Econ-Final Exam Study Guide

Econ-Final Exam Study Guide - International Trade and...

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International Trade and Business Environment (Econ 300) Final Exam Study Guide This study guide should be used along with class notes, homework assignments, in- class assignments and readings from the text. Chapters 7/13 Why do governments intervene in FDI? Protect cultural heritage Protect domestic companies Protect jobs What is BOP? (Balance of Payments) National accounting system that records all payments to entities in other countries and all receipts coming into the nation Receipts from other nations are ADDITIONS + Payments to other nations are REDUCTIONS – What is current account? Records transactions involving the imports and exports of goods/services, Income receipts on assets abroad and Income payments on foreign assets inside the country What is capital account? Records transactions involving the purchase or sale of assets (including assets such as property and shares of common stock in a company) Read pages 198 and 199 – of the sixth edition – carefully Why does “host” country intervene in FDI? Keep BoP under control Obtain resources and benefits (access to tech, management skills) Decrease import demand Generate exports Create employment Why does “home” country intervene in FDI? Removes resources from nation o (-) Can eliminate an export market and domestic jobs o (-) Can damage a nations BOP 1
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o (+) May improve national competitiveness and offshore ‘sunset’ industries Chapters 9/10 Introduction Globalization, International Trade, FDI all require a mechanism through which one currency can be exchanged for another Define “International Monetary System” Institutionalized framework within which exchange rates are determined Central Banks, Governments, IMF, etc.
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