An example of a foreign direct investment (FDI) would include
A) a U.S. couple buying land for their dream retirement home in Costa Rica.
B) a U.S. mutual fund manager buying shares of stock in a Brazilian oil company.
C) a U.S. firm expanding its U.S. operations.
D) a Chinese consumer buying an imported Japanese car.
E) a wealthy Mexican buying U.S. Treasury bills.
Question 2 - Suppose a manufacturer of software develops a new computer program that sells for 50.
The 50 cost includes 0.25 for the CD it is stored on, 5 for the labor of the company software programmers, and 1.75 for packaging materials and transportation costs. Value added by the software company is
A) 49.75.
B) 48.25.
C) 48.
D) 44.75.
E) 43.
Question 3 - Financial capital flows could include
A) real estate purchases.
B) construction of factories.
C) sales of a business.
D) the purchase of the physical assets and operations of a multinational corporation by another.
E) currency market transactions.
Question 4 - Your text mentions several ways that international trade flows are qualitatively different than they were a century ago. Which of the following is NOT one of those ways?
A) Manufactured goods are more important than the were in the past.
B) Firms' investment spending on capital goods is more important than in the past.
C) International trade in raw commodities and agricultural products is more important than it was in the past.
D) It is possible to trade some types of services in a way that was not possible in the past.
E) Multinational corporations play a bigger role in production than they did in the past.
Question 5 - Large countries can improve their welfare by levying a tariff only if it does not
A) encourage rent seeking elsewhere in the economy.
B) discourage innovation.
C) lead to retaliation by the nation's trading partners.
D) All of the above.
E) None of the above.
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