GEB6366 Midterm
Which of the following is the LEAST likely reason that small countries worry about OVERDEPENDENCE caused by globalization?
A large country may substantially increase its demand for the small country's production.
How does arbitrage differ from speculation?
A speculator buys or sells foreign currency with the hope that that currency will either weaken or strengthen in the future, resulting in a profit.
23) Which of the following was a notable trend in political systems during the second half of the 20th century and beginning of the 21st century?
A) A wave of democratic transformations occurred as countries around the world moved away from
40) All of the following are international business translation problems EXCEPT which of the following?
A) All written work requires back translation in order to be understood in a second language.
________ effects of economic integration are the overall growth in the market and the impact on a company caused by expanding production and by the company's ability to achieve greater economies of scale.
A) Dynamic
Which of the following statements most likely undermines the arguments for a strategic trade policy?
A) Entrepreneurs, rather than governments, should take business risks.
Many NGOs, including Africa Now, Quaker Peace and Social Witness, and Save the Children, are members of the ________.
A) Ethical Trading Initiative
The EU organization that provides political leadership, drafts laws, and runs the daily programs of the EU is the ________.
A) European Commission
52) Why are offsets considered protectionist measures?
A) Exporters must often find markets for goods outside their lines of expertise.
The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country.
A) Human Development Index
25) The top location for trading foreign exchange is ________.
A) London
The major trade group in South America involving Brazil, Paraguay, Uruguay, and Argentina is ________.
A) MERCOSUR
13) An example of an electronic brokerage system used to trade foreign exchange is ________.
A) Reuters
8) Which of the following is NOT one of the regions included in the triad regions of the world?
A) South America
________ involve the exchange of currency the second day after the date on which the two foreign exchange traders agree to the transaction.
A) Spot transactions
53) Which of the following hypothetical examples would be a restriction on the import of services?
A) The U.S. restricts foreign companies from carrying cargo between two U.S. cities.
All the following are reasons for the lower international mobility of people than capital EXCEPT which one?
A) The differences in economic return between countries are lower for people than for capital.
13) Most trade groups contain countries in the same area of the world. Why is this so?
A) The distances that goods need to travel between such countries are short.
12) All of the following are generally true about trade-displaced workers EXCEPT which one?
A) They move abroad to take new jobs.
36) Which of the following members of the European Union has NOT adopted the euro?
A) United Kingdom
56) Analysts conclude that the finite supply of natural resources will most likely ________.
A) Urbanization establishes an inflow of immigrants who will work for less money.
22) In which of the following countries would business activity, given its status as a "not free" marketplace, be under the greatest government control?
A) Vietnam
50) Brain drain is a term that describes ________.
A) a country's loss of educated, productive people
11) Under the WTO agreement, ________.
A) a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures
20) The U.S. dollar is most likely traded widely because it is ________.
A) a reserve currency held by many central banks
24) As a center for foreign exchange trading, London ________.
A) actually trades more U.S. dollars than are traded in the United States
28) One way that developed countries specialize in order to gain acquired advantages is by ________.
A) allocating research efforts more heavily in specific sectors
According to the product life cycle theory, production and sales are primarily domestic in the introductory stage because ________.
A) businesses need quick market feedback
16) In a democracy, ________.
A) citizens have the right to participate in the decision-making process
The fact that an English word such as blue-jeans has entered the Spanish language, while a Spanish word such as macho has come into American English illustrates that ________.
A) cultural diffusion is a two-way process
17) Of the following possibilities, the European Union is best described as a ________.
A) customs union
What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist?
A) difficulties of identifying a definitive set of predictive economic indicators
55) The role of most commodity agreements now is to ________.
A) discuss issues and disseminate information about commodities
60) The U.S. catfish industry petitioned the U.S. government for increased taxes on imported Vietnamese fish, claiming that the fish were being sold below the cost of production. The U.S. catfish industry was accusing the Vietnamese fish industry of ________.
A) dumping
When the European Union was formed, the size of the market increased for European companies. This is most likely an example of a ________.
A) dynamic effect
There are several reasons for a company to sell products abroad at either below cost or below the price in the home country. Which of the following is one of these reasons?
A) encouraging foreign consumers to try new products
35) A worrisome outcome of chronic inflation is that it tends to ________.
A) erode confidence in a country's currency
42) Uneven income distribution ________.
A) exists in almost every country
The trade theory that says countries should concentrate production on those products using their most abundant production factors is the ________.
A) factor proportions theory
43) In addition to protection, tariffs serve to ________.
A) generate revenue
In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by ________.
A) government officials
2) The term protectionism when applied to international trade refers to ________.
A) governmental restrictions and competitive support actions to affect trade flows
1) The recent global economic crisis has led to which of the following?
A) governments seeking to impose more constraints on capitalism
18) Which of the following best explains the increase in trading activity in recent years?
A) growing emphasis on hedge funds
An economic system is the set of structures and processes that ________ in a country.
A) guides the allocation of resources and shapes the conduct of business activities
26) The term "________ culture" describes a country in which the norm is a money-and-things orientation and a belief that it's better to "live to work" than to "work to live."
A) high masculinity
Which term refers to restricting imports in order to boost domestic production and consumption of goods that would otherwise be imported?
A) import substitution
10) Although there are different views about the purpose of a political system, most analysts agree that an essential task of a political system is to ________.
A) integrate the different elements of a society into a functioning unit
51) ION Software is the registered owner of a program designed to help sort and organize incoming and outgoing e-mail. Which of the following legal conventions does ION most likely have?
A) intellectual property right
2) Which of the following problems in China is blamed for the annual loss of $250 billion by American MNEs?
A) intellectual property violations
Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with ________.
A) minimal government intervention
9) The ________ clause embodied the fundamental principle of GATT—trade without discrimination.
A) most-favored-nation
58) Assume a firm plans to expand internationally. If its managers wish to avoid pitfalls caused by differences in "silent language," they should consider differences in ________.
A) normal proximity during conversations
7) Businesspeople seeking to understand more about another culture in order to successfully conduct business within that culture would be best advised to do which of the following?
A) observing the behavior of people who have gained respect within that cultural environment
45) Under NAFTA, rules of origin ensure that ________.
A) only goods produced mostly within the region are eligible for liberal tariff conditions
Baldani Manufacturing, an Italian firm, plans to expand into Asia. In order to take advantage of regional trading groups, Baldani will most likely need to change its ________.
A) operating strategies
57) In the opening case on the Java Lounge in Saudi Arabia, people in the port city of Jeddah were less culturally conservative than people in the interior of the country. The most likely reason for this is that ________.
A) people in the port cities have more contact with foreigners
28) People generally prefer little consultation between superiors and subordinates in cultures where ________ is high.
A) power distance
20) Nontradable goods are best defined as ________.
A) products and services for which exporting costs are excessive
29) Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine?
A) purchasing power parity
33) Critics of the Lisbon Treaty primarily argue that the legislation will ________.
A) reduce national sovereignty
3) The European Union is an example of ________ integration.
A) regional
45) Ellen, a U.S. citizen, worked for a U.S. firm in Germany for four years and was transferred back to the firm's home office in Chicago two months ago. Ellen feels significant dissatisfaction with her job and life in Chicago, which is most likely a result of ________.
A) reverse culture shock
35) Raj, an engineer, works long hours and takes full responsibility for both his good and bad work performance. Raj most likely believes in ________.
A) self-determination
56) An example of an effective commodity agreement is ________.
A) the Organization of Petroleum Exporting Countries
Assume the following conditions: In the United States it takes 5 units of resources to produce a ton of potatoes and 10 to produce a ton of coal. In Canada it takes 6 units of resources to produce a ton of potatoes and 9 to produce a ton of coal. According to the theory of absolute advantage, ________.
A) the United States should export potatoes to Canada and import coal from Canada
41) Which of the following are members of NAFTA?
A) the United States, Canada, and Mexico
37) An argument against limiting exports to unfriendly countries is that ________.
A) the costs of the sanctions are borne by innocent people rather than by leaders
According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________.
A) the country will forego producing its less efficient output in order to produce its more efficient output
20) Terms of trade refers to ________.
A) the quantity of imports that a given quantity of a country's exports can buy
52) Most counterfeit goods are made in markets in which ________ is the basis of the legal system.
A) the rule of man
Skinner Electronics plans to expand into foreign markets. Top executives want the firm to focus only on locations where the rule of law prevails. Which of the following should most likely be considered by Skinner?
A) wealthier, westernized countries
54) Commodity agreements ________.
A) were initially established to attempt to stabilize commodity prices
Which of the following is most likely true regarding options?
An option is a right to sell foreign currency.
According to regional content rules, at least ________ of the net cost of most products must come from the NAFTA region in order to get access to the tariff reductions of NAFTA.
B) 50%
Which of the following is most likely a true statement about the relationship between the United Nations and NGOs?
B) A UN committee discusses issues of importance to NGOs but does not regulate their activities.
6) Which of the following is the most accurate statement about culture?
B) Although most cultural variables are universal, the forms these variables take differ from culture to culture.
14) Which of the following groups of countries is most likely to form a regional trading group?
B) Canada, United States, Mexico
45) Premium Manufacturing is planning to expand operations overseas. Executives at the firm are considering a number of different countries. Which of the following countries would most likely have the lowest start-up costs?
B) China
53) Which of the following statements referring to intellectual property rights and violations is INCORRECT?
B) Companies can register a global patent, trademark, or copyright through the World Trade Organization (WTO).
The ________ is the European Union's ultimate decision-making body and is composed of the different ministers of the member countries.
B) Council of the European Union
1) ________ integration is the political and economic agreements among countries that give preference to member countries to the agreement.
B) Economic
28) To determine whether the standard of living within a country is rising or falling, economists would most likely use which of the following measures?
B) GNI growth rate
43) Which of the following is most likely a FALSE statement about income inequality?
B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens.
14) Which of the following statements most likely undermines the infant-industry argument?
B) High tariffs to prevent foreign competition increase government revenues in the protected country.
________ is a general, sustained rise in prices measured against a standard level of purchasing power.
B) Inflation
Which of the following assumptions was made in the original theories of absolute and comparative advantage?
B) Labor resources are fully employed.
According to the PLC theory, what is the most likely reason that companies manufacture products in locations with high labor rates during the introductory stage of a product's life cycle?
B) Many consumers are willing to pay high costs for the newest products.
29) ________ political risks arise from political actions, such as public corruption or a partisan judicial system, that interfere with transactions between sellers and buyers and that can significantly raise the costs of getting things done.
B) Procedural
Which of the following statements most accurately describes the relationship between trading groups and MNEs?
B) Regional trading groups can define the rules under which companies must operate within that region.
People who argue for keeping the U.S. trade embargo with Cuba claim all of the following EXCEPT which one?
B) Removal of the embargo will cause much more Cuban immigration to the United States.
________ effects of trade agreements are the shifting of resources from inefficient to efficient companies as trade barriers fall.
B) Static
Country X has a significant amount of external debt. Which of the following is the most likely cause?
B) The government of Country X borrowed money from other governments.
Most countries have agreed on how to assess values when their customs agents levy tariffs. Which of the following best expresses this agreement?
B) They should use the declared invoice price unless they doubt its authenticity.
3) Why should managers have an understanding of trade protectionism?
B) Trade protectionism affects a company's ability to sell abroad and ability to compete at home.
32) Which of the following was primarily responsible for establishing the euro?
B) Treaty of Maastricht
59) Which of the following is Walmart's competitive advantage in Mexico?
B) Walmart is able to transfer its "everyday low prices" concept to Mexico.
37) Hudson Manufacturing is an MNE based in the U.S. with operations in Asia. The firm is considering expansion into the European Union. Which of the following questions is most relevant to the decision?
B) Which country has the best production location?
41) Which of the following is most likely a true statement regarding the rule of law? The rule of law is a hallmark of ________.
B) a democratic government
51) An NGO is ________.
B) a private institution independent of a government
49) In international trade, what is a quota?
B) a quantitative limit on the amount of a product that can be imported or exported
Neomercantilism describes the approach of countries that try to run a favorable balance of trade to ________.
B) achieve a social or political objective
20) Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to ________.
B) achieve low unemployment
27) Most world trade takes place ________.
B) among developed countries
24) Studies indicate a strong correlation between the intensity of religious belief and ________.
B) an adherence to some attributes that lead to economic growth
12) The interbank market in foreign exchange is where ________.
B) banks trade currency with each other
33) In societies where trust is high, ________.
B) business costs are typically lower
6) Anderson Enterprises is a U.S. firm that manufactures light fixtures for commercial and residential consumers. Anderson is looking to expand internationally, so the firm should most likely ________.
B) change their organizational structure to fit the norms of the foreign country
31) Safe work environments motivate ________; challenges motivate ________.
B) collectivists; individualists
38) A ________ law system is based on tradition, judge-made precedent, and usage and assigns a preeminent position to existing case law as a guide to dispute resolution.
B) common
18) A ________ results when free mobility of factors of production is added to a customs union.
B) common market
46) Countries with a ________ legal system tend to encourage precise, detailed contracts, whereas countries with a ________ legal system tend to encourage shorter and less specific contracts.
B) common; civil
Albert, an employee at Morgan Stanley, has been given the task of handling the foreign exchange for a customer who is moving from Brazil to Switzerland in one week. Which of the following should Albert most likely use when exchanging the client's Brazilian real for Swiss francs?
B) cross rate
16) Cultural change imposed by an alien culture is called ________.
B) cultural imperialism
49) In a country's balance of payments, the ________ tracks all trade activity in merchandise.
B) current account
Members of the Andean Community(CAN) have a common external tariff. CAN is most likely a ________.
B) customs union
50) Which of the following is the primary focus of the African Union (AU)?
B) democracy
Countries with varied climates and varied natural resources generally ________ than countries with less varied climates and natural resources.
B) depend less heavily on trade
12) A major problem with the Doha Round is that ________.
B) developing countries want a reduction in agricultural subsidies maintained by the developed countries
Because the size of the market increases when trade barriers fall, companies can increase their production, which will result in lower costs per unit. This phenomenon is known as ________.
B) economies of scale
Country X wants to eliminate its balance of trade deficit while simultaneously keeping prices low for imported essentials. Which of the following methods would most likely achieve these dual objectives?
B) enacting selective import restrictions
48) Local content regulations are primarily intended to ________.
B) encourage MNEs to increase production activities in a country
The relationship between the value of the Brazilian and Chinese currencies is known as the ________.
B) exchange rate
If Toranaga-san, who works for a Japanese trading company that operates in Japanese yen, wanted to purchase Spanish castanets from a company in Barcelona and needed euros to complete the transaction, he would use the ________ to gain access to spot euros.
B) foreign-exchange market
Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate, known as the ________.
B) forward rate
When a company wishes to introduce change in a foreign country, its likelihood of success can most likely be improved by ________.
B) gaining the support of local opinion leaders
El Salvador has a population density of about 620 people per square mile and neighboring Honduras a population density of about 115 people per square mile. According to the factor proportions theory of trade, one would expect El Salvador's exports to Honduras to ________.
B) have a higher labor-to-land ratio than its imports from Honduras
41) The most common type of tariff is the ________ tariff.
B) import
38) A possible drawback to the essential industry argument for import protectionism is ________.
B) in times of military emergency, almost any product could be considered essential
25) A free trade agreement is likely to increase efficiency because of ________.
B) increased competition
39) The so-called "misery index" is the sum of a country's ________.
B) inflation and unemployment rates
A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________.
B) it is facing competition from some commercial banks
According to the PLC theory, at an early stage of a product's life cycle the product is likely to be made in a more ________ method than in its later stages.
B) labor-intensive
4) Which of the following ideas holds that a government should NOT interfere in business affairs?
B) laissez-faire
History suggests that if the economic crisis worsens, we are likely to see more people question the ________.
B) legitimacy of capitalism
Costa Rica applied the concepts of the diamond of national advantage theory to help transform its economy by ________.
B) looking globally to develop favorable conditions
36) According to the optimum tariff theory, a foreign producer will most likely ________.
B) lower its export prices if the importing country imposes an import tax on its products
A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a ________.
B) market economy
37) A culture in which people prefer to finish one task before starting another is most accurately characterized as which of the following?
B) monochronic
24) Recently, the Economist Intelligence Unit investigated the status of democracies around the globe. Relying on 60 indicators that focus on the performance of free elections, civil liberties, government functioning, political participation, and political culture in a country, the study found that ________.
B) nearly half of the world's democracies qualify as "full" or "flawed" democracies
59) During a time of reflation, the government is most likely to ________.
B) print money
57) Logan Electronics has a production facility in Bolivia. Recently, the firm was taxed at a significantly higher rate than a local electronics company. Which type of political risk is Logan most likely experiencing?
B) procedural
30) Countries most likely establish export restrictions to ________.
B) raise prices in foreign markets
Evaluating the importance of potential clients or partners by the way they dress is an example of using ________.
B) silent language
9) The nation offers a workable reference for studying cultural differences because ________.
B) similarity among people is both a cause and effect of national boundaries
7) The recent global credit crisis has interrupted the trend of national economies ________.
B) steadily adopting the free market model
The inability of a company to gain foreign production factors to use in its domestic operations most likely ________.
B) stimulates the company to adopt efficient substitute methods of production
38) All of the following are features of the diamond of national advantage theory EXCEPT ________.
B) strategic trade policy regulations
International businesspeople need to understand social stratification systems where they do business because ________.
B) such systems indicate who people in a given culture will likely respect more
Assume the following conditions: In the United States it takes 4 units of resources to produce a ton of potatoes and 5 to produce a ton of coal. In Canada it takes 6 units of resources to produce a ton of potatoes and 10 to produce a ton of coal. According to the theory of comparative advantage, ________.
B) the United States should import potatoes from Canada and export coal to Canada
Assume a government places restrictions on a specific product from a specific foreign country. What would be the government's most likely concern about the foreign country's response?
B) the foreign country restricting its own imports
16) In a command economy, ________.
B) the government sets goals and determines the price and quantity of what is produced
25) The march toward greater political freedoms and more expansive civil liberties, beginning in the 1970s, strongly fueled a sense of ________.
B) the inevitability of democracy
15) Creolization refers to ________.
B) the process of mixing elements of an outside culture with those of a national culture
43) NAFTA is a good example of ________.
B) trade diversion
11) In foreign-exchange markets, reporting dealers ________.
B) trade more foreign exchange with other financial institutions than with any other category of users
1) Western Union's role in foreign exchange trading is best described as ________.
B) transferring currency from one country to another
According to Adam Smith's theory of absolute advantage, specialization allows countries to increase their efficiency for each of the following reasons EXCEPT ________.
B) transportation costs could be lowered by producing closer to markets
Because all countries face the questions of what, how much, and with whom they should import and export, international business managers should most likely ________.
B) understand the theories used to answer these questions because policies affect business operations
17) The industrialization argument for trade protection in developing countries is based on the assumption that ________.
B) unemployment and underemployment exists in rural areas, so little agricultural output is lost as people move into industrial jobs
11) In a practical sense, the term political system is meant to signify the ________.
B) working government in a country
A computer firm has high foreign sales in Asia and wants to expand sales into Europe. Which of the following statements provides the most appropriate advice for Elway executives?
Being a leader in one country does not guarantee market leadership in another country.
NOT a reason to study international business?
Business conducted outside the confines of any one country is INEXPLICABLY on the decline.
44) The World Bank reports that approximately ________ percent of the world's population is poor.
C) 80
The ________ is a preferential trade agreement that was organized in 1967 and comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
C) ASEAN
Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft?
C) Companies differentiate products to appeal to different consumers.
The EU organization that ensures consistent interpretation and application of EU treaties is the ________.
C) Court of Justice
13) A(n) ________ ideology is the system of ideas that expresses the goals, theories, and aims of how society should work.
C) Different ideologies are held by different segments of society.
19) Which of the following statements about the English language is most likely NOT true?
C) English is the official national language in most countries where FDI is encouraged.
The three major responsibilities of the ________ are legislative power, control over the budget, and supervision of executive decisions.
C) European Parliament
All of the following are reasons that foreign investment may stimulate exports from the home (donor) country EXCEPT which of the following?
C) Home-country aid usually goes where the investments are made.
60) Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has recently developed an innovative blender design that Wharton executives anticipate being very profitable. Currently, Wharton has production facilities in the U.S. and China. Wharton executives are trying to determine where the new product should be manufactured. Which of the following questions is most relevant to the decision?
C) How can the firm guard against counterfeiting in China?
38) Hudson Manufacturing is an MNE based in the U.S. with operations in Asia. The firm is considering expansion into the European Union. Executives at the firm are debating whether central Europe or Eastern Europe would be best for the firm. Which of the following best supports a decision to establish operations in Eastern Europe?
C) Hudson wants to minimize costs by keeping wages low.
3) In 2010, what was the top remittance-receiving country in the world?
C) India
A government increases its internal debt for all of the following reasons EXCEPT which of the following reasons EXCEPT ________.
C) The government borrows money from international financial institutions.
Global integration occurs as countries from all over the world decide to cooperate through the ________.
C) WTO
Which of the following would have the LEAST influence on price setting in the foreign exchange market?
C) Western Union
39) The diamond of national advantage would be best used to answer which of the following questions?
C) Why do specialized competitive advantages differ among countries?
48) All of the following are examples of international labor mobility EXCEPT ________.
C) a college student on a study abroad program
The U.S. catfish industry successfully petitioned the U.S. government to require that catfish varieties imported from Vietnam be labeled as tra, basa, or pangasius. This is an example of which of the following?
C) a nontariff barrier
As a leading exporter of luxury automobiles, Germany has built a strong reputation in engineering. Germany's trade most likely relies on a(n) ________.
C) acquired advantage
1) Trade protectionism will most likely affect which aspect of a company's operations?
C) acquiring foreign supplies
44) Which term refers to a tariff or duty assessed as a percentage of an item's value?
C) ad valorem duty
52) If an MNE convinced a popular priest that its vitamin-enriched soft drink would benefit parishioners' health, the MNE would be using ________ to help bring about change.
C) an opinion leader
Advocates of the comparable access argument for trade protection primarily assert that domestic industries ________.
C) are entitled to the same access to foreign markets as foreign industries have to their markets
Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time?
C) balance of payments
10) Successful trade retaliation is most likely achieved ________.
C) by a large trading country
28) Which of the following types of political risks often is caused by ethnic conflict or civil disorder and includes those random political developments that adversely affect the operations of all companies in a country?
C) catastrophic political risk
37) A(n) ________ law system is based on a systematic and extensive codification of laws and puts political officials in charge of specifying accessible, detailed, and written law that applies to all citizens.
C) civil
6) Proponents of ________ argue that individual interests are not as important as the welfare of the group.
C) collectivism
17) In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X?
C) command economy
14) Contact among countries brings about cultural change, which is a process called ________.
C) cultural diffusion
40) Which of the following recently threatened the future of the EU's common currency?
C) debt crisis in Greece
According to the PLC theory, developing countries have their best production advantage in which stage of the product life cycle?
C) decline
44) The term "cultural distance" refers to the ________.
C) degree to which countries differ on cultural dimensions
Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect the Hong Kong government to ________.
C) ensure fair competition
47) Which of the following is a unique provision of NAFTA?
C) environmental standards
34) The ________ is the common currency of the European Union.
C) euro
14) The comparative advantage theory holds that a country will gain from trade ________.
C) even though it can produce all goods more efficiently than other countries
6) A(n) ________ is the price of a currency.
C) exchange rate
Countries often use local content regulations to determine the proportion of the product that must be made in the local market versus made outside of the local market in order to ________.
C) favor domestic companies
Defense arguments are sometimes used to prevent exports to unfriendly countries. This runs the risk of the targeted country ________.
C) finding alternative sources of supply
Countries sometimes fear that foreign producers are pricing their exports artificially low. This fear is most likely based on the assumption that ________.
C) foreign producers will charge exorbitant prices after putting competitors out of business
The pound-dollar forward rate for pounds is $1.9068, and the spot rate is $1.9059. Pounds are selling at a ________.
C) forward premium
16) The goal of a ________ is to abolish all tariffs among member countries.
C) free trade agreement
The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its________.
C) gross domestic product (GDP)
A physician, who is a citizen of and licensed in Country A, meets the professional licensing requirements of Country B. The physician will most likely ________.
C) have to get a work permit from Country B's immigration authorities to work in Country B
Countries with large land areas are generally less dependent on trade than countries with small land areas because of ________.
C) higher transportation costs related to foreign trade
40) The pushback against democracy has powered a rise in totalitarianism, a situation that is likely to include which of the following?
C) increasing adoption of the principles of the rule of man
29) Which of the following is characterized by low dependence on an organization and a desire for personal time, freedom, and challenges?
C) individualism
5) The principle that an individual has the freedom to pursue his or her interests is called ________.
C) individualism
Contrary to the product life cycle theory, there has been an increased tendency for companies to ________.
C) introduce new products simultaneously in domestic and foreign markets
Tests to substantiate the factor proportions theory have had mixed results most likely because ________.
C) labor skills and education are not homogeneous
6) Under mercantilism, governments sought to influence trade by ________.
C) limiting imports and subsidizing exports
46) One of the potential problems for an MNE that practices too much polycentrism is ________.
C) losing innovative capabilities to less-risky host-country practices
21) In the Economic Freedom Index, ________ exhibit high economic freedom whereas ________ exhibit little to no economic freedom.
C) market economies; command economies
14) Market economies are primarily characterized by ________.
C) minimal governmental participation
38) In the U.S., the unemployment rate indicates the ________.
C) percentage of unemployed workers seeking paid work relative to the total labor force
39) The attempt to resolve small issues before principles is a characteristic of which of the following?
C) pragmatism
Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________.
C) privatization of many factors of production
36) In most cases, governments ________ in order to regulate inflation.
C) raise interest rates
41) When a company does business in another country whose official language is the same as its home country's, the company should most likely ________.
C) realize that words may have different meanings
18) The free trade theories of specialization primarily assume that ________.
C) resources can move domestically from the production of one good to another
10) Which of the following is NOT a characteristic of capitalism?
C) state control of factors of production
18) Which of the following would most likely be used in a totalitarian system to promote unconditional support for the official ideology?
C) state control of the education system
24) In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________.
C) supporting the local activities of foreign competitors
D) Government actions should target industries that are believed to give the country its best export
C) targets the resources needed to support industries that seem to fit best with the country's advantages
30) In the foreign exchange market, the bid is the rate at which ________.
C) the trader is willing to buy foreign exchange
Since production has shifted to more efficient producers due to comparative advantage, consumers in Country X have had access to more goods at lower prices. Which of the following most likely exists?
C) trade creation
Trade shifting to countries within a regional trade agreement at the expense of trade with countries not in the agreement is called ________.
C) trade diversion
32) Managers should be more precise in their directions to subordinates when ________.
C) uncertainty avoidance is high
57) The Organization of Petroleum Exporting Countries ________.
C) uses quotas to control oil prices
According to the diamond of national advantage theory, the domestic existence of all four conditions best explains ________.
C) where globally competitive firms develop and sustain themselves
Which of the following has MOST influenced consumers to demand access to foreign-made products?
Consumers have become more efficient in using MEDIA AND TECHNOLOGIES to compare prices worldwide.
NOT true about cultural diversity?
Cultural diversity is most successful when domestic and foreign firms establish joint ventures.
3) Which of the following countries has an individualistic orientation?
D) Canada
People who argue for lifting the U.S. trade embargo with Cuba claim all of the following EXCEPT which one?
D) Cuba has largely become a market economy already.
15) ________ refers to a political system in which government is organized by and accountable to the people.
D) Democracy
2) Which of the following is most likely a true statement about the global economy since the 1980s?
D) Emerging economies are adopting the principles and practices of free markets.
10) Which of the following accurately identifies a difference between GATT and the WTO?
D) GATT rules did not cover trade in services, but the rules of the WTO do.
Which of the following best supports a nation's decision to implement a strategic trade (industrial) policy?
D) Government actions should target industries that are believed to give the country its best export
26) Which of the following is NOT one of the top four locations for trading foreign exchange?
D) Hong Kong
16) Which of the following is a problem with the infant-industry argument for protection?
D) If the industry does not lower costs sufficiently to be competitive, it becomes a formidable pressure
26) Which of the following is a condition that powered the worldwide spread of democracy from 1970 onward?
D) Information and communications technologies broke down the ability of the state to control access to uncensored information, especially that from foreign sources.
________ refer(s) to the creative ideas, innovative expertise, or intangible insights that give an individual, company, or country a competitive advantage.
D) Intellectual property
35) Which of the following statements about the euro is true?
D) It was designed to eliminate currency as a barrier to trade in the EU.
18) Which of the following is most typical of a command economy?
D) Many products are usually in short supply.
27) ________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower- than-projected rate of return.
D) Political risk
60) Which of the following governmental actions is LEAST likely to increase national debt?
D) T-bond sales
30) Which of the following statements is most likely FALSE?
D) The greater the geographic distance between countries the greater the trade.
58) In nearly half the cases in which U.S. firms have requested protection from imports, one or more U.S. companies in the industry opposed the protection. What was the reason for opposing protection?
D) They believed that they could compete against global and domestic rivals.
19) The ________ is the most widely traded currency in the world.
D) U.S. dollar
All countries face the questions of what, how much, and with whom they should import and export. How they answer these questions primarily affects whether ________.
D) a company's present production location will be competitive
13) Most people's basic value system is ________.
D) acquired mainly during early childhood
19) Under the ________ form of totalitarianism, the regime confines itself to political control of the state. It does not regulate the economic and social structure of society.
D) authoritarian
59) Assume a U.S. firm plans to expand into either Mexico, Germany, or Japan. Its executives are traveling to each country to meet with local businesspeople in the decision-making process. Which of the following would be LEAST beneficial when the executives make a presentation?
D) avoiding repetition to prevent boredom
26) In computing GNI, the value of a Ford car that is manufactured in Mexico using capital from the United States would ________.
D) be added to the GNI of the United States but not the GNI of Mexico
10) Which of the following is most likely a basis for a Jamaican natural advantage in international trade?
D) beautiful beaches and climate
2) Country A and Country B make an agreement to cooperate more closely and implement tariff reductions. Which of the following best describes this agreement?
D) bilateral integration
Jack, an American accounts manager, is preparing a presentation for a group of Japanese businesspeople. Jack's presentation would be most effective if he ________.
D) budgeted extra time for translation and clarification
All of the following are types of products that are usually exceptions to what is predicted by the product life cycle theory EXCEPT ________.
D) consumer durables
12) In a market economy, the patterns of resource allocation are most directly influenced by ________.
D) consumers who "vote" by their personal decision to buy or not buy products
55) American hamburgers, Japanese sushi, Italian pizza, Mexican tacos, and Middle Eastern pita bread are now commonly found in most countries. This best supports the argument that ________.
D) cultural hybridization is occurring
U.S. companies monopolize much of the international entertainment media, which largely portrays U.S. products and lifestyles as glamorous and appealing. This situation would most likely be used as an example of ________.
D) cultural imperialism
48) The two main categories in the balance of payments are the ________.
D) current account and the capital account
23) Eight of the top 10 exporting and importing countries are countries with ________.
D) developed economies
The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT ________.
D) diversity
33) Exporting below cost or below the home country price is called ________.
D) dumping
42) An import tariff may be protective ________.
D) even though the importing country does not produce the product
If a foreign currency is quoted in American terms (the direct quote) and the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a ________.
D) forward discount
22) As a trading currency, the euro is ________.
D) gaining ground against the U.S. dollar in Eastern European countries
48) The approach a company takes when it bases foreign operations on an informed knowledge of its organizational culture along with home- and host-country needs, capabilities, and constraints is called ________.
D) geocentrism
30) Assume a firm has operations in Tokyo, where there is a collectivist culture. Which of the following would most likely motivate the firm's Japanese employees?
D) good health benefits
11) Communism primarily relies on a system of ________.
D) government controlled economic activity
Which of the following undesirable results will most likely occur for a country running a favorable balance of trade?
D) granting credit that may be risky
36) In a(n) ________ culture, people tend to regard seemingly peripheral information as pertinent to decision making and infer meanings from things that people say either indirectly or casually.
D) high-context
Country X is withholding goods from international markets in an attempt to raise prices abroad. Such actions will be most effective for Country X if the nation ________.
D) holds a monopoly on the product or resource
50) Organizing work differently to improve productivity will likely fail ________.
D) if changes interfere with strongly held value systems
49) Labor and capital mobility are intertwined because ________.
D) immigrants bring an investment in human capital with them
25) Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________.
D) income generated by both total domestic production and the international production activities of national companies
45) The Gini coefficient estimates a country's ________.
D) income inequality
11) Imports can stimulate exports by ________.
D) increasing foreign income
44) Compared to the European Union, the North American Free Trade Agreement ________.
D) is slightly smaller in population and GDP
33) The ________ of a country specifies the rules that regulate behavior, the processes by which laws are enforced, and the procedures used to resolve grievances.
D) legal system
55) A firm with operations in Denmark can most likely expect all of the following EXCEPT ________.
D) minimal monetary policies
In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning.
D) mixed
20) Although English is referred to as the "international language of business,"________.
D) monolingual English speakers may experience more difficulty in the future in communicating on a worldwide basis
17) In a totalitarian political system, ________.
D) one agent monopolizes political power
49) A firm that concentrates on national cultural differences in terms of averages is more likely to ________.
D) overlook outliers
32) Barkely Enterprises, a U.S. manufacturer, received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia. Which of the following types of support did Barkely most likely receive from OPIC?
D) political risk insurance
18) Unlike the infant-industry argument, the industrialization argument for trade protection ________.
D) presumes that economic growth will occur even if domestic manufactured prices are not globally competitive
4) Which of the following is the largest source of foreign-exchange income in Mexico?
D) remittance income
19) The free trade theories of specialization primarily assume that ________.
D) resources are immobile internationally
46) The most internationally mobile factor of production is ________.
D) short-term capital
47) Tied aid requires a recipient to ________.
D) spend the funds in the donor country
In the spot market, the ________ is the difference between the bid and offer rates and is the trader's profit margin.
D) spread
Assume a government is considering import restrictions on sugar because sugar imports are hurting the domestic industry. Which of the following groups is LEAST likely to speak out on the subject?
D) sugar consumers
The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________.
D) take advantage of wage and skill differences among countries
7) In a country that emphasizes collectivism, ________.
D) the needs of society take precedence over individual freedoms
54) All of the following are reasons piracy has occurred EXCEPT ________.
D) the protection of intellectual property rights varies little from country to country
Which of the following best explains why the experience of countries such as Taiwan and South Korea are used to support export-led development policies?
D) their rapid economic growth
The fact that there are few reciprocal agreements among countries on the licensing of professionals most likely means that ________.
D) there is an effective limitation on trade in services
In this example, assume that both trade and production factors are internationally mobile. Using domestic labor, the labor cost per silicon chip is $.10 in Japan and $.20 in the United States. Using domestic capital, the capital cost per chip is $.10 in Japan and $.05 in the United States. Chip transportation in either direction is $.10. Japanese labor is willing to work in the United States for $.15 per chip including the workers' transport cost. U.S. capital will go to Japan at a cost of $.08 per chip including transaction costs. Which silicon chips will the United States buy?
D) those made in the United States with Japanese labor and U.S. capital
40) What is the main motive for countries' protection of their film/cinema industries?
D) to maintain their cultural sovereignty
26) Assume that U.S. companies are importing the same product from Mexico and Taiwan. The United States enters into an FTA with Mexico but not with Taiwan. Consequently, the United States begins to import more goods from Mexico (due to lower tariffs) than from Taiwan, even though the Mexican products are not any better or cheaper. This is most likely an example of ________.
D) trade diversion
37) ________ typically results when demand decreases and supply increases.
Deflation
The same automobile company produces Fiats and Ferraris. The company builds an engine plant in China with low production costs for Fiats but not Ferraris. The probable reason is that ________.
Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly on a focus strategy
22) Which of the following countries is the best example of a mixed economic model?
France
Which of the following statements would most likely be made by a SUPPORTER OF GLOBALIZATION?
Globalization encourages the adoption of uniform and superior standards for combating
SHIFTING NATIONAL BORDERS has most likely created which of the following situations for international business?
It has INCREASED PHYSICAL BARRIERS to exporting.
Assume that company executives at the firm would like to increase sales by expanding into an international market. Which of the following factors, if true, best supports a decision to expand sales globally?
Its costs of making additional sales would not increase disproportionately.
Consumers want a GREATER VARIETY OF GOODS AND SERVICES at lower prices, many governments have ________.
REDUCED their restrictions on the international movement of goods and services
What is the primary difficulty associated with dismantling developed countries' agricultural subsidies?
Rural areas in the United States, the European Union, and Japan are disproportionately represented in
Which of the following is NOT a common argument for the slowing of future globalization?
Technological, transportation, and communication advances will decline in the near future.
Which of the following best explains why international business has grown rapidly in the past few decades?
The end of the political schism between the Communist and non-Communist blocs
The relationship between import substitution policies and export-led development policies is best characterized by which of the following?
The two are hard to distinguish because production under import substitution may eventually be exported.
What is the most likely reason that consumers rarely protest import restrictions that raise the prices they pay for a specific product?
Typically, although the added costs to consumers for a given product are high in aggregate, they are
51) An import license is ________.
a requirement that permission be secured from governmental authorities before importation can be undertaken
23) The more closed a society is, the more important ________ group membership is.
acribed
IMPORTED FLOWERS are now a stronger competitor to U.S. grown flowers in the U.S. market. Which of the following is likely the MOST important factor for this increase in imports?
advances in TRANSPORTATION
RYAN a foreign exchange dealer, sold U.S. dollars for Swiss francs in the U.S., then sold Swiss francs for Japanese yen in Switzerland, and then sold the Japanese yen for U.S. dollars in the U.S. Ryan hopes that he will end up with more U.S. dollars than when he began. Which term best describes Ryan's actions?
arbitrage
Although the U.S. film industry depends heavily on revenue in foreign countries, revenue from international markets is usually low for a sports-themed film. This is most likely due to ________ factors.
behavioral
DEVON, accounts manager at a large electronics firm, does not have any direct international responsibilities. However, Devon would most likely benefit from studying international business issues so that he can ________.
better understand how foreign operations affect the company's COMPETITIVE POSITION
Melissa, a foreign exchange trader, wants to buy euros from Stephanie. Which of the following is the price at which Melissa is willing to buy euros?
bid
A company STARTING OUT WITH A GLOBAL FOCUS, usually because of the international experience of its founders, is called a ________.
born-global company
An irrevocable letter of credit ________.
can be amended only if all parties involved agree
If a company from Country A decides to sell merchandise to a company from Country B, then the company from Country A ________.
can denominate the sale in either currency and use the foreign exchange market to convert currency
Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer?
capability of assessing cultural risk
An investor sells Japanese yen which is yielding a low interest rate and uses the proceeds to buy Swiss francs that yield a higher interest rate. Which term best describes the investor's actions?
carry trade
Which of the following handles the majority of all foreign exchange activities?
commercial banks
Some key ________ factors in a company's international business external environment are its product strategy and access to resources.
competitive
STELLA, who works and lives in San Diego, wants to send money to her mother who lives in a small village south of Puerto Vallarta, Mexico. Stella typically uses Western Union to handle the transaction. Which of the following is the most likely reason that Stella uses Western Union?
convenience
Companies most likely use the foreign exchange market to ________.
convert money for use in financial transactions
When divergent cultures come in contact, ________ occurs.
cultural collision
________ consists of specific learned norms based on attitudes, values, and beliefs of a group of
culture
Which of the following has NOT been a major force increasing globalization in recent decades?
decreasing prices of natural resources
In addition to understanding the laws affecting business in countries where their companies operate, it is most important for managers to understand the ________.
degree of law enforcement
INSTITUTIONAL development of services by business and government has aided the expansion of international business by ________.
developing means to EASE THE FLOW of goods among countries
18) ________ peoples account for the largest percentage of global production.
english-speaking
A major criticism of offshoring is that it ________.
exchanges good jobs for bad jobs
Companies most likely use the foreign exchange market to ________.
facilitate regular business transactions
A firm is currently seeking resources from foreign countries. Which of the following is the LEAST likely reason for doing so?
following a customer into the global market
The pound-dollar forward rate for pounds is $1.9068, and the spot rate is $1.9100. Pounds are selling at a ________.
forward discount
Governments have signed TREATIES TO PROTECT foreign-owned property rights, such as investments and patents. A primary reason for doing so is to ________.
gain reciprocal advantages
Managers who are knowledgeable about ________ are better able to identify the location, quantity, quality, and availability of the world's natural resources.
geographic factors
It is sometimes contended that by imposing import controls a country might be able to increase its exports. This contention is premised on ________.
getting other countries to maintain or relax their current import restrictions instead of escalating restrictions in a trade war
BROADENING set of interdependent relationships among people from different parts of the world is known as ________
globalization
Some observers feel that international institutions and the people working in them cannot adequately handle the complexities of an interconnected world. Based on this, these observers believe that ________.
globalization will slow in the future
Which of the following ideas calls for assessing a country's performance based on factors such as life expectancy, leisure time, and income equality?
happynomics
Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________.
hiring host-country nationals who pay no taxes
38) A culture that prefers to first settle general principles rather than small issues is most accurately characterized as ________.
idealist
Most of the world's goods and services are sold ________.
in the countries where they are produced
Compared with a forward contract, a futures contract ________.
is only traded on an exchange
13) The rationale for the infant-industry argument for trade protection is that ________.
it takes time for an industry to become competitive in world markets, so protection is needed to help this industry pass through the critical period
The owner of a U.S. football team and the owner of a Canadian hockey team purchase a British soccer team. This is an example of a ________.
joint venture
Which term refers to two or more companies that share ownership of an FDI?
joint venture
Reebok pays a royalty to the German Soccer League to use the team's logo on t-shirts that it sells. Reebok and the German Soccer League most likely have a ________.
licensing agreement
50) A voluntary export restriction (VER) refers to ________.
limits placed on exports by a government of an exporting country at the request of the government of an importing country
25) According to the theory of success and reward expectation, the greatest enthusiasm for work generally occurs when there is a ________ certainty of success combined with a ________ reward for success compared to the reward for failure.
low; high
All of the following are reasons a country might institute import restrictions to improve its balance of trade position with other countries EXCEPT to ________.
maintain essential industries
17) Which of the following languages has the most native speakers?
mandarin
5) The trade theory that says a country should export more than it imports is known as ________.
mercantilism
Visible exports and imports are ________
merchandise imports and exports
39) A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system.
mixed
When selecting a commercial and/or investment bank to deal in foreign exchange, corporations are most likely to use ________.
more than one bank to meet different needs
In terms of international business, it is most accurate to say that ________.
most firms DEPEND on foreign markets and supplies OR compete against companies that do
28) Which of the following is the price at which the trader is willing to sell foreign currency?
offer
The process of shifting production from a domestic to a foreign location is best known as ________.
offshoring
A(n) ________ is the right but not the obligation to buy or sell a foreign currency within a certain time period or on a specific date at a specific exchange rate.
option
When a company SUCCESSFULLY RESPONDS to foreign production and market opportunities, ________.
other companies will likely emulate its successful practices
Because people can be grouped or classified in many ways, such as on the basis of nationality, ethnicity, religion, profession, and income level, ________.
people have more than one cultural group membership
35) Which of the following is NOT a component of modern legal systems?
private law
Which of the following best describes arbitrage?
purchasing foreign currency on one market for immediate resale on another market
Critics of the view that regionalization will prevail over globalization most likely base their argument on the belief that ________.
regionalization is a transition stage toward globalization
22) Which of the following is an example of an acquired group membership?
religion
GOMEZ Enterprises, a firm based in Mexico City, exported 1,000 circuit boards to Taylor Industries, a firm based in Chicago. Taylor received a document from Gomez that requests immediate payment for the goods. Gomez has most likely sent a ________.
sight draft
Politics, law, culture, and economy are all examples of ________ factors that can affect the ways in which companies produce and sell their products in foreign markets.
social
According to the A.T. Kearny/Foreign Policy Globalization Index, countries ________.
sometimes rank HIGH on one dimension AND LOW on another
ANITA an employee at ABX Partners, a hedge fund firm, has purchased euros because she believes that the euro will strengthen against other currencies. Which term best describes Anita's activities?
speculation
Costa Rica's recent economic transformation to depend more on high-tech manufacturing is largely due to its adoption of ________ trade policy.
strategic
The view that globalization is inevitable is most likely based on the belief that ________.
technical advances in transportation and communications are highly pervasive
Although globalization may bring economic growth, critics nevertheless contend that ________.
the inequality of gains puts some people in a relatively worse economic situation
A flag of convenience is ________.
the registration of a shipping company in a country that charges low taxes
A document requesting payment 30 days after delivery is known as a ________.
time draft
What is the most likely reason that GOVERNMENTS COOPERATE with each other through treaties, agreements, and consultations?
to attack problems jointly that one country acting alone cannot solve
The term used by the United Nations as a synonym for multinational enterprise is ________.
transnational company
When companies face the same competitors in almost all countries where they operate, ________.
what they learn about each other in one country is useful in predicting the other's strategies and
A multinational enterprise (MNE) is best defined as a firm ________.
with foreign direct investments
56) In the opening case on the Java Lounge in Saudi Arabia, Saudi businessmen engaged in chit-chat while drinking coffee at a café during the conduct of business. Which of the following was the most likely reason for their behavior?
D) They come from a high-context culture in which small talk and seemingly unrelated information is
The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day.
A) Base of the Pyramid
42) The largest percentage of nations, within a contiguous geographic region, that adhere to the rule of man are located in ________.
A) Central Africa
9) According to research, which of the following countries is the strongest supporter of free markets?
A) China
31) Which of the following statements about approaches to political risk management is NOT true?
A) Passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards.
55) The vigor of IPR protection is highly related to a country's stage of ________.
A) economic development
Which of the following is NOT one of the top exchanges that trade in foreign currency futures and options?
UBS
Assume an enterprise is considering ESTABLISHMENT OF A FOREIGN PRODUCTION FACILITY. Which of the following best supports this decision?
Its main competitor successfully opened a foreign plant.
56) Garnet Footwear suffered significant financial losses and had to close its foreign operations. The dissolution process took six months and cost four percent of the firm's estate. Where was Garnet's foreign operations most likely located?
Japan
8) Which of the following countries has a collectivist orientation?
Japan
Which of the following best explains why migrant workers in Dubai send money back home?
Non-citizens cannot purchase property.
Which of the following statements would most likely NOT be supported by an advocate of offshoring?
Offshoring is fundamentally better for workers than the introduction of labor-saving technologies.
In which of the following transactions is one currency swapped for another on one date and then swapped back on a future date?
C) FX swap
Kyle, an international manager for Apex Industries, has been given the task of analyzing the economies of three different emerging countries for the firm's potential expansion. Which of the following questions is LEAST relevant to Kyle's assignment?
C) What is the likelihood that Apex can fill manufacturing positions with locals?
42) NAFTA was primarily formed because the member nations have ________.
C) geographic proximity to each other
Which of the following is NOT a reason that international trade theory is useful for managers to understand?
Countries use laissez-faire policies to intervene in the free movement of international trade, thus affecting where companies can produce most efficiently.
Why should managers in international business understand international trade theories?
Countries' trade policies, based on trade theories, influence which products companies might export
In a strategy known as ________, many new companies locate themselves NEAR COMPETITORS and suppliers.
clustering
Which of the following calls for economic activity that meets present needs without hindering the future needs of society?
sustainable development
Which of the following best describes a result of cultural collision in international business?
A company implements practices that are less effective than intended.
59) Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has recently developed an innovative blender design that Wharton executives anticipate being very profitable. Currently, Wharton has production facilities in the U.S. and China. Wharton executives are trying to determine where the new product should be manufactured. Which of the following best supports a decision to manufacture the new product in the U.S. instead of China?
A) Intellectual property rights are strongly protected by U.S. patent laws.
The government of Country X imposes import restrictions on steel to help the domestic steel industry in depressed areas. What is the most likely result of such restrictions?
A) damaging other industries in Country X
All of the following factors most likely led to Costa Rica's attraction of high-tech FDI EXCEPT the country's ________.
A) demand for high-tech products
Since the late 1980s, the growing emergence of freer markets has been powered by the realization that ________.
A) economic growth is directly related to economic freedom
31) Export restrictions have a tendency to ________.
A) favor domestic consumers
9) In foreign exchange markets, reporting dealers are ________.
A) financial institutions that actively participate in local and global foreign exchange markets
5) Which term refers to money denominated in the currency of another nation or group of nations?
A) foreign exchange
If a foreign currency is quoted in American terms (the direct quote) and the forward rate is greater than the spot rate, the foreign currency is selling at a ________.
A) forward premium
59) Which of the following is NOT causing greater complexity in the regulation of trade?
A) growth in export tariffs
57) Companies with ________ would most likely oppose global protectionist measures.
A) internationally integrated supply chains
A problem that can arise in using trade protectionism to develop international competitiveness for a domestic industry is that ________.
A) it is difficult to identify industries that have a high probability of reaching competitiveness
Korman Industries is a foreign multinational that recently established operations in the European Union. What is the most likely advantage for Korman as a result?
B) Market size is larger because of the elimination of internal tariff barriers.
51) Which of the following is the LEAST likely result of outward migration?
B) Nations receive more foreign aid.
34) A system of ________ law sets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations.
B) constitutional
Certain attitudes can link groups, such as managers, from different nations more closely than managers with labor within a given nation. As a result, international businesspeople should most likely ________.
B) examine relevant groups when comparing nations
34) Expatriate managers located in cultures characterized by ________ have noticed that local employees are highly motivated by retirement programs.
B) high future orientation
Between now and 2050, countries undergoing a simultaneous population reduction and an increased percentage of retirees in the population most likely will need more ________.
B) immigrants
9) Unemployed workers are most apt to form a pressure group to support ________.
B) import restrictions
The U.S. automobile industry has attempted to counter import competition in all the following ways EXCEPT ________.
B) lobbying for customs deposits so that importers' costs would be raised
The ________ starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality, population health, livelihood security, equity, free time, and educational attainment.
C) Genuine Progress Indicator
23) Why is London most likely the top market for trading foreign exchange?
C) London is uniquely positioned geographically in terms of time zones.
32) All of the following are potential problems of using export controls EXCEPT which one?
C) Prices go up in the country imposing the controls.
8) Which of the following is a common shortcoming of studies examining culture in different countries and regions?
C) Responses are reported in averages, which can lead to a belief in unrealistic stereotypes.
20) All of the following countries have a totalitarian political system EXCEPT ________.
C) South Korea
1) Which of the following is a true statement about China?
C) The Chinese government manipulates market activities for political purposes.
58) Which of the following primarily triggered Toyota's investment in the European Union?
C) The EU lowered trade barriers on foreign auto imports.
22) Export-led development refers to ________.
C) a program to promote industries with export potential
47) Ethnocentrism in international business refers to the ________.
C) belief that what works best at home should work best everywhere
60) What was the primary purpose of the formation of Sinergia?
C) better compete with Walmart on price
The 27 member EU negotiates trade agreements as one. The EU and Brazil have negotiated a strategic trade alliance which is an example of a ________.
C) bilateral agreement
Developing countries have sometimes adopted policies to shift people out of agriculture and into industry by protecting manufactured production. One of the problems they have encountered is that ________.
C) demand for social and political services has increased excessively in the cities
According to the concept of green economics, measuring a country's economic performance should also take into account ________.
C) ecological costs
The Human Development Index measures the average achievements in a country on three basic dimensions of human development, including ________.
C) extent of knowledge
12) The distinguishing feature of political ideologies along the political spectrum is ________, with some emphasizing its primacy and others opposing it.
C) freedom
A foreign exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date in the future as specified in a standardized contract to all participants in the specified market is known as a(n) ________.
C) futures contract
Country X brings in a large number of unskilled immigrants to meet its labor needs. Which of the following is the LEAST likely to occur in Country X as a result?
Country X will experience a significant transfer of knowledge and a resulting rise in start-up
30) Select the correct order, going from low to high total impact on an MNE, of the following types of political risk: (1) procedural political risks, (2) systemic political risks, (3) distributive political risks, (4) catastrophic political risks.
D) 2, 1, 3, 4
44) Rockwall Enterprises is planning to expand the firm by establishing operations outside of the U.S. In which of the following countries would Rockwall most likely be able to establish operations most quickly?
D) Australia
4) Managers should understand the effect of trade protectionism because ________.
D) trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers
12) It is most accurate to say that within most nation's borders, people largely share such essential attributes as ________ and ________.
D) values; language
10) A problem of using the nation as a reference point for culture is that ________.
D) variations tend to be great within a country
27) Based on the hierarchy-of-needs theory, in which of the following would fulfillment of lower-order needs be the best motivator?
D) very poor countries
21) Which of the following is most likely a characteristic of a "partly free" country, such as Guatemala, Kenya, or Malaysia?
D) weak rule of law
ADVANCED COMMUNICATION systems have contributed to growth in international business by ________.
Enabling BETTER OVERSIGHT of global operations
Which of the following best explains recent GOV'T RELAXATION of restrictions on cross-border trade or resource movements?
Governments believe that domestic producers will become MORE EFFICIENT as a result of foreign competition.
Managers at Morrison Manufacturing are considering expanding the firm's production overseas and want to ensure that the firm is located in a country with a high degree of economic freedom. Presently, which of the following locations would most likely offer Morrison the highest economic freedom?
Hong Kong
CURTAILMENT of logging in the Amazon region is generally viewed as environmentally beneficial for the planet as a whole. However, unemployed Brazilian workers have felt that job creation inside Brazil is more important than climate protection outside Brazil. This example best illustrates which of the following?
How global interests can conflict with a country's local interests
An example of a U.S. merchandise import is an automobile made in ________ and sold ________.
Japan by a Japanese company; in the United States
Presently, which of the following countries is best characterized as a pure example of a command economy?
Libya
Critics of offshoring claim all EXCEPT which of the following?
Offshoring reduces the incomes of people in low-wage countries.
Why are options most likely so attractive to companies?
Options provide companies with more flexibility than a forward contract.
Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering?
Russia
47) Elite Manufacturing seeks a foreign location with a highly favorable business environment and a comprehensive legal code. Which of the following countries would be most suitable for Elite?
Singapore
An example of a Japanese service export is a visit by a ________.
U.S. citizen to Tokyo Disneyland in Japan
Which of the following is an indication of the increased globalization of business since the end of WORLD WAR II?
World trade has GROWN more rapidly than world production.
Which of the hypothetical new products, if successful, would most likely diffuse its production and sales according to the product life cycle theory?
a Sony television that receives global transmissions without a satellite dish or cable connection,
A foreign direct investment occurs when ________.
a company has a controlling interest in a foreign company
A letter of credit that provides an exporter with the guarantee of another bank in addition to the importer's bank is called ________.
a confirmed letter of credit
best defines international business?
all business transactions involving two or more countries
36) Ian, a financial manager, is preparing to transfer to Germany where he will serve as an expatriate manager of his employer's European office. With which type of legal system will Ian most likely have to deal with in Germany?
civil
9) Political systems based on the ________ paradigm, such as those of Japan and China, accept the principle that government may intervene to ensure that business practices benefit society.
collectivistic
In a ________, one party directs another party to make payment.
commercial bill of exchange
Kevin, marketing manager of the North American Bowling League, has decided to televise major bowling competitions to viewers in multiple countries rather than only in Canada and the U.S. Which of the following goals would this most likely help Kevin accomplish?
increasing sales and profits
Which of the following is an example of interest arbitrage?
investing in debt instruments in different currencies or different countries
Comparative advantage differs from absolute advantage in that the former ________, whereas the latter ________.
states that there is a basis of trade even if one country can produce everything more efficiently than
58) Harmon Clothing has a production facility located in Venezuela. Recently, Harmon has been unable to arrange for overseas loans due to the burdensome regulatory policies of the Venezuelan government. Which type of political risk is Harmon most likely experiencing?
systemic
A speculator is someone who ________.
takes positions in foreign exchange markets to earn a profit
Which of the following BEST explains how a firm reduces risk by operating internationally?
taking advantage of business-cycle differences among countries
46) In most cases, which type of government protection assistance is most controversial?
tariffs
All of the following are areas in which commercial activities take place outside the territory of any nation EXCEPT ________.
the Panama and Suez Canals
Which of the following is NOT one of the THREE MAIN REASONS affecting international business for governments to cooperate with each other?
to establish a common language
Which of the following is NOT a reason a company would deal in foreign exchange?
to import merchandise denominated in its currency rather than the currency of the exporter