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Questions and Answers
What are the three different political views involved in FDI, described as radical, pragmatic nationalism, and free market?
What are the three different political views involved in FDI, described as radical, pragmatic nationalism, and free market?
- Hostile to FDI (correct)
- Open to all FDI regardless of cost
- View that suggests FDI unrestricted by government is best (correct)
- Only approves FDI when its benefits outweigh its cost (correct)
What are some of the costs associated with a country accepting FDI?
What are some of the costs associated with a country accepting FDI?
- Loss of sovereignty
- Capital outflow
- Adverse effects on competition
- All of the above (correct)
What does the term "resource similarity" in business refer to?
What does the term "resource similarity" in business refer to?
The extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm.
Which of the following is NOT part of the classical theory of international trade?
Which of the following is NOT part of the classical theory of international trade?
Absolute advantage refers to a country producing a commodity with better quality and a faster rate than another.
Absolute advantage refers to a country producing a commodity with better quality and a faster rate than another.
What is the main purpose of government intervention in industries under the strategic trade theory?
What is the main purpose of government intervention in industries under the strategic trade theory?
How does supply and demand influence a country's exchange rate?
How does supply and demand influence a country's exchange rate?
What is the primary objective of a firm?
What is the primary objective of a firm?
What is the primary difference between a perfectly competitive firm's demand curve and a monopolistic firm's demand curve?
What is the primary difference between a perfectly competitive firm's demand curve and a monopolistic firm's demand curve?
What are the two main tools used by the Federal Reserve for monetary control?
What are the two main tools used by the Federal Reserve for monetary control?
What is the difference between consumer surplus and producer surplus?
What is the difference between consumer surplus and producer surplus?
What is the primary difference between a normal good and an inferior good?
What is the primary difference between a normal good and an inferior good?
Complement goods are goods that are purchased more frequently when the price of one decreases, while substitute goods are purchased less frequently when the price of one decreases.
Complement goods are goods that are purchased more frequently when the price of one decreases, while substitute goods are purchased less frequently when the price of one decreases.
What is the main purpose behind imposing an import tariff?
What is the main purpose behind imposing an import tariff?
A tariff imposed on a good will generally reduce the overall domestic demand for that good.
A tariff imposed on a good will generally reduce the overall domestic demand for that good.
What is the definition of deadweight loss?
What is the definition of deadweight loss?
Which of the following entities generally benefits the most from a tariff?
Which of the following entities generally benefits the most from a tariff?
What is the difference between real GDP and nominal GDP? Why is it important to measure GDP in real terms?
What is the difference between real GDP and nominal GDP? Why is it important to measure GDP in real terms?
Which of the following components is NOT included in the calculation of GDP?
Which of the following components is NOT included in the calculation of GDP?
What is a major advantage of using "real GDP" compared to nominal GDP?
What is a major advantage of using "real GDP" compared to nominal GDP?
If a country's real GDP increases, it means the country is experiencing economic growth.
If a country's real GDP increases, it means the country is experiencing economic growth.
Flashcards
Globalization (New View)
Globalization (New View)
Globalization is a new, recent force in the world.
Globalization (Evolutionary View)
Globalization (Evolutionary View)
Globalization is a long-running historical process, beginning from the dawn of humankind.
Globalization (Pendulum View)
Globalization (Pendulum View)
Globalization fluctuates and switches over time, following a pattern like a pendulum.
Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI)
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Radical View (FDI)
Radical View (FDI)
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Pragmatic Nationalism (FDI)
Pragmatic Nationalism (FDI)
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Free Market View (FDI)
Free Market View (FDI)
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FDI Benefit (Host Country)
FDI Benefit (Host Country)
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FDI Costs (Host Country)
FDI Costs (Host Country)
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Resource Similarity
Resource Similarity
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Classical Theory of International Trade
Classical Theory of International Trade
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Study Notes
Competency 1: Globalization
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Globalization is viewed in three ways: New, Evolutionary, and Pendulum.
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New: a recent, sweeping force.
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Evolutionary: a long-standing historical trend.
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Pendulum: a cyclical pattern of highs and lows (e.g., Great Depression, Great Recession).
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Foreign Direct Investment (FDI) is investment, control, and management of value-added activities abroad.
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Different political views on FDI exist:
- Radical view: hostile towards FDI.
- Pragmatic nationalism: approves FDI only when benefits outweigh costs.
- Free market view: supports unrestricted government intervention regarding FDI.
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Benefits of FDI for host countries:
- Capital inflow improves balance of payments.
- Technology spillovers benefit domestic firms.
- Advanced management know-how.
- Job creation (direct and indirect).
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Costs of FDI for host countries:
- Potential loss of sovereignty.
- Adverse effects on competition.
- Capital outflow.
Competency 2: Political and Economic Forces
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Institutions reduce uncertainty by establishing rules.
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Three pillars of institutions: regulatory, normative, and cognitive.
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Regulatory: laws, regulations, and rules.
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Normative: values, beliefs, actions of other players.
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Cognitive: internalized values and beliefs.
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Formal institutions are laws, rules and regulations, whereas informal institutions are norms, cultures and ethics.
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The institution-based view of global business focuses on laws, rules, and norms as core drivers of firm behavior.
Competency 3: Consumer Behavior
- Indifference curves show consumption bundles providing the same level of satisfaction.
- Indifference curves are downward sloping, not crossing, and bowed inward.
- Budget constraints represent affordable consumption bundles.
- A consumer's optimal consumption point occurs where the indifference curve is tangent to the budget constraint.
- Marginal rate of substitution equals the relative price of goods.
Competency 4: Macroeconomic Principles
- The Federal Reserve uses monetary policy tools like open market operations, the discount rate, and reserve requirements to control the money supply and interest rates.
- Open market operations involve buying or selling government bonds.
- A fall in the interest rate increases aggregate demand.
- An increase in the interest rate decreases aggregate demand.
Competency 5: International Trade
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Tariffs are taxes on imported goods.
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Tariffs lead to a reduction in imports, an increase in exports, and raise government revenue.
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Tariffs typically harm consumers due to rising prices, benefit producers, and benefit the government due to increased revenue.
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Trade barriers include tariffs and non-tariff barriers.
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Consumer surplus is the difference between what a buyer is willing to pay and what they actually pay.
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Producer surplus is the difference between what a seller receives and their cost of production.
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Total surplus is the sum of consumer and producer surplus.
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Description
Explore the different perspectives on globalization and foreign direct investment (FDI) in this quiz. Understand the historical, cyclical, and contemporary views of globalization while analyzing the benefits and costs of FDI for host countries. Test your knowledge on political attitudes towards FDI as well as its economic implications.
