INTERNATIONAL BUSINESS AND
TRADE - MIDTERM REVIEWER 7. Reduced Regional and Global
TRUE / FALSE
1. National Economic Trade Theory
refers to cross-national economic
interactions including consumer
products, such as television sets and
apparel, are exchanged often, as are
capital goods, such as machinery, as
well as raw material and food.
Answer: FALSE
2. International financial payments
promote international commercial
transactions, with the private banking
sector and central banks of trading
nations playing key roles.
Answer: TRUE
3. The Economic Trade and related
Human Resource Operations are
often carried out to provide a country
with commodities it needs in return.
Answer: FALSE
4. International trade may also assist
you to improve your supply chain and
sourcing methods, as well as boost
your access to export finance
possibilities in some circumstances.
Answer: TRUE
5. Foreign Direct Investment occurs
when a firm invests directly in
facilities to produce or market goods
or services in a foreign country.
Answer: TRUE
6. Local Direct Investment (LDI) is
where an individual or business from
one nation, invests in another.
Answer: FALSE
Tensions a supply chain is created
between national regions that was
created by the division of labor. For
example, North Korea may make the
batteries; China the ID sensors, and
the USA the cameras they are all
dependent on each other.
Answer: FALSE
8. Sharing of Technology, Knowledge,
and Culture, FDI allows the transfer
of technology, knowledge, and
culture, its interest to ensure the most
efficient use of its resources.
Answer: TRUE
9. Consolidation and merger, by
investing in other nations, it spreads
the company’s exposure.
Answer: FALSE
10. Employment and Economic Boost,
this brings about new opportunities
for local residents and can stimulate
further growth.
Answer: TRUE
IDENTIFICATION
1. It is that they can essentially be
brought in and controlled by foreign
powers.
Answer: FOREIGN CONTROL
2. When significant sums of money are
transferred to another, it is an
investment that would have been
used in the home market.
Answer: LOSS OF DOMESTIC
JOBS
3. When investing abroad, particularly 9. This may mean increased trade with
in developing nations, there is huge a less efficient or more expensive
risk that is associated. producer because it is in a member
Answer: RISK OF POLITICAL OR country. In this sense, weaker
ECONOMIC CHANGE companies can be protected
inadvertently with the bloc agreement
4. It is best characterized as an acting as a trade barrier.
agreement between clusters of Answer: TRADE DIVERSION
nations in a geographic region to
lower and eventually eliminate tariff 10. Countries may move production to
and non-tariff barriers to the free cheaper labor markets in member
movement of goods, services, and countries. Similarly, workers may
inputs of production. move to gain access to better jobs
Answer: REGIONAL ECONOMIC and wages. Sudden shifts in
INTEGRATION employment can tax the resources of
member countries.
5. When countries join into an economic Answer: EMPLOYMENT SHIFTS
agreement to reduce trade barriers AND REDUCTIONS
and embrace similar economic
policies, this kind is established. 11. Seven (7) benefits of Foreign Direct
Answer: ECONOMIC UNION Investment
Answer:
6. These agreements create more ● BOOST TO
opportunities for countries to trade INTERNATIONAL TRADE
with one another by removing the ● REDUCED REGIONAL AND
barriers to trade and investment. GLOBAL TENSIONS
Answer: TRADE CREATION ● SHARING OF
TECHNOLOGY,
7. By removing restrictions on labor KNOWLEDGE, AND
movement, economic integration can CULTURE
help expand job opportunities. ● DIVERSIFICATION
Answer: EMPLOYMENT ● LOWER COSTS AND
OPPORTUNITIES INCREASED EFFICIENCY
● TAX INCENTIVES
8. Members of nations may find it easier ● EMPLOYMENT AND
to agree with smaller numbers of ECONOMIC BOOST
countries. Regional understanding
and similarities may also facilitate 12. Three (3) Disadvantages of Foreign
closer political cooperation. Direct investment
Answer: CONSENSUS AND Answers:
COOPERATION ● FOREIGN CONTROL
● LOSS OF DOMESTIC JOBS
● RISK OF POLITICAL OR
ECONOMIC CHANGE

13. Four (4) types of motives for FDI
Answers:
● RESOURCE SEEKING
● MARKET SEEKING
● EFFICIENCY SEEKING
AND FAVORABLE
● GOVERNMENT POLICY
SEEKING
14. Five (5) Classical Country- Based
Trade Theories
Answers:
● MERCANTILISM
● ABSOLUTE ADVANTAGE
● COMPARATIVE
ADVANTAGE
● HECKSCHER OHLIN
THEORY
● LEONTIEF PARADOX1
15. Four (4) Modern Firm-Based
Theories
Answers:
● COUNTRY SIMILARITY
THEORIES
● PRODUCT LIFE CYCLE
THEORY
● GLOBAL STRATEGIC
RIVALRY THEORY
● PORTER’S NATIONAL
COMPETITIVE
ADVANTAGE THEORY
16. Due to these agreements a reduction
or removal of tariffs, cooperation
results in cheaper prices for
consumers in the bloc countries.
a. Blue Ocean strategy
b. National Diversion
c. Trade Creation
d. Employment Shift
e. None of the above.
17. The member nations may find it
easier to agree with smaller numbers
of countries. Regional understanding
and similarities may also facilitate
closer political cooperation.
a. Loss of Nation
b. Consensus and
cooperation.
c. Economic Rights
d. Expensive producer
e. None of the above
18. With each new round of discussions
and agreements within a regional
bloc, nations may find that they have
to give up more of their political and
economic rights.
a. Pros and Cons
b. Employment Challenges
c. Loss of National
Sovereignty
d. Trade Creation
e. None of the above
19. One of the main fears, particularly
among developing nations, is that
they can essentially be brought in
and controlled by foreign powers.
a. Foreign Control
b. Foreign trade control
c. Developed Nations
d. Home market
e. None of the above
20. For instance, there may be huge
political upheaval, or a regional war.
This may consist of a new
government that is not so favorable to
investors.
a. Climate change
b. Resource seeking resource
c. Regional Integration
d. Risk of political or
economic change