Questions part 1

Multiple choice questions

Question 1

Which of the following statements regarding multinational activity is correct?

1. Multinational firms are more likely to choose franchising as an entry mode if the risk of dissemination is high.

2. Firms are more likely to export than engage in horizontal multinational activity if transport costs are high.

3. Multinational firms are more likely to engage in vertical multinational activity if transport costs are low.

4. Multinational firms are more likely to choose full acquisitions over joint ventures if the desire for a high degree of control is low.

Question 2

Which of the following statements regarding Porter’s Diamond Model and Dunning’s OLI model is true?

1. Porter’s model describes the sources of firm-specific advantages and Dunning’s model the role of firm-specific advantages for the success of multinationals.

2. Porter emphasizes the importance of firm-specific factors for the success of multinationals and Dunning the role of governmental subsidies.

3. Dunning emphasizes the importance of resources available in the home country and Porter emphasizes the importance of resources available in the host country.

4. Porter emphasizes the role of supporting industries and Dunning emphasizes the importance of how firms organize the foreign activity.

Table 1: Information on Balance of Payments in country X

Question 3

Based on table 1, the current account balance is:

1. +400

2. +300

3. -300

4. ‐400

Question 4

Based on table 1, the financial (or capital) account balance is:

1. +400

2. +300

3. -300

4. ‐400

Question 5

Which of the following statements regarding Foreign Direct Investment (FDI) statistics is

correct?

1. FDI flow data show the level of multinational activity.

2. All multinational activity is reflected in FDI data.

3. Vertical multinational activity is not recorded in FDI statistics.

4. Funds that multinationals raise in the host country do not show up in FDI data.

Question 6

If a