The least risky method through which companies can conduct their business internationally is:
A) Franchising
B) International Trade
C) The acquisitions of existing businesses overseas
D) Licensing
E) The establishment of new subsidiaries
Which of the following statement is correct concerning MNCs?
A) MNCs usually have a larger opportunity set than entirely domestic businesses because of potential
cost advantages and/or returns opportunities.
B) MNCs usually have a smaller opportunity set than entirely domestic businesses since it is more
expensive to establish subsidiaries overseas.
C) MNCs generally are more capable of acquiring financing at a lower cost than purely domestic
companies.
D) a and c only
E) b and c only
The goal of a multinational corporation (MNC) is
A) The minimization of taxes remitted from foreign subsidiaries.
B) The maximization of shareholder wealth.
C) The establishment of subsidiaries in any country where operations would provide a return over and
above the cost of capital, even if better projects are available domestically.
D) The maximization of social benefits resulting from actions such as the employment of foreign
managers.
Which of the following cases is an example of the Comparative Advantage Theory?
A) Apple imports the needed components for iPhone from Taiwan.
B) Apple builds a factory in Mexico to reduce labor costs.
C) Apple establishes a plant in China to reduce transportation costs and to retain its advantage over its
Chinese competitors.
D) All of the above
E) None of the above
A balance of trade deficit occurs when a country
A) exports more goods than it imports.
B) buys more goods from the rest of the world than it sells.
C) buys more stocks and bonds from the rest of the world than it sells.
D) None of the above
Merchandise exports minus imports equal the
A) basic balance.
B) liquidity balance.
C) official settlements balance.
D) balance of trade.
Which of the following would likely have the least direct influence on a country’s current account?
A) inflation.
B) national income.
C) exchange rates.
D) tariffs.
E) a tax on income earned from foreign stocks.