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Exam 3: Doing Business in Global Markets

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Question 91

Multiple Choice

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A fast-growing form of foreign direct investment is sovereign wealth funds (SWFs) . Why do these investments by governments with surplus cash flows worry trade experts?

A) SWFs invest in high-risk start-ups with no proven history of producing goods and services that developing or developed countries need. They may likely undermine the years of development of growing economies.
B) SWFs have a greater risk of going bankrupt than other investments because governments are not good at running businesses.
C) Some fear that governments investing their SWFs in large firms may gain control of natural resources, sensitive technologies, and the decision making of management.
D) Some trading experts believe that SWFs are supported by terrorist organizations, and their strategy is an indirect way to undermine the creation of U.S. jobs.

E) A) and C)
F) B) and C)

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Question 92

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The United States is the largest exporter in the world.

A) True
B) False

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Question 93

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A Kia Motors assembly plant in Georgia is an example of foreign direct investment in the United States.

Reviewing the recent experience of the United States in global markets reveals that the U.S has

A form of foreign direct investment, where a domestic company purchases a company in a foreign country to produce a similar product or service, is a

Governments directly participate in global markets through sovereign wealth funds.

Which of the following nations has joined the U.S., Japan, and the EU as a key driver of the world economy?

Climate and terrain in several South American countries are conducive to growing coffee beans efficiently. While other countries have the ability to grow the bean, they are not as efficient and effective because of short seasons and climate concerns. This fact would lead you to believe that these South American countries have a(n) ________ advantage in the production of coffee.

In global markets, there is not a central system of law.

The European Union created a single monetary unit to replace the national currencies of 12 member nations. This common currency is known as the

An advantage of licensing is that licensors spend little or no money to produce and market their products. These costs are paid for by the licensees.

_______ is a complex form of bartering in which several countries may be involved, each trading products and services for the products and services of another country.

If a Swiss chocolate firm purchases an American ice cream manufacturer, the American ice cream manufacturer becomes a

Even though the U.S. exports a vast amount of goods globally, it exports a much lower percentage of its products than other countries do.

An exchange rate is the value of one nation's currency relative to the currencies of other nations.

________ is lowering the value of a nation's currency relative to other currencies.

The website for Electricity City noted, "Russia has been a country in which Electricity City has made substantial investments. We are one of the largest foreign companies in Russia, operating multiple businesses, including an equipment fleet with more than 1,500 large units." With physical presence in Russia, Brazil, New Zealand, France, Turkey, Nigeria, Canada, and other countries, Electricity City is an example of a multinational company.

The U.S. government, responding to pressure from political lobbyists representing the U.S. steel industry, will impose a tax on steel products imported from South America. This is an example of a(n)

Banana plantations in Hawaii cannot produce nearly enough of all the bananas consumed by Americans. The fact that the U.S. grows and sells bananas gives it a comparative advantage in bananas. It is not an absolute advantage and that is why we choose to import bananas from South America, as well.

One characteristic of an international joint venture is all parties sharing the risk of a major project.