BU402: Final Exam
In the balance-of-payments, the _____ account records transactions involving the export and import of goods and services A. Current B. Foreign C. Internal D. Tariff E. Savings
A.
It is argues that under a fixed system, a country's ability to expand or contract its money supply as it sees fits limited by: A. The need to maintain exchange rate parity B. he need to restrict price inflation C. The need to maintain economic stability D. Direct oversight by the World Bank
A.
Skill within the firm that competitors cannot easily match or imitate are referred to as: A. Core competencies B. Global competencies C. In-born skills D. Competitive threats
A.
Rates for currency exchange quoted for 30, 90, or 180 days into the future are referred to as _____. A. Forward Exchange Rates B. Foreign Exchange Quotes C. United Trade Rates D. Generic Exchange Quotes
B.
The International Bank for Reconstruction and Development (IBRD) is the official name for A. World Trade Organization B. World Bank C. International Monetary Fund D. Global-Regional Bank
B.
The _____ of foreign direct investment refers to the amount of FDI undertaken over a given period. (normally a year) A. Portfolio B. Flow C. Status D. Stock E. Fragment
B.
The ability to spread fixed costs over a large volume results in a cost-saving phenomenon referred to as: A. volume synergies B. Economies of Scale C. Captured Savings D. Size Effect
B.
The depreciation of a country's currency causes the prices of imports to: A. Rise and the prices of exports to rise B. Rise and the prices of exports to fall C. Fall and the prices of exports to rise D. Fall and the prices of exports to fall
B.
The right of foreign truckers to pick up and deliver goods within another member-state's borders is known as A. Affreightment B. Cabotage C. Dunnage D. Dumping E. Folkways
B.
Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement? A. Political Unions B. Customs Union C. Common Market D. Economic Union E. Political Unions
B.
When American companies but office building in Australia, they are generating a: A. Supply of U.S. dollars and a demand for a foreign currency B. Supply of U.S. dollars and a supply of a foreign currency C. Demand for U.S. Dollars and supply for a foreign currency D. Demand for U.S. dollars and a demand for a foreign currency
A
A _____ occurs when a speculative attack on the exchange value of a currency results in sharp depreciation in the value of the currency or forces authorities to expand large volumes of international currency reserved and sharply increase interest rates to defend the prevailing exchange rate A. Currency Crisis B. Monetary Disruption C. Banking Crisis D. Currency Disruption
A.
As stipulated by the Bretton Woods conference, the goal of the International Monetary Fund was to: A. Maintain order in the international monetary system B. Establish a world currency C. Promote development D. Set interest rates in member nations
A.
Suppose that today the exchange rate between the U.S dollar and the Chines yuan is $1 = .12 yuan. If next week the exchange rate is $1 = .20 yuan, it is clear that: A. the yuan has depreciated relative to the dollar B. Both currencies have depreciated C. The dollar has depreciated relative to the yuan D. Both currencies have appreciated
A.
The Bretton woods conference created two major international institutions. These are A. the International Monetary Fund and the World BAnk B. The World Trade Organization and the United Nations C. The World Currency Exchange and the World Bank D. The Bretton Woods Monetary Fund and the World Trade Organization
A.
The Maastricht Treaty called for: A. Establishment of the independent European Central Bank (ECB) B. The abolitions of restrictions on cabotage C. Establishment of the European Parliament D. The formation of a single market for the European Union E. Placing restrictions on foreign exchange transactions between member-countries
A.
The ____ referee to a 1969 agreement among Bolivia, Chile, Ecuador, Colombia, and Peru to establish a customs unions A. Andean Pact B. ASEAN C. Mercosur D. CARICOM
A.
The _____ refers to the systematic reduction in production costs that have been observed to occur over the life of a product A. experience curve B. forward advantage C. positive-sum result D. competitive threats
A.
The _____ states that in competitive markets free of transportation cost and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency A. Law of One Price B. Principle of Consistent Pricing C. Model of Fair Pricing D. Principle of Equitable Pricing
A.
The foreign exchange market converts the currency of one country into the currency if another and: A. Provides some insurance against foreign exchange risk B. Collects duties on imported products C. Sets interest rates charged to foreign investors D. Arbitrates disputes between trade partners
A.
The great strength claimed for the fold standard was that it contained a powered mechanism for simultaneously obtained ____ for all countries. A. Balance-of-Trade equilibrium B. Economic stability C. Interest Rate Parity D. Equal Tariff Levels
A.
The idea behind multipoint competition is to ensure that: A. A rival does not dominant a market and use those profits to drive competitive attacks elsewhere B. The competitors cooperate with each other to establish a cartel C. No other competitors can enter the market unless they resort to licensing with the initial pioneers D. Growing technologies or business methods in new markets are transferred to establish markets E. The firms in an industry prefer FDI over licensing or exporting
A.
The main benefits of inward FDI for a host country arise from: A. The resource-transfer effect, the employment effect, and the balance-of-payments effect B. The labour-transfer effect, the technology effect, and the currency-exchange effect C. The cultural-awareness effect, the first-mover advantage effect, and economic development effect D. The foreign exchange reserves effect, knowledge flow effect, and the reserves transfer effect E. The employment effect, the labor-transfer effect, and the technology effect
A.
The value of freely-floating currencies is determined by: A. The interaction between the demand and supply of that currency relative to the demand and supply of other currencies B. A consortium of international currency traders C. The World Trade Organization D. Negotiations between the central banks of the leading five industrial powers of the world
A.
To encourage inward FDI, it is increasingly common for governments to: A. Offer tax concessions to firms that invest in their countries B. Exclude foreign companies from specific industries C. Require that local investors own significant proportion of the equity in a joint venture D. Impose high customs duties on foreign firms E. Prohibit MNEs from joining a cartel
A.
To maximize its long-run return on invested capital, a firm must fo all of the following EXCEPT: A. Establish economies of scale through high-end customization B. Pick a position on the efficient frontier that is viable C. Configure its internal operations D. Install the right organization structure to execute its strategy
A.
When the exchange rate between the U.S dollar and the Japanese Yen is $1 = ¥100, this is an indication that: A. It would take ¥100 to purchase $1 B. The yen is stronger than the U.S. dollar C. The dollar is depreciating compared to the yen D. All of the above
A.
Which of the following generate demand for foreign currencies? A. Expenditures by Americans traveling abroad B. Exports from the United States to foreign countries C. The purchase by foreigns of bonds issued by the U.S. government D. Transfer of money from foreigners to relatives in the United States
A.
Which of the following is a benefit of adopting the euro? A. The adoption of a common currency makes it easier to compare prices across Europe B. The adoption of a common currency makes Europe an optimal currency area C. The introduction of a common currency increases the range of investment options open to only to institutions D. The introduction of a common currency leads to higher prices which translate into substantial gains for European producers E. The introduction of a common currency decreases competition because it has become easier for consumers to shop around.
A.
Which of the following is not one of the four basic strategies used by firms A. Multi-global strategy B. Global standardization strategy C. International strategy D. Transnational Strategy
A.
Which of the following principles did the Single European Act propose to apply to product standards? A. The principles of "mutual recognition" B. The principle of "quid pro quo" C. The materiality principle D. The principe of "market-to-market" E. The elimination principle
A.
Concerns about _____ arise because close economic integration demands that countries give up some degree of their control over such key policy issues as monetary policy, fiscal policy, and trade policy A. Job Losses B. National Sovereignty C. Trade Unionism D. Cultural Uniformity E. Poverty
B
The _____ is responsible for proposing European Union Legislation, implementing it, and monitoring compliance with European Union laws by member states A. Council of ht eEuropean Union B. European Commission C. European Parliament D. Court of Justice E. European Community
B
Offering subsidies to foreign MNEs in the form of tax breaks or grants is one way of: A. Adopting a retaliatory stance in B. Courting FDI beloved to be national interest C. Adopting a radical stance to FDI D. Blocking FDI inflow into the country E. Curbing a trade war
B.
A _____is a governing body that manages the value of a currency by holding foreign currency reserves equal to the amount of domestic currency issued at a fixed exchange rate A. Exchange rate committee B. Currency Board C. Certificate Board D. Monetary Review Commission
B.
A country is said to be balance-of-trade equilibrium when: A. the income that its resident earn from the export of manufactured goods equals the income that its residents earn from the export of services B. The income that its residents earn form exports is equal to the money that its resident pay for imports C. The income the it residents earn from exports in the current fiscal year is equal to the income that its resident earned from exports in the previous fiscal year. D. The income that its resident earn from the export of raw materials is equal to the income that its residents earn from the export of manufactured goods
B.
A firm will favor FDI over exporting as an entry strategy when: A. The cost of establishing production facilitates are high B. The transportation costs or trade barriers are high C. There are problems associated with doing business in a different culture D. The products involved have a high value-to-weight ratio E. The firm wants to occupy a position that falls inside the efficiency frontier
B.
According to the U.S.Department of Commerce, in the United States _____ occurs whenever a U.S. citizen, organization, or affiliated group tales and interest of 10 percent or more in a foreign business entity A. Multilateral Investment B. Foreign Direct Investment C. Reciprocal Foreign Investment D. International Divestment E. Assest Divestment
B.
An argument against the North American Free Trade Agreement centered on the fear that ratification would result in: A. Low-interest rates in the U.S. and Canada B. A mass exodus of jobs from the United States into Mexico C. A move towards a common currency for NAFTA member-nations D. Competitions form the members of the European Union E. High inflation in the U.S. and Canada
B.
As stipulated by the Bretton Woods conference, the goal of the World Bank was to: A. maintain order in the international monetary system B. promote development C. Set interest rates in members states D. establish a wold currency
B.
Depreciation of the dollar refers to: A. A loss of foreign-exchange reserves B. An increase in the dollar price of foreign currency C. Intervention in international money markets D. A fall in the dollar price of a foreign currency
B.
Firms that compete in the global marketplace typically face two types of competitive pressures. They face pressures for cost reductions and: A. Pressures for volume increases B. Pressures to be locally responsive C. Pressures to be politically savvy D. Pressures for price reductions
B.
Helping finance the building of Europe's economy after World War II by providing low-interest loans was the initial mission of: A. The World Trade Organzation B. The World Bank C. The European National Bank D. The International Monetary System
B.
If one £1 is equal to $.60, what would be the euro price of a car that cost $10,000 A. €5,000 B. €16,667 C. €60,000 D. €10,000
B.
Under a pegged exchange rate regime, a country will peg the value of its currency to : A. An index of wold currencies maintained by the World BAnk B. That of a major currency C. An index of "paper nation" currencies D. An index of its historic currency rates
B.
When Americans but Mercedes-Benz automobiles made in Germany, they are generating a: A. Supply of U.S. dollars and a supply of a foreign currency B. Supply of U.S. dollars and a demand for a foreign currency C. Demand for U.S. Dollars and supply for a foreign currency D. Demand for U.S. dollars and a demand for a foreign currency
B.
When a country is importing more goods and services than it is exporting, it is incurring a(n): A. Trade Surplus B. Current Account Deficit C. Positive Balacne-of-Payment D. Economic Recession E. Net Capital Inflow
B.
When foreign countries but where grown in the United States, they are generating a: A. Demand of U.S. dollars and a demand for foreign currency B. Demand of U.S. dollars and a supply of a foreign currency C. Supply for U.S. dollars and demand for a foreign currency D. Supply for U.S. dollars and a supply of a foreign currency
B.
Which of the following groups would be aided by a depreciation of the American dollar? A. Foreign producers of goods imported by the United States B. American producers of goods for export C. U.S. importers of goods from abroad D. Foreign workers
B.
Which of the following is true about the European Parliament? A. It cannot propose amendments to legislations B. It is directly elected by the populations of the member-states C. It is primarily a legislative body rather than a consultative body D. It does not have the right to veto laws such as single-market legislation E. The European Parliament does not have the right to vote on the appointment of commissioners
B.
Which of the following is true with regard to a free trade area? A. Factors of production are allowed to move freely between member nations B. Each member country is allowed to determine its own trade policies with regard to nonmember C. Member nations are required to have a common currency D. Member nations are required to have common monetary and fiscal policy E. Member nations are required to have a central political apparatus the coordinate economic, social and foreign policy
B.
A depreciation of the Korean won against the U.S. dollar will A. Raise the dollar price of Korean goods. B. Lower the dollar price of U.S. goods. C. Raise the won price of U.S. goods. D. Lower the won price of Korean goods.
C
A change in the exchange rate for a country's currency alters the prices of : A. Exports only B. Imports only C. Exports and Imports D. Only domestic good and services
C.
A(n) _____ has no impediment to the free flow of goods and services A. Classical Market B. Efficient Market C. Traditional Market D. Inefficient Market
C.
A(n) _____ strategy makes sense when a firm faces pressures for cost reductions, hah pressures for local responsiveness, and significant opportunities for leveraging valuable skills within a multinational's global network of operations A. International B. Global C. Transnational D. Multidomestic
C.
According to our textbook, those in favor of floating exchange rate argue that floating rates: A. Discourage speculation B. Help confuse trade imbalances C. Help adjust trade imbalances D. Have no effect on trade imbalances
C.
According to our textbook, when the growth in a country's money supply is faster than the growth in it s output, _____ is fueled A. Economic Growth B. Unemployment C. Inflation D. Per Capita Savings
C.
According to the Fischer effect, if the real rate of interest in a country is 5 percent and expected annual inflation is 10 percent, the "nominal" interest rate will be: A. 5% B. 10% C. 15% D. 20%
C.
According to the _____, FDI has both benefits and costs and should be allowed only if the benefits outweighs the cost A. Eclectic Paradigm Theory B. Free Market View C. Pragmatic Nationalist View D. Radical View E. Internalization Theory
C.
According to the textbook, the success of a strategic alliances is a function of three factors. These are: partner selection, alliance structure, and ____. A. Similarity in size of the alliance partners B. Geographic distance between the alliance partners C. The manner in which the alliance is managed D. Government support
C.
Although a foreign exchange transaction can involve any two currencies, nearly 90% of transactions involve: A. Japanese Yen B. British Pounds C. U.S. Dollars D. French Francs
C.
Historically, most FDI ha be directed at the ____ nations of the world A. Underdeveloped B. Developing C. Developed D. Emerging E. Least Developed
C.
PPP theory stands for: A. Productivity Power Premium Theory B. Process Productivity Predictor Theory C. Purchasing Power Parity Theory D. Personal Power Predictor Theory
C.
Pressure for local responsiveness arise from differences in _____ A. Boundary preferences B. Distribution Channels C. Infrastructure and Traditional practices D. Government demands
C.
Suppose a U.S. firms purchases some English china. The china cost £1,000. At the exchange rate is $1.45 = £1, the dollar price of the china is A. $250 B. $690 C. $1450 4. $2000
C.
The _____ states that for any two countries, the spot exchange rate should change in an equal amount but in the opposite direction o the difference in the nominal interest rates between the two countries A. Worldwide James Effect B. Universal Phillips Effects C. International Fischer Effect D. Global Miller Effect
C.
The _____ theory tells us that a country with a high inflation rate will see depreciation in it currency exchange rate A. Law of One Price B. Monetary System C. PPP D. Price Inflation
C.
The cement market in Erbia is dominated by four firms. These firms control 85 percent of selling and buying of the domestic market. Which of the following terms explains the market structure of the cement industry in Erbia? A. Perfect Competiton B. Monopoly C. Oligopoly D. Dual Monopoly E. Monopsony
C.
The three factors that have the most important impact on future exchange rate movement include the country's price inflation, its market philosophy, and its _____ A. Rate of Economic Growth B. Unemployment Rate C. Interest Rate D. Participation in the World Trade Organization
C.
Under the exchange rate system established by the Bretton Woods agreement, the value of most currencies in terms of _____ was fixed for long periods and was allowed to change only under a specific set of circumstances. A. Britsih pound B. Japanese Yen C. U.S. Dollar D. German Deutsche Mark
C.
What shows the different positions that aa firm can adopt with regard to value creation and low cost assuming its international operations are configured efficiently that position? A. Production Paradigm B. Efficiency Paradigm C. Efficient Frontier D. Production Frontier
C.
When foreigners but U.S. dollars because it is more stable currency than the currency in their country, they are generating a: A. Demand for U.S. dollars and a demand for a foreign currency B. Supply of U.S. dollars and a supply of a foreign currency C. Supply of U.S. dollars and a demand for a foreign currency D. Demand for U.S. Dollars and supply for a foreign currency
C.
When the dollar buys more francs on the spot market than the 30-day forward market, we say the dollars is selling at a _____. Conversely, when the dollars but less francs on the spot market than the 30-day forward market, we say the dollar is selling at a _____. A. Premium, Discount B. Handicap, Bonus C. Discount, Premium D. Subsidy, Handicap
C.
Which of the following compares the Euro Zone? A. The 27 member nations of the European Union B. The member nations of the European Union and the applicants to the Union C. The 17 member nations who use euro as its currency D. The member nations of the European Union and countries who have pegged their currencies to the euro E. The 21 member nations that have their member in the European Parliament
C.
Which of the following generates a supply of U.S. dollars? A. The demand for U.S. exports to foreign countries B. The foreign tourist visiting the United States C. The construction of a plant abroad by the U.S. corporation D. All of the above
C.
Which of the following is true of the Court of Justice? A. The judges are required to act as representatives of national interest B. It comprised of several judges from a few-selected countries C. It is the supreme appeals court for European Union Law D. A member-country cannot bring anther member-country to this court E. Member-countries cannot bring the commission or the council to this court
C.
Which strategy makes the most sense when there are strong pressures for cost reductions and demands fro local responsiveness are minimal? A. Domestic Strategy B. International Strategy C. Global Standardization Strategy D. Transnational Strategy
C.
___ occurs when high-cost domestic producers are replaced by low-cost producers within a free trade area A. Value Creation B. Strategic Pricing C. Trade Creation D. Trade Diversion E. Economic Exposure
C.
A strategy that focuses on lowering costs is referred to as a strategy, while a strategy that focusses primarily on increasing the attractiveness of a product is referred to as a _____ strategy A. low-quality; diversion B. Low-cost; high-quality C. Low-quality; high-quality D. Low-cost; differentiation
D.
Economists refer to knowledge "spillovers" that occur when companies in the same industry are located in the same area as: A. Technology Flows B. Overlaps C. Corporate Espionage D. Externalities E. A Free Rider Problem
D.
Exports minus imports defines a country's A. Current-Account Balance B. Capital-Account Balance C. Balance-of-Payments D. Trade Balances
D.
Historically, ____ firms include the likes of Toys "R" Us, McDonalds, IBM, Kellogg, Procter & Gamble, Wal-Mart, and Microsoft A. Multidomestic B. Global C. Transnational D. Internatioal
D.
If the exchange rate between the U.S. dollars and Japanese Yen changes from $1 = ¥100 to $1 = ¥90, then A. All Japanese producers and consumer will lose B. U.S. auto procedures and autoworkers will lose C. U.S consumers of Japanese tV set will benefits D. Japanese tourists to the U.S. will benefits
D.
In essence, PPP theory predicts that: A. There is no relationship between changes in relative prices and changes in exchange rates B. Changes in relative prices will result in stability in exchange rates C. Stability in relative prices will result in a change in exchange rates D. Changes in relative prices will result in a change in exchange rates
D.
Many host countries are concerned that a foreign-owned manufacturing plant may import many components from its home country, which has negative implications for the host country's: A. Free Trade Agreement B. Inward FDI C. Sovereignty D. Balance-of-Payments E. Gold Reserves
D.
The argument that firms prefer FDI over licensing to retain control over know-how, manufacturing, marketing, and strategy or because some firm capabilities are not amenable to licensing constitutes the _____. A. Comparative Advantage Theory B. Distribution Theory C. New Trade Theory D. Internalization Theory E. Licensing Theory
D.
Today, £1 exchange's for $1.50 and next week, £1 exchanges for $1.70, it is clear that A. The pound has depreciated relative o the dollar B. The dollar has appreciated relative to the pound C. Both currencies have appreciated D. The dollar has depreciated relative to the pound
D.
Under a _____, some currencies are allowed to float freely, but the majority of currencies are either managed is some way by government intervention or pegged to another currency A. Random Monetary System B. Regulated Standard System C. Monitored Spot Market D. Managed Float System
D.
Under the Bretton Woods system, which currency served as the base currency A. Japanese Yen B. British Pound C. French Franc D. U.S Dollar
D.
Value chain activities can be categorized as: A. primary activities and secondary activities B. Input activities and throughout activities C. Profitable activities and unprofitable activities D. Primary activities and support activities
D.
When foreigners come to the United States as tourists, they are generating a: A. Demand for U.S. dollars and a demand for a foreign currency B. Supply of U.S. dollars and a supply of a foreign currency C. Supply of U.S. dollars and a demand for a foreign currency D. Demand for U.S. Dollars and supply for a foreign currency
D.
When reality show participants travel through foreign countries, they are generating a: A. Demand for U.S. dollars and a demand for a foreign currency B. Supply of U.S. dollars and a supply of a foreign currency C. Demand for U.S. dollars and a supply of a foreign currency D. Supply of U.S. dollars and a demand for a foreign currency
D.
When two parties agree to exchange currency and execute the deal immediately, the transaction is referred to as _____. A. Point-in-Time Exchange B. Temporal Exchange C. Spot Exchange D. Forward Exchange
D.
Which of the following is NOT an example of conventional commodity product? A. Petroleum B. Sugar C. Steel D. A dress
D.
Which of the following entails a closer economic integration and cooperation then a common market? A. Command Economy B. Customs Union C. Efficient Market D. Free Trade Area E. Economic Union
E.
