International Economics Questions

EDM Designs grants a foreign entity the right to produce and sell the company's glow-in-the-dark t-shirts in return for a royalty fee on every shirt sold. What approach to FDI does this represent?

What will happen if a country increases its money supply rapidly under a fixed exchange rate regime?

If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen?

The currency of Lebanon is fixed relative to the U.S. dollar. This means that the exchange rate between the Lebanese pound and other currencies is determined by the dollar exchange rate. This reflects a

Assume that the interest rate on borrowing in Japan is 1 percent, while the interest rate on deposits in Australian banks is 5 percent. A trader borrows in yen and then converts the money into Australian dollars and deposits it in an Australian bank to make a 4 percent margin. This is an example of which type of trade?

Assume that the yen/dollar exchange rate quoted in Tokyo at 3:00 p.m. is ¥120 = $1, and the yen/dollar exchange rate quoted in New York at the same time is ¥123 = $1. A dealer in New York uses dollars to purchase yen and then immediately sells the yen to buy dollars in Tokyo, thereby making a profit. The dealer has engaged in

It is difficult if not impossible to get adequate insurance coverage for exchange rate changes that

A pair of earrings costs £40 in Britain. An identical pair costs $50 in the United States when the exchange rate is £1 = $1.50. Which statement is correct?

How can governments increase the attractiveness of FDI and licensing relative to exporting?

Direct effects of FDI on employment in the host country arise when a foreign MNE

Suppose a government increases the money supply. As a result, there is a surge in the demand of goods as consumers rush to spend their extra money, but producers cannot keep up with demand. What will be the result?

According to the law of one price, if the exchange rate between the British pound and the dollar is £1 = $1.50, a shirt that retails for $120 in New York should sell for __________ in London.

Country A and Country B entered into a free trade agreement recently. After this, Country A starts importing heavy machinery from Country B. Country A previously imported such machinery at lower rates from another country. What has occurred in this scenario?

How does NAFTA seem to increase the international competitiveness of U.S. and Canadian firms?

In which situation does the internalization theory recommend FDI as opposed to licensing?

A country rejects FDI proposals in certain industries. It does so because the tangible advantages of such investments are lesser than potential costs like loss of employment and reduction of overall well-being. However, it aggressively pursues inviting foreign investments in sectors like infrastructure, education, and health care because of the benefits that accrue with them. Which political view of FDI is discussed in this example?

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.A) TrueB) False

What was the main objection raised by those in the United States and Canada who opposed the ratification of the NAFTA?

Domestic firms do not have foreign exchange risk.A) TrueB) False

According to the international Fisher​ Effect, if an investor purchases a five−year U.S. bond that has an annual interest rate of​ 5% rather than a comparable British bond that has an annual interest rate of​ 6%, then the investor must be expecting the​ ________ to​ ________ at a rate of at least​ 1% per year over the next 5 years.A.British​ pound; appreciateB.British​ pound; revalueC.U.S.​ dollar; appreciateD.U.S.​ dollar; depreciate