Question 1

The most contentious implication of new trade theory is that it suggests governments should have no role in trade regulation.

Accepted Answer

A) True 
 B)False

Question 2

A contentious issue in the new trade theory is that it generates an argument for __________________ and ____________________.

Accepted Answer

A)   low-cost production; government intervention
B)   increased trade; government intervention
C)   government intervention; economies of scale
D)   government intervention; strategic trade policyE) All of the above
F) B) and D)

Question 3

Mercantilism was considered to be the last and most successful theory of international trade.

Accepted Answer

A) True 
 B)False

Question 4

Considered to be the first theory of international trade, ______________ principal assertion was that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Accepted Answer

A)   collectivism's
B)   mercantilism's
C)   capitalism's
D)   economic conservatism'sE) None of the above
F) A) and B) B

Question 5

Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialisation.

Accepted Answer

A)   'stage'
B)   product life-cycle
C)   new trade
D)   Heckscher-OhlinE) B) and D)
F) A) and D)

Question 6

New trade theory points out that through its impact on economies of scale, trade can increase the variety of goods available to consumers and _______ the average costs of those goods.

Accepted Answer

A)   alleviate
B)   maintain
C)   decrease
D)   spreadE) A) and B)
F) B) and D)

Question 7

Michael Porter's (1990) 'diamond' shows four attributes of a nation: (a) factor endowments; (b) demand conditions; (c) relating and supporting industries; and (d) firm strategy, structure and rivalry. Focus therefore centres on national competitive advantage.

Accepted Answer

A) True 
 B)False

Question 8

Who initially proposed the product life-cycle theory in the mid-1960s?

Accepted Answer

A)   Porter
B)   Heckscher-Ohlin
C)   Vernon
D)   SmithE) A) and B)
F) A) and C)

Question 9

Which of the following has historically been noted as being an accurate explanation for international trade patterns?

Accepted Answer

A)   Product life-cycle theory
B)   Absolute advantage theory
C)   Internationalisation 'stage' theory
D)   The Leontief paradoxE) C) and D)
F) None of the above

Question 10

______________________ are unit cost reductions associated with a large scale of output.

Accepted Answer

A)   Location-specific advantages
B)   Competitive advantages
C)   Economies of scale
D)   Positive-sum gamesE) B) and C)
F) All of the above

Question 11

Psychic distance relates to:

Accepted Answer

A)   those factors that impede the flow of information between the firm and an international market.
B)   the challenge of overcoming attitudinal differences relating to quality.
C)   the distance between the trial stage of a new product and its widespread introduction.
D)   the attitudinal difference between the overseas production/manufacturing units and the home-country manufacturing plants.E) A) and C)
F) A) and B)

Question 12

In relation to the Uppsala models, which of the following statements is incorrect?

Accepted Answer

A)   There are four major stages of internationalisation.
B)   The stage models are limited in their ability to predict the internationalisation of small- to medium-sized firms.
C)   The stage models suggest an incremental sequential approach to internationalisation.
D)   Some researchers have criticised the stage models for being too 'deterministic'.E) A) and D)
F) All of the above B

Question 13

International new ventures and born globals internationalise rapidly due to reduced trade barriers and shorter product life cycles. These firms:

Accepted Answer

A)   do not follow an incremental sequential process to internationalisation.
B)   follow a definitive path in their development based on scale.
C)   are technology, media and telecommunications firms.
D)   have economies of scale enabling them to enter new markets.E) None of the above
F) B) and D)

Question 14

The flaw of mercantilism was that it viewed trade as __________________.

Accepted Answer

A)   a zero-sum game
B)   an economic necessity
C)   an import-only activity
D)   a positive-sum gameE) None of the above
F) C) and D)

Question 15

British economist John Dunning, who became known for developing the 'eclectic paradigm', suggested the following elements of advantage:

Accepted Answer

A)   operations, localisation and internationalisation.
B)   outsourcing, legal and institutional.
C)   ownership, location and internalisation.
D)   oligopolistic, language and intellectual.E) A) and B)
F) A) and C)

Question 16

Raymond Vernon proposed the product life-cycle theory in the early 1960s in response to the failure of the Heckscher-Ohlin theory to explain the observed pattern of international trade in the US.

Accepted Answer

A) True 
 B)False

Question 17

The theories of international trade claim that promoting free trade is generally in the best interests of a country, although it may not be in the best interests of ____________.

Accepted Answer

A)   firms
B)   governments
C)   multipoint competition
D)   societyE) A) and D)
F) B) and C) A

Question 18

According to Porter's theory, governments should be urged to ________________ that will have a favourable impact on each component of the national diamond.

Accepted Answer

A)   reject lobby attempts
B)   accept foreign manufacturing techniques
C)   adopt policies
D)   divest outdated materialsE) A) and C)
F) None of the above

Question 19

Because of their pivotal role in international trade, _________ can exert strong influence on government trade policies.

Accepted Answer

A)   unions
B)   entrepreneurs
C)   lobbyists
D)   businessesE) A) and B)
F) None of the above

Question 20

A firm that starts international operations soon after formation has become known in the literature as:

Accepted Answer

A)   a global start-up.
B)   an international new venture.
C)   a born global.
D)   a universal corporation.E) B) and D)
F) B) and C)

Exam 2: Theories of Trade: Investment and Internationalisation

The most contentious implication of new trade theory is that it suggests governments should have no role in trade regulation.

Correct AnswerverifiedShow Answer

A contentious issue in the new trade theory is that it generates an argument for __________________ and ____________________.

Correct AnswerverifiedShow Answer

Mercantilism was considered to be the last and most successful theory of international trade.

Correct AnswerverifiedShow Answer

Considered to be the first theory of international trade, ______________ principal assertion was that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Correct AnswerverifiedB

Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialisation.

Correct AnswerverifiedShow Answer

New trade theory points out that through its impact on economies of scale, trade can increase the variety of goods available to consumers and _______ the average costs of those goods.

Correct AnswerverifiedShow Answer

Michael Porter's (1990) 'diamond' shows four attributes of a nation: (a) factor endowments; (b) demand conditions; (c) relating and supporting industries; and (d) firm strategy, structure and rivalry. Focus therefore centres on national competitive advantage.

Correct AnswerverifiedShow Answer

Who initially proposed the product life-cycle theory in the mid-1960s?

Correct AnswerverifiedShow Answer

Which of the following has historically been noted as being an accurate explanation for international trade patterns?

Correct AnswerverifiedShow Answer

______________________ are unit cost reductions associated with a large scale of output.

Correct AnswerverifiedShow Answer

Psychic distance relates to:

Correct AnswerverifiedShow Answer

In relation to the Uppsala models, which of the following statements is incorrect?

Correct AnswerverifiedB

International new ventures and born globals internationalise rapidly due to reduced trade barriers and shorter product life cycles. These firms:

Correct AnswerverifiedShow Answer

The flaw of mercantilism was that it viewed trade as __________________.

Correct AnswerverifiedShow Answer

British economist John Dunning, who became known for developing the 'eclectic paradigm', suggested the following elements of advantage:

Correct AnswerverifiedShow Answer

Raymond Vernon proposed the product life-cycle theory in the early 1960s in response to the failure of the Heckscher-Ohlin theory to explain the observed pattern of international trade in the US.

Correct AnswerverifiedShow Answer

The theories of international trade claim that promoting free trade is generally in the best interests of a country, although it may not be in the best interests of ____________.

Correct AnswerverifiedA

According to Porter's theory, governments should be urged to ________________ that will have a favourable impact on each component of the national diamond.

Correct AnswerverifiedShow Answer

Because of their pivotal role in international trade, _________ can exert strong influence on government trade policies.

Correct AnswerverifiedShow Answer

A firm that starts international operations soon after formation has become known in the literature as:

Correct AnswerverifiedShow Answer

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A contentious issue in the new trade theory is that it generates an argument for and __.

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B

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B

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A

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