BUSA 3000 Final exam, Ch. 8 MAN 3600, Ch 7 MAN3600, Int. Buisness
What are the five levels of regional integration?
1. Free Trade Area 2. Customs Union 3. Common Market 4. Economic and Monetary Union 5. Political Union
1. Low-income countries characterized by limited industrialization and stagnant economies. E.g. Bangladesh, Bolivia, Zaire. This is an example of: a. Developing Economies b. Advanced Economies c. Emerging Market Economies d. Upscale Economies
A
1. Price of one currency in terms of another (convertible, hard currency, capital flight, dirty float). This is a definition of which of the following: a. Exchange Rate b. Foreign Exchange c. Foreign Exchange Market d. Trade Exchange
A
1. The United States prohibiting exports of plutonium and similar products to North Korea, is an example of a. National security b. National culture and identity c. Protection of an infant industry d. Protection of the national economy
A
1. Which of the following challenges of doing business in emerging markets is best defined as: corruption, weak legal systems, and unreliable government authorities increase business risks and costs, and hinder forecasting. a. Political Stability b. Weak Intellectual Property Rights c. Bureaucracy, Red Tape, and Lack of Transparency
A
1. Which of the following is defined by: When members agree to eliminate tariffs and non-tariff trade barriers with each other but maintain their own trade barriers with non-member countries (e.g. NAFTA) a. Free Trade Area b. Customs Union c. Common Market d. Economic and Monetary Union
A
1. ________ is the increase in value of the goods and services produced by an economy. a. Economic Growth b. Market Psychology c. Inflation d. Government Action
A
India imposing barriers to shield its huge agricultural sector, which employs millions, is an example of ________. a. Protection of the national economy b. Protection of an infant industry c. National security d. National culture and identity
A
Products are classified under about 8,000 different unique codes in the ________ schedule, a standardized system used worldwide. A. harmonized tariff B. protective tariff C. revenue tariff D. specific tariff
A
Religion-based totalitarian states are called ______. A. theocratic B. secular C. socialistic D. atheistic
A
The main decision-making body of the EU, that decides on economic policy, budgets, foreign relations, and admission of new member countries, is: a. Council of the European Union b. European Commission c. European Parliament d. European Court of Justice
A
The three major types of current political systems are ______. A. totalitarianism, socialism, and democracy B. socialism, democracy, and monarchy C. totalitarianism, liberalism, and fascism D. democracy, republicanism, and oligarchy
A
When sourcing relies on foreign suppliers or production bases, it is known as _______. A. offshoring B. protectionism C. insourcing D. subsidizing
A
Which of the following is an example of a currency risk? A. purchasing products from a nation with appreciating currency B. purchasing products from a country with depreciating currency C. selling products to a country with appreciating currency D. selling products to a nation that has the same currency value as the exporter's
A
_____ fundamental tenet is that capital and wealth should be vested in the state and used primarily as a means of production rather than for profit. A. Socialism's B. Democracy's C. Totalitarianism's D. Theocracy's
A
______ are low-income countries characterized by limited industrialization and stagnant economies. A. Developing economies B. Emerging markets C. Developed economies D. Transition economies
A
What is a political system?
A set of formal institutions that constitute a government. It includes legislative bodies, political parties, lobbying groups, and trade unions. The system also defines how these groups interact with each other.
What is a legal system?
A system for interpreting and enforcing laws. The laws, regulations, and rules establish norms for conduct. It incorporates institutions and procedures for ensuring order and resolving disputes in commercial activities, as well as protecting intellectual property and taxing economic output.
1. Post-industrial countries with high per capita income, competitive industries, and developed commercial infrastructure. Typically the richest countries, including Australia, Canada, Japan, United States, and nations of Western Europe. This is the definition of: a. Upscale Economies b. Advanced Economies c. Developing Economies d. Emerging Market Economies
B
What are advanced economies and what are some examples?
Advanced economies: Post-industrial countries with high per capita income, competitive industries, and developed commercial infrastructure. Typically the richest countries, including Australia, Canada, Japan, United States, and nations of Western Europe.
1. All forms of internationally traded monies including foreign currencies, bank deposits, checks, and electronic transfers. This is the definition of which of the following: a. Exchange Rate b. Foreign Exchange c. Foreign Exchange Market d. Trade Exchange
B
1. When countries create better jobs and higher tax revenues when they support high value-adding industries, such as IT, automotive, pharmaceuticals, or financial services, they are applying ______. a. Increase employment b. National strategic priorities c. National security d. Protection of an infant industry
B
1. Which of the following is best described by: Tax imposed on imported products a. regional tax b. tariffs c. quota d. local content requirements
B
1. _________ refers to investor behavior, such as herding behavior or momentum trading. a. Economic Growth b. Market Psychology c. Inflation d. Government Action
B
A formal arrangement between two or more countries to reduce or eliminate tariffs is known as a(n) ________. A) quota arrangement B) free trade agreement C) economic union D) economic bloc
B
A quantitative restriction on specific imports for a set period of time is referred to as _______. A. tariff B. quota C. investment barrier D. country risk
B
An individual from a country with a low degree of political risk would most likely be from _______. A. Venezuela B. Canada C. Zimbabwe D. Iraq
B
Currency risk can best be defined as the risk that occurs when ______. A. currency values remain constant for prolonged periods B. one currency changes in relation to another currency C. buyers and sellers disagree over which currency to use D. fluctuations in the stock market affect all exchange rates
B
Tariffs that are ad valorem are ________. A. based on the weight or size of the imported product B. assessed as a percentage of the imported product's value C. intended to provide a steady flow of income for the government D. charged regardless of the imported product's value
B
The U.S.dollar is an example of ______. A. soft currency B. convertible currency C. nonconvertible currency D. private currency
B
The intended purpose of regional integration is to ________. A) increase the mobility of workers among the member countries in a bloc B) reduce trade and investment barriers within the bloc C) streamline customs agency regulations within the bloc D) encourage foreign investment into the bloc
B
Typically, administrative and bureaucratic procedures _________. A. speed up the investment activities of firms B. hinder the activities of importers C. boost investment activities D. harm late importers
B
Which form of government is characterized by private property rights and limited government? A. autocratic B. democratic C. socialist D. totalitarian
B
Which of the following does the central bank perform in order to accommodate a nation's economic growth? A. enforce strict regulations on foreign direct investment B. increase the nation's money supply C. establish a voluntary export restraint D. restrict innovation and entrepreneurship
B
Which of the following is an example of a developing economy? A. Australia B. Bangladesh C. France D. Brazil
B
Which of the following is characteristic of emerging markets? A. minimal trade barriers B. high trade volume C. low inward FDI D. highly developed industry
B
Which of the following is the underlying principle of socialism? A. The welfare of individuals far outweighs the welfare of society. B. Collective welfare of people outweighs the welfare of the individual. C. Capital and wealth should be vested in the hands of few and used primarily as a means of profit. D. The state should protect itself from individual and group interests.
B
______ are checkpoints at the ports of entry in each country where government officials inspect imported products and levy tariffs. A. Non-tariff trade barriers B. Customs C. Quotas D. Subsidies
B
What are the BRIC countries?
Brazil, Russia, India, and China
What did the Bretton Woods Agreement establish in 1971?
Bretton Woods dissolved in 1971, as the world economy was evolving and governments could no longer maintain fixed exchange rates on the gold standard. Bretton Woods established the: • Concept of international monetary cooperation, especially aimed at minimizing currency risk. • International Monetary Fund (IMF): Agency that promotes exchange rate stability, monitors exchange systems, provides funding to developing economies. • World Bank: Agency that provides loans and technical assistance to combat global poverty around the world.
1. Key actors in Political and legal systems does not include a. Government b. International Organizations c. Neighboring countries relations d. Regional economic blocs
C
1. The global marketplace for buying and selling national currencies. This is the definition of which of the following: a. Exchange Rate b. Foreign Exchange c. Foreign Exchange Market d. Trade Exchange
C
1. Which of the following is best defined by: The free movement of products, labor, and capital (e.g. Pre-1992 European Economic Community) a. Free Trade Area b. Custom Unions c. Common Market d. Political Union
C
1. Which of the following is best described by: Unified monetary and fiscal policy by a central authority (e.g. The European Union Today) a. Custom Unions b. Common Market c. Economic and Monetary Union d. Political Union
C
Governments impose offensive barriers to ______. A. protect domestic industries B. promote national security C. increase employment D. safeguard the interests of special interest groups
C
Purchasing power parity is ______. A. the total income received by all sectors of an economy within a nation B. the value of goods and services that can be purchased with one unit of a country's currency C. an adjustment for prices that reflects the amount of goods that consumers can buy in their home country, using their own currency and consistent with their own standard of living D. the exchange rate in the international currency market
C
Which of the following is characteristic of family conglomerates? A. low access to capital than most other firms B. wholly owned or controlled by the government C. extensive networks in various industries D. inferior market knowledge
C
Which of the following refers to an often-used form of non-tariff trade barrier? A. premium B. subsidy C. quota D. grant
C
Which of the following statements is true regarding the value of national currencies? A. They cannot be quantified. B. They remain highly stable. C. They fluctuate constantly. D. They change occasionally.
C
Which of the following terms refers to the type of currency used only for domestic business transactions? A. hard currency B. convertible currency C. nonconvertible currency D. alternative currency
C
_______ refer to post-industrial countries characterized by high per-capita income, highly competitive industries, and well-developed commercial infrastructure. A. Underground economies B. Emerging markets C. Advanced economies D. Transition economies
C
_______ refer to rules that limit the ability of foreign firms to invest in certain industries or acquire local firms. A. Quotas B. Regulations and technical standards C. FDI and ownership restrictions D. Administrative and bureaucratic procedures
C
1. Former developing economies that achieved substantial industrialization, modernization, and remarkable economic growth. E.g., Indonesia, Mexico, Poland, Turkey. This is the defined by: a. Under-scaled Economies b. Developing Economies c. Advanced Economies d. Emerging Market Economies
D
1. Political risk examples does not include which of the following _______. a. Government takeover of corporate assets b. Embargoes c. Terrorism d. Income repatriation laws
D
1. The four major legal systems does not include ____. a. Common law b. Civil Law c. Religious law d. Culture law
D
1. Which of the following is best defined by: Perfect unification of all policies by a common organization; submersion of all separate national institutions (e.g. This remains ideal and yet to be achieved) a. Custom Unions b. Common Markets c. Full Economic and Monetary Union d. Political Union
D
1. Which of the following is not a factor that makes emerging markets attractive? a. Emerging Markets as Target Markets (huge middle class & significant income) b. Emerging Markets as Manufacturing Bases c. Emerging Markets as Sourcing Destinations d. Emerging Markets Political System
D
1. Which of the following is not one of the major political systems a. Totalitarianism b. Socialism c. Democracy d. Free economy
D
A ______ government seeks to control not only all economic and political matters but also the attitudes, values, and beliefs of the citizenry. A. democratic B. socialistic C. mixed D. totalitarian
D
A government policy that impedes trade through means other than explicit tariffs is known as a(n) ________. A. investment incentive B. subsidy C. maquiladora D. non-tariff trade barrier
D
Emerging markets are _______. A. developing economies where goods and services are directly exchanged for other goods and services B. post-industrial countries characterized by high per-capita income, highly competitive C. low-income countries characterized by limited industrialization and stagnant economies D. former developing economies that have achieved substantial industrialization, modernization, and rapid economic growth since the 1980s
D
Governments impose defensive barriers to ________. A. generate tax revenues B. increase employment C. pursue strategic policy objectives D. promote national security
D
If demand for the dollar is low, the price of the dollar is mostly likely to _______. A. rise B. remain stable C. fall, then rise D. fall
D
The levels of supply and demand for a currency in a free market vary ______ with its price. A. rarely B. occasionally C. directly D. inversely
D
The purpose of the Bretton Woods Agreement was to _______. A. enable the U.S. Government to monetarily recover after WWII B. control the fluctuating price of gold used for global trading C. oversee the importing and exporting of international traders D. govern the exchange rates of major international currencies
D
Transition economies were once socialist states but have been largely transformed into capitalism-based systems, partly through ________. A. low inward FDI B. high trade barriers C. low energy consumption D. privatization of state-owned industries
D
Which of the following is characteristic of emerging markets? A. low inward foreign direct investment B. minimum regulations C. major focus on services and branded products D. rapidly declining trade barriers
D
Which of the following pairs of nations are on opposite ends of the political freedom scale? A. New Zealand and Chile B. China and Vietnam C. Japan and South Korea D. Cuba and Sweden
D
Which of the following terms indicates potential loss or adverse effects on company operations and profitability caused by developments in a country's political and/or legal environments? A. commercial risk B. currency risk C. cross-cultural risk D. country risk
D
Which of the following terms refers to the existence of a legal system based on clear rules and fair enforcement? A. conciliation B. arbitration C. culture of law D. rule of law
D
Which of the following terms refers to the price of one currency expressed in terms of another? A. countertrade B. monetization C. credit derivative D. exchange rate
D
What is democracy associated with?
Democracy is associated with market economies and capitalism, in which decisions are largely left to market forces, that is, supply and demand.
What are developing economies?
Developing economies: Low-income countries characterized by limited industrialization and stagnant economies. e.g. Bangladesh, Bolivia, Zaire.
What happens when the rule of law is weak?
Economic activity suffers and uncertainty increases when the rule of law is weak.
What are emerging market economies?
Emerging market economies: Former developing economies that achieved substantial industrialization, modernization, and remarkable economic growth. e.g., Indonesia, Mexico, Poland, Turkey.
What is the Rule of Law?
Existence of a legal system where rules are clear, publicly disclosed, fairly enforced, and widely respected by individuals, organizations, and the government.
What is Extraterritoriality?
Extraterritoriality: The application of home-country laws to other countries. For example, the European Union pursued Microsoft for monopolistic practices.
Who are the participants in political and legal systems?
Government, international organizations, regional trade organizations, special interest groups, competing firms.
What is the Harmonized Code?
Harmonized code - Standardized worldwide system that determines tariff amount.
Examples of government seizures:
In Venezuela, President Hugo Chavez confiscated an oil field owned by the French petroleum firm Total. In Bolivia in 2006, the Bolivian government nationalized the oil and gas industry.
What is the international monetary system?
International monetary system: The institutional framework, rules, and procedures by which national currencies are exchanged for one another.
Who are the key players and participants in the monetary and financial systems?
Key players - finance ministries, national stock exchanges, commercial banks, central banks, the Bank for International Settlements, the World Bank, and the International Monetary Fund.
What is a non tariff trade barrier?
Nontariff trade barrier - Government policy, regulation, or procedure that impedes trade.
Japan long protection for its car industry, is an example of:
Protection of an infant industry
What is Protectionism?
Protectionism - National economic policies that restrict free trade. Usually intended to raise revenue or protect domestic industries from foreign competition.
What is the rationale for government intervention in IB?
Protectionism refers to national economic policies designed to restrict free trade and protect domestic industries from foreign competition. Governments impose trade and investment barriers to achieve political, social, or economic objectives. Such barriers are either defensive or offensive: Defensive barriers safeguard industries, workers, special interest groups, protect infant industries and to promote national security (export controls). Offensive barriers pursue a strategic or public policy objective, such as increasing employment or generating taxes.
What is a Quota?
Quota - Quantitative restriction on imports of a specific product (e.g., Imports of Japanese cars).
What are sanctions?
Sanctions are bans on international trade, usually undertaken by a country, or a group of countries, against another judged to have jeopardized peace and security.
Who has the strongest rule of law?
Singapore
What is Socialism associated with?
Socialism is associated with mixed economies, which have features of both market and command economies, combining state intervention and market mechanisms (e.g., Sweden, Singapore).
What is a trade surplus?
Trade surplus - Exports exceed imports; may result when the exporter's currency is undervalued, as in China's official policy regarding its currency.
What is government takeover of corporate assets? and what do they target the most?
The industries that are most often targeted by government seizure are natural resources (mining and petroleum), utilities, and manufacturing.
What does the Central Bank regulate?
The nation's central bank regulates the money supply, issues currency and manages the exchange rate, to accommodate economic growth.
What is Totalitarianism associated with?
Totalitarianism is associated with command economies, wherein the state makes all decisions on what to produce, how much to produce, and what prices to charge.
What is a trade deficit?
Trade deficit - Imports exceed exports; the government may devalue the nation's currency to correct a trade deficit.
What is the FCPA?
is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.
Confiscation:
is the seizure of corporate assets without compensation.
Nationalization:
seizure of an entire industry, with or without compensation.
Expropriation:
seizure with compensation.
What are embargoes?
• Embargoes are bans on exports or imports that forbid trade in specific goods with specific countries. Example: The U.S. has enforced embargoes against Cuba, Iran, and North Korea, labeled as state sponsors of terrorism.