International Trade and Foreign Direct Investment
Chapter 2
International Trade and Foreign Direct Investment
True/False Questions
1. The classical international trade theories are from the perspective of a country. True; Easy
2. Trade surplus refers to a situation where the value of imports is greater than the value of exports. False; Easy
3. The economic theory of mercantilism stated that a country’s wealth was determined by the amount of its gold and silver holdings. True; Easy
4. Trade deficit refers to a situation where the value of exports is greater than the value of imports. False; Easy
5. The modern international trade theories explain trade from a firm, rather than a country, perspective. True; Easy
6. The new nations of the 1500s promoted exports by imposing restrictions on imports. True; Easy
7. The British colonial empire sought to increase its wealth by using raw materials from places ranging from what are now the Americas and India. True; Easy
8. Countries such as China still favor exports and discourage imports through a form of neo-mercantilism. True; Easy
9. Free trade only benefits select industries, at the expense of both consumers and other companies, within and outside of the industry. False; Easy
10. The product life cycle theory has been better able to explain current trade patterns where innovation and manufacturing occur around the world. False; Moderate
11. The Internet has lessened the ability of the countries to regulate or strong-arm companies into abiding by their rules and regulations. True; Easy
12. Global businesses can afford to ignore the political and legal climate in countries in which they currently operate. False; Easy
13. A main differentiator of political systems is each system’s philosophy on the rights of the individual and the group as well as the role of government. True; Easy
14. Most countries maintain a balance between anarchism and totalitarianism and the balance is
International Trade and Foreign Direct Investment
True/False Questions
1. The classical international trade theories are from the perspective of a country. True; Easy
2. Trade surplus refers to a situation where the value of imports is greater than the value of exports. False; Easy
3. The economic theory of mercantilism stated that a country’s wealth was determined by the amount of its gold and silver holdings. True; Easy
4. Trade deficit refers to a situation where the value of exports is greater than the value of imports. False; Easy
5. The modern international trade theories explain trade from a firm, rather than a country, perspective. True; Easy
6. The new nations of the 1500s promoted exports by imposing restrictions on imports. True; Easy
7. The British colonial empire sought to increase its wealth by using raw materials from places ranging from what are now the Americas and India. True; Easy
8. Countries such as China still favor exports and discourage imports through a form of neo-mercantilism. True; Easy
9. Free trade only benefits select industries, at the expense of both consumers and other companies, within and outside of the industry. False; Easy
10. The product life cycle theory has been better able to explain current trade patterns where innovation and manufacturing occur around the world. False; Moderate
11. The Internet has lessened the ability of the countries to regulate or strong-arm companies into abiding by their rules and regulations. True; Easy
12. Global businesses can afford to ignore the political and legal climate in countries in which they currently operate. False; Easy
13. A main differentiator of political systems is each system’s philosophy on the rights of the individual and the group as well as the role of government. True; Easy
14. Most countries maintain a balance between anarchism and totalitarianism and the balance is