SOM 354 Final Exam Review (updated)
well answered already passed
Dolby Fashion House, an Italian manufacturer of evening dresses, granted U.S. company On the
Runway Inc. the right to produce and sell Dolby Fashion's products in the United States. In
return, On the Runway Inc. has to pay a royalty fee on every unit sold. According to this
information, what form of FDI is Dolby Fashion House using? - correct answer ✔✔Licensing
The __________ view argues that international production should be distributed among
countries according to the theory of comparative advantage and countries should specialize in
the production of goods they can produce most efficiently. - correct answer ✔✔free market
Which political ideology reflects the idea that a multinational enterprise is an instrument of
imperialist domination? - correct answer ✔✔radical view
Licensing is a good option to enter a foreign market when - correct answer ✔✔tight control of
the foreign operation is not required.
A country that relies on the pragmatic nationalist view would say that - correct answer ✔✔FDI
should be allowed so long as the benefits outweigh the costs.
The stock of FDI refers to the - correct answer ✔✔total accumulated value of foreign-owned
assets at a given time.
A firm might justify a preference for licensing over FDI because licensing - correct answer
✔✔results in the licensee bearing the costs and risks.
, One of the main benefits that FDI provides to the home country is - correct answer ✔✔the
home country's balance of payments benefits from the inward flow of foreign earnings.
According to the eclectic paradigm, __________ is/are of considerable importance in explaining
both the rationale for and the direction of foreign direct investment. - correct answer
✔✔location-specific advantages
Internalization theory is used to explain why a company prefers FDI over __________ as a way
to enter a foreign market. - correct answer ✔✔licensing
What is an economic argument for regional integration? - correct answer ✔✔It allows countries
to specialize in the goods they can produce most efficiently.
An economist would say that the benefits of regional integration are determined by the -
correct answer ✔✔amount of trade creation.
The harmonization of member nations' tax rates plus a common monetary and fiscal policy are
all required to form a(n) - correct answer ✔✔economic union.
Identify the correct sequence of economic integration starting from the least integrated to the
most integrated. - correct answer ✔✔free trade area, customs union, common market,
economic union, and political union
When Norway, Iceland, Liechtenstein, and Switzerland established the EFTA, all barriers to the
free flow of goods and services between the countries were removed. Member nations were
allowed to determine the level of trade protection for goods coming from all other nations.
What level of economic integration does this represent? - correct answer ✔✔free trade area
A country that wants to create the highest level of economic integration would enter into a(n) -
correct answer ✔✔political union.
well answered already passed
Dolby Fashion House, an Italian manufacturer of evening dresses, granted U.S. company On the
Runway Inc. the right to produce and sell Dolby Fashion's products in the United States. In
return, On the Runway Inc. has to pay a royalty fee on every unit sold. According to this
information, what form of FDI is Dolby Fashion House using? - correct answer ✔✔Licensing
The __________ view argues that international production should be distributed among
countries according to the theory of comparative advantage and countries should specialize in
the production of goods they can produce most efficiently. - correct answer ✔✔free market
Which political ideology reflects the idea that a multinational enterprise is an instrument of
imperialist domination? - correct answer ✔✔radical view
Licensing is a good option to enter a foreign market when - correct answer ✔✔tight control of
the foreign operation is not required.
A country that relies on the pragmatic nationalist view would say that - correct answer ✔✔FDI
should be allowed so long as the benefits outweigh the costs.
The stock of FDI refers to the - correct answer ✔✔total accumulated value of foreign-owned
assets at a given time.
A firm might justify a preference for licensing over FDI because licensing - correct answer
✔✔results in the licensee bearing the costs and risks.
, One of the main benefits that FDI provides to the home country is - correct answer ✔✔the
home country's balance of payments benefits from the inward flow of foreign earnings.
According to the eclectic paradigm, __________ is/are of considerable importance in explaining
both the rationale for and the direction of foreign direct investment. - correct answer
✔✔location-specific advantages
Internalization theory is used to explain why a company prefers FDI over __________ as a way
to enter a foreign market. - correct answer ✔✔licensing
What is an economic argument for regional integration? - correct answer ✔✔It allows countries
to specialize in the goods they can produce most efficiently.
An economist would say that the benefits of regional integration are determined by the -
correct answer ✔✔amount of trade creation.
The harmonization of member nations' tax rates plus a common monetary and fiscal policy are
all required to form a(n) - correct answer ✔✔economic union.
Identify the correct sequence of economic integration starting from the least integrated to the
most integrated. - correct answer ✔✔free trade area, customs union, common market,
economic union, and political union
When Norway, Iceland, Liechtenstein, and Switzerland established the EFTA, all barriers to the
free flow of goods and services between the countries were removed. Member nations were
allowed to determine the level of trade protection for goods coming from all other nations.
What level of economic integration does this represent? - correct answer ✔✔free trade area
A country that wants to create the highest level of economic integration would enter into a(n) -
correct answer ✔✔political union.
