PART I: CURRENT EVENT ANALYSIS
Directions: Utilize LIRN and other sources of information (articles, internet sources, etc.) to find one current event article or news story related to any concept presented in this module. Summarize the article's main points/concepts and discuss how the it using APA format. Length should be a minimum of one page, double-spaced. Provide links to the articles (or scan and upload a printed article). Please use proper APA citation when using any source including the textbook. Please visit the Academic Resource Center (ARC) for concise APA guidelines.
PART II: SHORT ANSWER
1. What theories are categorized as firm-based theories? Which theories are categorized as country-based trade theories? What does each type of theory help explain?
2. What is the key difference between the theory of comparative advantage and the theory of absolute advantage? Which theory do you support? Why?
3. How can firms develop a sustainable competitive advantage?
4. What are the top three sources of FDI for the United States? What are the top three destinations for FDI from the United States?
5. Why does Heineken rely on FDI for much of its internationalization strategy? Name two other companies that rely on FDI for large parts of their internationalization strategies.
6. Explain the three stages in the international product life cycle theory.
7. Why is the notion of specialization important when analyzing the benefits of free trade?
8. Why did some countries deliberately devalue their currencies following the end of the gold standard?
9. Briefly explain how exchange rates are determined under a fixed exchange rate system and a flexible exchange rate system.
10. Why did the gold standard result in a fixed exchange rate system? How did the United States dollar become the currency standard under the Bretton Woods system?
11. The international monetary system provides three important functions in international business. What are these?
12. What are the four types of assets included in the Official Reserves Account?
13. What is flight capital? Who uses flight capital? Why is it not often included in BOP statistics?
14. What guidelines must the World Bank follow in making loans? Discuss at least three of these guidelines and explain whether you believe these guidelines are appropriate.
15. How did the Eurocurrency market develop?
16. What is the primary transaction currency for the foreign exchange market? What are the dominant currencies in the international bond market?
17. Why is the foreign exchange market moving online?
18. Briefly explain the theory of purchasing power parity and the law of one price.
19. Explain how the rising value of the Canadian dollar relative to the U.S. dollar affects Canadian consumers, Canadian visitors to the United States, and Canadian exporters to the United States.
20. Assume that the per capita income in the United States in 2010 was $36,170 while the per capita income in Japan, converted into U.S. dollars, was $38,410. Does this mean that the average Japanese citizen enjoys a higher standard of living than the average American? Why or why not?