b. Colombia
c. Mexico
d. Venezuela
ANSWER: c
110. What is a major concern of many Americans about the number of Mexican migrants in the United States?
a. Mexican migrants may petition the United States to adopt Spanish as its official language.
b. Mexican migrants may drive down the wages of American workers.
c. Many Mexican migrants never learn to speak English.
d. Mexican migrants are displacing American workers in high-tech jobs.
ANSWER: b
111. Which of the following is an example of a foreign direct investment (FDI) flow?
a. the purchase of a controlling interest in a foreign firm by a domestic firm
b. the purchase of stocks or bonds directly from an international dealer
c. the purchase of foreign government bonds by domestic investors
d. accounts denominated in foreign currency in foreign banks owned by domestic depositors
ANSWER: a
112. Most FDI flows are owned by:
a. low-income nations.
b. Australia.
c. OECD nations.
d. the African continent.
ANSWER: c
113. FDI is measured in “flow” terms when we take into account:
a. any form of FDI ownership occurring across the world.
b. foreign companies owning a company or property in another country.
c. the total ownership (adding up over all years) by firms from one country investing in other countries.
d. the new ownership each year acquired by firms from one country investing in other countries.
ANSWER: d
114. Which of the following is NOT a reason for firms in an industrial nation to undertake vertical FDI in a low-income nation?
a. access to raw materials in the low-income nation
b. lower wages in the low-income nation
c. avoidance of export taxes in the low-income nation
d. avoidance of import taxes in the low-income nation
ANSWER: c
115. Most foreign direct investment among industrialized countries is:
a. vertical FDI.
b. horizontal FDI.
c. industrial FDI.
d. reverse-vertical FDI.
ANSWER: b
116. Which of the following is considered an outflow of foreign direct investment (FDI) from the United States?
a. General Motors sells Saab, its Swedish subsidiary, to a Chinese company.
b. General Motors uses the proceeds of its sale of Saab to purchase British treasury bonds.
c. General Motors earns interest on its British treasury bonds, which it then credits to its accounts in the United States.
d. General Motors invests $100 million to modernize its U.K. plant that produces Vauxhall automobiles.
ANSWER: d
117. Which of the following is NOT classified as horizontal FDI?
a. NUCOR, a U.S. steel manufacturer, purchases an iron ore mine in Australia.
b. BMW, a German auto manufacturer, constructs an auto assembly plant in South Carolina.
c. Burger King, an American fast-food chain, buys Canadian fast-food chain Tim Horton's.
d. General Motors, an American auto manufacturer, constructs an auto assembly plant in Toronto, Canada.
ANSWER: a
118. The key reason for horizontal FDI is:
a. to avoid or to minimize taxes or tariffs.
b. to take advantage of low wages in the destination country.
c. to compete with local companies in the destination country.
d. to learn newer technology in the destination country.
ANSWER: a
119. What is the principal reason for Intel (a U.S. computer chip producer) to establish a computer chip manufacturing plant in a developing country (e.g., Malaysia)?
a. to take advantage of the low wages in Malaysia
b. to take advantage of Malaysia's climate
c. to take advantage of Malaysia's low tariffs on imported computer chips
d. to avoid Malaysia's low export taxes on computer chips
ANSWER: a
120. Which of the following is classified as reverse-vertical FDI?
a. Subaru, a Japanese automaker, builds a plant in Indiana to assemble Subaru Outbacks.