Flowers of May
Chapter 4 Theories of International Trade and Investment
TRUE/FALSE QUESTIONS
THEORIES OF INTERNATIONAL TRADE AND INVESTMENT
1. Farm land, diamond mines, and good climate conditions would all be categorized as comparative advantages for a region.
(True; p. 94; concept; Learning Objective 1; easy)
2. The earliest efforts to explain international business emerged in the early 20th century
(False; p. 95; concept; Learning Objective 1; easy)
3. Modern business executives use the term comparative advantage when referring to the assets of individual firms.
(False; p. 95; concept; Learning Objective 1; moderate)
WHY NATIONS TRADE
4. Specialization prohibits industries and laborers from being productive and profitable in the arena of international trade.
(False; p. 96; concept; Learning Objective 2; moderate)
5. In Adam Smith’s opinion, mercantilism negatively impacts a nation’s wealth, and benefits only a few individuals.
(True; p. 97; concept; Learning Objective 2; easy)
6. In theory, nations which adhere to the absolute advantage principle will have higher standards of living than nations which follow principles of mercantilism.
(True; p. 97; concept; Learning Objective 2; moderate)
HOW NATIONS ENHANCE THEIR COMPETITIVE ADVANTAGE
7. Modern globalization is associated with efforts by many governments to develop policies intended to encourage industrialization and national prosperity.
(True; pp. 102; concept; Learning Objective 3; easy)
8. Successful software and computer firms sustain competitive advantages by investing in research and development.
(True; p. 103; concept; Learning Objective 3; moderate)
9. In the contemporary world of international trade and investment, the most important source of national advantage is a country’s natural resources.
(False; p. 105; concept; Learning Objective 3; moderate)
10. National industrial policies typically involve the creation of bureaucratic regulatory systems which
TRUE/FALSE QUESTIONS
THEORIES OF INTERNATIONAL TRADE AND INVESTMENT
1. Farm land, diamond mines, and good climate conditions would all be categorized as comparative advantages for a region.
(True; p. 94; concept; Learning Objective 1; easy)
2. The earliest efforts to explain international business emerged in the early 20th century
(False; p. 95; concept; Learning Objective 1; easy)
3. Modern business executives use the term comparative advantage when referring to the assets of individual firms.
(False; p. 95; concept; Learning Objective 1; moderate)
WHY NATIONS TRADE
4. Specialization prohibits industries and laborers from being productive and profitable in the arena of international trade.
(False; p. 96; concept; Learning Objective 2; moderate)
5. In Adam Smith’s opinion, mercantilism negatively impacts a nation’s wealth, and benefits only a few individuals.
(True; p. 97; concept; Learning Objective 2; easy)
6. In theory, nations which adhere to the absolute advantage principle will have higher standards of living than nations which follow principles of mercantilism.
(True; p. 97; concept; Learning Objective 2; moderate)
HOW NATIONS ENHANCE THEIR COMPETITIVE ADVANTAGE
7. Modern globalization is associated with efforts by many governments to develop policies intended to encourage industrialization and national prosperity.
(True; pp. 102; concept; Learning Objective 3; easy)
8. Successful software and computer firms sustain competitive advantages by investing in research and development.
(True; p. 103; concept; Learning Objective 3; moderate)
9. In the contemporary world of international trade and investment, the most important source of national advantage is a country’s natural resources.
(False; p. 105; concept; Learning Objective 3; moderate)
10. National industrial policies typically involve the creation of bureaucratic regulatory systems which