C211 OA | THE SMART WAY TO PASS | REAL TESTS,
REAL RESULTS!
New - Answer: view that claims phenomenon of globalization was initially driven by the
desire of Western economies to exploit their power through MNE's
Evolutionary - Answer: view that claims globalization is a long-run historical evolution
since the dawn of humanity. Says it is nothing new and that it will always exist
Pendulum - Answer: view that claims globalization is swinging from one extreme to
another from time to time
Foreign direct investment - Answer: investment in, controlling, and managing value-
added activities in other countries
Radical - Answer: political view hostile to FDI. Believes it is an instrument of imperialism
and vehicle for exploitation of domestic resources by foreign capitalists and firms
Free market - Answer: suggests that FDI, unrestricted by government intervention, will
enable countries to tap into their absolute or comparative advantages by specializing in
the production of certain goods and services
Pragmatic nationalism - Answer: views FDI as having pros and cons and only approving
FDI when its benefits outweigh costs
What benefits exist to a country receiving FDI? - Answer: capital inflow, technology
spillovers, advanced management know-how, creates jobs
What costs exist to a country receiving FDI? - Answer: loss of sovereignty, adverse
effects on competition, net outflow in the capital account
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Balance of trade - Answer: The aggregation of importing and exporting that leads to the
country-level trade surplus or deficit.
Firms with a _____ degree of resource similarity are likely to have similar competitive
actions - Answer: high
A high degree of resource similarity but low market commonality = _______ intensity of
rivalry - Answer: highest
Little resource similarity but high market commonality = _____ intensity of rivalry -
Answer: lowest
Mercantilism, absolute advantage and comparative advantage belong to what theory of
international trade - Answer: classical
Theory of international trade that relies on more realistic product life cycles and first
mover advantages - Answer: modern
Under free trade, a nation gains by specializing in economic activities in which it has
_____advantage - Answer: absolute
Focuses on the idea that if a country does not have absolute advantage, they can still
choose to specialize in the production of one good where it has ______ advantage -
Answer: comparative
Comparative advantage and absolute advantage stem from - Answer: factor
endowments
Theory that the wealth of the world is fixed and that a nation that imports more and
exports less will be richer - Answer: mercantilism
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
, Stage of the product life cycle where production of a new product that commands a
price premium will concentrate in the US - Answer: new
Stage of the product life cycle where demand and ability to produce grow in other
developed nations - Answer: maturing
Stage of the product life cycle where the previously new product is commoditized and
production will now move to low-cost developing nations - Answer: standardized
Comparative advantage may change over time because patterns of ______ change
over time - Answer: trade
Theory that suggests that intervention by governments in certain industries can
enhance their odds for international success - Answer: strategic trade
If a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? - Answer: currency hedging
Exchange rate risk associating with the time delay between entering a contract and
settling it - Answer: transaction risk
Forward transaction that protects traders and investors from exposure to fluctuations of
the spot rate - Answer: hedging
A means of spreading out activities in different currency zones in order to offset the
currency losses in certain regions through gains in other regions - Answer: strategic
heding
Amount of resources committed to entering a foreign market - Answer: scale of entry
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
REAL RESULTS!
New - Answer: view that claims phenomenon of globalization was initially driven by the
desire of Western economies to exploit their power through MNE's
Evolutionary - Answer: view that claims globalization is a long-run historical evolution
since the dawn of humanity. Says it is nothing new and that it will always exist
Pendulum - Answer: view that claims globalization is swinging from one extreme to
another from time to time
Foreign direct investment - Answer: investment in, controlling, and managing value-
added activities in other countries
Radical - Answer: political view hostile to FDI. Believes it is an instrument of imperialism
and vehicle for exploitation of domestic resources by foreign capitalists and firms
Free market - Answer: suggests that FDI, unrestricted by government intervention, will
enable countries to tap into their absolute or comparative advantages by specializing in
the production of certain goods and services
Pragmatic nationalism - Answer: views FDI as having pros and cons and only approving
FDI when its benefits outweigh costs
What benefits exist to a country receiving FDI? - Answer: capital inflow, technology
spillovers, advanced management know-how, creates jobs
What costs exist to a country receiving FDI? - Answer: loss of sovereignty, adverse
effects on competition, net outflow in the capital account
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Balance of trade - Answer: The aggregation of importing and exporting that leads to the
country-level trade surplus or deficit.
Firms with a _____ degree of resource similarity are likely to have similar competitive
actions - Answer: high
A high degree of resource similarity but low market commonality = _______ intensity of
rivalry - Answer: highest
Little resource similarity but high market commonality = _____ intensity of rivalry -
Answer: lowest
Mercantilism, absolute advantage and comparative advantage belong to what theory of
international trade - Answer: classical
Theory of international trade that relies on more realistic product life cycles and first
mover advantages - Answer: modern
Under free trade, a nation gains by specializing in economic activities in which it has
_____advantage - Answer: absolute
Focuses on the idea that if a country does not have absolute advantage, they can still
choose to specialize in the production of one good where it has ______ advantage -
Answer: comparative
Comparative advantage and absolute advantage stem from - Answer: factor
endowments
Theory that the wealth of the world is fixed and that a nation that imports more and
exports less will be richer - Answer: mercantilism
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
, Stage of the product life cycle where production of a new product that commands a
price premium will concentrate in the US - Answer: new
Stage of the product life cycle where demand and ability to produce grow in other
developed nations - Answer: maturing
Stage of the product life cycle where the previously new product is commoditized and
production will now move to low-cost developing nations - Answer: standardized
Comparative advantage may change over time because patterns of ______ change
over time - Answer: trade
Theory that suggests that intervention by governments in certain industries can
enhance their odds for international success - Answer: strategic trade
If a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? - Answer: currency hedging
Exchange rate risk associating with the time delay between entering a contract and
settling it - Answer: transaction risk
Forward transaction that protects traders and investors from exposure to fluctuations of
the spot rate - Answer: hedging
A means of spreading out activities in different currency zones in order to offset the
currency losses in certain regions through gains in other regions - Answer: strategic
heding
Amount of resources committed to entering a foreign market - Answer: scale of entry
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
