions with
complete solutions
According to Dunning's OLI Framework a firm's foreign investment decisions are driven by: - correct
answer ✔✔Ownership, Location and Internalization factors
The ___________ theory attempts to explain international trade by examining the pattern of consumer
demand for products. - correct answer ✔✔Linder
According to the International Product Cycle Theory comparative advantage shifts to developing
countries such as Mexico, India and China in the _________ stage of the cycle. - correct answer ✔✔Third
Which is NOT a form of government export promotion? - correct answer ✔✔Establishing voluntary
export restrictions on local firms
The Mexican ambassador to Canada knew exactly why he was being asked to attend a meeting in
Ottawa. Mexican vegetable farmers were rumored to be subsidized by their government. Canadian
farmers in British Columbia and Ontario (two Canadian provinces) had complained to the Canadian
government calling for the imposition of ________________ on Mexican imports. The Mexican
ambassador knew that if he was not careful in discussions with trade officials in Ottawa the matter could
soon be before the World Trade Organization - correct answer ✔✔Countervailing duties
Voluntary export restraints have been used mainly in areas such as textiles, automobiles, and steel and
are intended to: - correct answer ✔✔Help companies in the importing nation survive
Unlike the International Product Cycle Theory, Porter's Diamond of National Advantage suggests that
countries can maintain their competitive advantage in specific industries over long periods of time
irrespective of the impact of labor costs. True/False? - correct answer ✔✔True
According to transaction cost analysis, firms seek to minimize transaction costs in their efforts to expand
and market their products globally. These may be classified as Contracting costs, Search costs,
Monitoring Costs and Enforcement costs. True/False? - correct answer ✔✔True
complete solutions
According to Dunning's OLI Framework a firm's foreign investment decisions are driven by: - correct
answer ✔✔Ownership, Location and Internalization factors
The ___________ theory attempts to explain international trade by examining the pattern of consumer
demand for products. - correct answer ✔✔Linder
According to the International Product Cycle Theory comparative advantage shifts to developing
countries such as Mexico, India and China in the _________ stage of the cycle. - correct answer ✔✔Third
Which is NOT a form of government export promotion? - correct answer ✔✔Establishing voluntary
export restrictions on local firms
The Mexican ambassador to Canada knew exactly why he was being asked to attend a meeting in
Ottawa. Mexican vegetable farmers were rumored to be subsidized by their government. Canadian
farmers in British Columbia and Ontario (two Canadian provinces) had complained to the Canadian
government calling for the imposition of ________________ on Mexican imports. The Mexican
ambassador knew that if he was not careful in discussions with trade officials in Ottawa the matter could
soon be before the World Trade Organization - correct answer ✔✔Countervailing duties
Voluntary export restraints have been used mainly in areas such as textiles, automobiles, and steel and
are intended to: - correct answer ✔✔Help companies in the importing nation survive
Unlike the International Product Cycle Theory, Porter's Diamond of National Advantage suggests that
countries can maintain their competitive advantage in specific industries over long periods of time
irrespective of the impact of labor costs. True/False? - correct answer ✔✔True
According to transaction cost analysis, firms seek to minimize transaction costs in their efforts to expand
and market their products globally. These may be classified as Contracting costs, Search costs,
Monitoring Costs and Enforcement costs. True/False? - correct answer ✔✔True
