IB300 Exam 2 Practice Questions

Which two of the following can an international manager assume when analyzing the economy? Multiple select question. (Select all that apply) Economic indicators do not reflect trade possibilities. Rising economic growth rates suggest lower consumer demand. A rapidly growing economy often indicates an increase in foreign direct investment. GNI provides a snapshot view of economic growth.

A rapidly growing economy often indicates an increase in foreign direct investment. GNI provides a snapshot view of economic growth.

A government with a high debt load might take which of the following actions? (Check all that apply.) Cut government spending. Encourage consumer spending limits Impose wage controls. Impose price controls.

Cut government spending. Impose wage controls. Impose price controls.

Which is an example of a government-owned business in the United States? Federal Trade Commission National Rifle Association United Nations Export-Import Bank

Export-Import Bank

True or false: A country would put a limitation on the convertibility of its currency when it is trying to deplete its foreign reserves.

False

True or false: Economic forces are some of the more stable forces in the external business environment.

False

True or false: Government ownership of a business can result in putting profits ahead of social goals.

False

True or false: In most parts of the world, you will not find government-owned businesses.

False

True or false: Rising inflation rates discourage borrowing.

False

True or false: Sanctions are effective at achieving their goal of forcing change in the targeted country.

False

What measures the degree to which family income within a country is distributed equally? Multiple choice question. disposable income Atlas conversion index GINI index income distribution

GINI index

When measuring the value produced in an economy, most international organizations prefer to use GNP. GDP. PPP. GNI.

GNI.

In order to control cybercrime, there must be international cooperation in which three areas? Worldwide media campaign against it Harmonizing laws Coordinating enforcement Having a central court to handle cases Improving investigation techniques

Harmonizing laws Coordinating enforcement Improving investigation techniques

Which of the following are part of a nation's underground economy? (Check all that apply.) Documented workers Illegal drugs Human trafficking Illegal gambling Unreported income

Illegal drugs Human trafficking Illegal gambling Unreported income

What is an issue with using GNI estimates? Multiple choice question. It assumes the relative values of each nation's currency is the same. In order to compare GNI estimates, they must be converted to a common currency. GNI estimates do not account for income generated abroad. GNI estimates include unrecorded transactions which skews the figures.

In order to compare GNI estimates, they must be converted to a common currency.

The __ helps facilitate payments, currency exchanges, and cross-border movements of capital required for international transactions. World bank International monetary system Central bank Global currency exchange

International monetary system

The government of a country may decide it wants to extract more money from a business, particularly if the government believes the company is concealing profits. What measure might it take to achieve this? It could erect trade barriers. It could nationalize the business. It could enact isolationism. It could privatize the business.

It could nationalize the business.

Which statements accurately describe a country's legal system? (Check all that apply.) Multiple select question. It is a collection of governing principles. It is a collection of legislation and regulations. Its goal is to provide for the welfare of the country. It is a collection of a country's values, norms, and beliefs.

It is a collection of governing principles. It is a collection of legislation and regulations. Its goal is to provide for the welfare of the country.

_____________is when a government takes a private firm to public ownership.

Nationalization

What are three resources that businesses can turn to that offer assessments and data regarding changes in the economic environment? (Select all that apply (3)) Private economic consultants Census data Governments and international organizations Industry associations incorrect Sales forecasts of industry competitors

Private economic consultants Governments and international organizations Industry associations

Which of the following areas of the law are of special concern to international businesses? (Check all that apply.) performance of contracts in an international setting immunity from prosecution of visiting foreign heads of state litigation in an international setting extraterritoriality

performance of contracts in an international setting litigation in an international setting extraterritoriality

Kory has been asked to determine how many people live in the 50 square miles surrounding the location of the proposed building project. What does Kory need to measure? population distribution birthrate population density age distribution

population density

During Margaret Thatcher's tenure as prime minister of Britain, she decreased the number of state-owned companies and sold more than 30 companies, thereby raising $65 billion for the country. This is an example of Blank______. subsidization privatization nationalization globalization

privatization

When a government transfers the assets of a company from the public sector to the private sector, it is an example of expansionism. isolationism. nationalization. privatization

privatization

The selling of government-owned businesses to the private sector is known as ____________

privatize

What are some of the reasons a government would restrict trade? (Check all that apply.) reduce sanctions imposed on other countries protect domestic infant industries promote national defense preserve domestic jobs increase economies of scale

protect domestic infant industries promote national defense preserve domestic jobs

One reason a government chooses to restrict trade would be to foster relations with other nations. protect domestic infant industries. indicate an isolationist stance. eliminate domestic jobs.

protect domestic infant industries.

Because of issues comparing GNI estimates, the United Nations International Comparison Program (ICP) has developed a method of comparing GNIs based on ____. the consumer price index purchasing power parity market currency exchange rates other measures such as inflation and unemployement

purchasing power parity

The Qur'an is associated with Islam and is the basis of which form of law? religious civil common international

religious

According to the Triffin paradox, the more ______ currency that foreign countries hold, the less confidence they have in the currency. paper reserve standard gold

reserve

Which one of the following would be recognized in a country risk assessment? pollution levels leading education facilities revolution against the government available environmental resources

revolution against the government

Dumping is defined in several ways. Which of the following are definitions of dumping? (Check all that apply.) selling a product abroad for less than the price to third-party countries selling a product abroad for less than the cost of production selling a product abroad for less than the price of domestic producers selling a product abroad for less than the price in the home market

selling a product abroad for less than the price to third-party countries selling a product abroad for less than the cost of production selling a product abroad for less than the price in the home market

A company is determining the divorce rate in parts of Europe. The company produces single-serving meal kits that might be of interest to people who were married but are now single. Which type of factor is this company analyzing? psychosocial socioeconomic economic political

socioeconomic

What are some reasons that explain why the effective rates of income tax are substantially lower than the statutory rates? (Check all that apply.) tax breaks through effective lobbying creative accounting tax levies on passive incomes tax planning strategies

tax breaks through effective lobbying creative accounting tax planning strategies

When a corporation buys a foreign company in a lower-taxed location and then uses that company as the legal location for the corporation, the corporation is using a ______ strategy. tax inversion tax evasion profit shifting value-added tax

tax inversion

A business would rely on the GINI Index to understand the relationship between income and expenses in a nation. the growth rate in production of competitor industries. how industry is developed based on factors of endowment. the degree to which family income is distributed equally within a country.

the degree to which family income is distributed equally within a country.

How does inflation affect companies? (Check all that apply.) Rising inflation rates weaken the value of currencies. Rising inflation rates encourage debt. High inflation rates cause the cost of goods to rise. It determines the real cost of borrowing. High inflation rates bring low interest rates.

Rising inflation rates weaken the value of currencies. Rising inflation rates encourage debt. High inflation rates cause the cost of goods to rise. It determines the real cost of borrowing.

What are the two basic strategies that corporations use to minimize their tax burden? Profit sharing Tax inversion Tax evasion Profit shifting

Tax inversion Profit shifting

True or false: Purchasing power parity is useful when a company is determining whether a particular country might be an attractive market for consumer goods.

True

True or false: The payment of ransoms to terrorist organizations violates international law.

True

True or false: Under a common law system, a civil wrong is rectified by compensation.

True

What is the main argument by economists for support of the gold system? The gold standard offers governments more flexibility in making adjustments to the money supply to ward off a recession. Under the gold standard, a government cannot create money that is not backed by gold no matter how great the temptation to do so for political advantage. The gold standard does not interfere with a nation's ability to trade as it sees fit and does not attempt to correct any trade imbalance. The gold standard allows for reserve funds to be held by a central bank and regulated so that it is fair and accurate for all nations.

Under the gold standard, a government cannot create money that is not backed by gold no matter how great the temptation to do so for political advantage.

Under the Bretton Woods system, par value was based on gold and the currency of which country? Great Britain China United States France

United States

What are the main roles of the Bank for International Settlements? (Check all that apply.) a center for research a forum for international monetary cooperation an agent for governments in international financial arrangements a banker for central banks an exchange market for currency trading

a center for research a forum for international monetary cooperation an agent for governments in international financial arrangements a banker for central banks

A manufacturing company pays import duties that are a stated percentage of the invoice value of the product. Which type of tariff does this company pay? ad valorem countervailing compound specific

ad valorem

What method of dispute resolution involves one person or body making a binding decision in lieu of going to court? litigation arbitration mediation resolution

arbitration

The total balance of payment account is a summation of which accounts? (Check all that apply.) capital account current liability account current asset account current account

capital account current account

The _____ law approach to a legal system is based on a systematic collection of laws designed to cover all areas of concern. common religious business civil

civil

What three factors are responsible for a change in labor costs in a country? compensation productivity exchange rates unemployment purchasing power parity

compensation productivity exchange rates

Soejin has written a cookbook. What form of legal protection can he obtain for his book? trade name trademark copyright patent

copyright

What are the three major accounts within the balance of payment account? current account capital account cash flow account official reserves account trade account

current account capital account official reserves account

Within balance of payments accounts, payments to other countries, which are funds flowing out, are tracked as ______, while payments from other countries, which are funds flowing in, are tracked as ______. gold; dollars credits; debits dollars; gold debits; credits

debits; credits

A large international debt may result in increased numbers of importers but less profit. growing levels of sales by home country factories that sell to the subsidiary in the indebted nation. reduction in the level of component production at the local level. decreased levels of foreign exchange available for importing components for local assembly.

decreased levels of foreign exchange available for importing components for local assembly.

What does a country's balance of payments reveal? ratio of a country's imports to exports demand for the country's currency demand for the country's products a country's financial position in the world

demand for the country's currency

Economists argue that the best way to protect national security and provide for national defense is through _____. complete embargo direct government subsidies imposition of sanctions the implementation of isolationism

direct government subsidies

During the pretrial period, a law firm worked to find facts relevant to the litigation. What is this process called? accommodation discovery arbitration consolidation

discovery

Kyle worked in his company's international office in Indonesia for many years. During his time there, political unrest caused many U.S. citizens, like Kyle, to have questions about his safety. What do governments put in place to represent their citizens in situations like this? judges legislatures congress people embassies

embassies

What two government resources are used to protect citizens when they are abroad? U.S. Department of State central intelligence agency embassies consulates

embassies consulates

A corporation would implement a country risk assessment in order to - estimate the risk to business employees, property, and investment. - analyze the impact of diversity in a country's workforce. - predict risk of marketing errors, given cultural variables. - predict responses of citizens to new product lines.

estimate the risk to business employees, property, and investment.

What option offers firms the shortest period of risk exposure? Multiple choice question. building a new facility in a foreign country financing an export operation entering into a joint venture starting a franchise in a new country

financing an export operation

The exchange rate regime in which the currency's value is tied to the value of another currency or gold is a ______. reserve exchange rate dual exchange rate floating exchange rate fixed exchange rate

fixed exchange rate

The Bretton Woods system goes by what two other names? conventional fixed-peg system gold exchange standard fixed-rate system free floating exchange system

gold exchange standard fixed-rate system

Gold has long been the trusted way for governments to measure the value of money. As trade increased, it became impractical to carry and store large amounts of gold. As a result, the Blank______ was established by Sir Isaac Newton as a system of valuing currency. fixed rate system gold standard currency standard floating rate system

gold standard

Under the ______ ________ each country set a number of units of its currency equal to an ounce of gold, and the ratios of these units of gold equivalence established the exchange rate between any two currencies.

gold standard

Francis is an economist and typically measures the overall economic output of a nation even though he realizes it doesn't account for the flows of FDI and income into and out of the nation. What measure is Francis using? gross domestic product international income debt purchasing power parity gross national income

gross domestic product

The International Organization for Standardization (ISO), the International Telecommunications Union (ITU), and the International Electrotechnical Commission (IEC) all promote - union membership in fields that are technology intensive. - harmonization in technology-related fields through standards. - shared bankruptcy standards across the globe. - harmonization in international accountancy.

harmonization in technology-related fields through standards.

What kind of assistance can be provided by embassies and consular offices? (Check all that apply.) help citizens contact family for money transfers file protests for abused citizens inform about local political risk monitor nationals imprisoned abroad provide armed escorts out of dangerous situations

help citizens contact family for money transfers file protests for abused citizens inform about local political risk monitor nationals imprisoned abroad

Countries with which of the following are more likely to have current account deficits? (Check all that apply.) high gross national product low interest rates strong exchange rates high barriers to to imports high price levels

high gross national product strong exchange rates high price levels

Unpredictability in a foreign government can make it hard for businesses operating in that country to adjust. What are two examples of such unpredictability? - Government contacts that change due to layoffs/promotions - Regulatory agencies that gave approval to a firm previously, now refuse to give approval - Currency exchange rates that fluctuate - Laws that change without warning

Regulatory agencies that gave approval to a firm previously, now refuse to give approval Laws that change without warning

Unpredictability in a foreign government can make it hard for businesses operating in that country to adjust. What are two examples of such unpredictability? (check all that apply) - Regulatory agencies that gave approval to a firm previously, now refuse to give approval - Currency exchange rates that fluctuate - Government contacts that change due to layoffs/promotions - Laws that change without warning

Regulatory agencies that gave approval to a firm previously, now refuse to give approval Laws that change without warning

Which of the following conditions in a country contribute to a current account deficit? (Check all that apply.) inadequate savings low productivity low gross national product excessive inflation

inadequate savings low productivity excessive inflation

When governments impose trade restrictions, the cost of the traded goods will decrease remain the same increase

increase

A government that makes radical changes to existing policies is demonstrating communism. instability. stability. democracy.

instability.

Which methods can a government use to minimize unfair international competition? (Check all that apply.) institutions such as the WTO national laws negotiations between governments universal system of law

institutions such as the WTO national laws negotiations between governments

Which of the following are types of passive income that typically have a withholding tax levied? (Check all that apply.) interest received revenues dividends royalties insurance payouts

interest received dividends royalties

What system is made up of institutions, agreements, rules, and processes that allow for the cross-border movements of capital required for international transactions? free-trade system international monetary system World Bank system globalization system

international monetary system

A business would obtain KRE insurance to cover losses associated with kidnapping situations associated with a foreign involvement. higher tariffs when exporting to developing countries. unpredictable international real estate investments. manufacturing operations that do not meet host country standards.

kidnapping situations associated with a foreign involvement.

In the United States court system, tort cases may result in lower liability insurance. jail time for guilty parties. a reduction in strict liability. large monetary awards.

large monetary awards.

Quotas are a quantitative barrier that set goals, established by the exporting country. limits, established by the importing country. specific quantities of imports or exports, based on price. expectations on domestic and foreign sales.

limits, established by the importing country.

The Chinese Anti-Monopoly Act has received attention for supporting the consumer. reducing competition. political sovereignty. local businesses.

local businesses.

On the GINI Index, a (lower/higher) score indicates a more equal distribution of family income within a country.

lower

Economic analyses become more complex when a firm enters overseas markets because - economists know less about foreign exchange rates. - management must operate in two new environments, -foreign and international. - analysts must now forecast the values for both socioeconomic and economic variables. - the uncontrollable economic variables must be forecast.

management must operate in two new environments, -foreign and international.

In a floating exchange rate system, exchange rates are determined by ______. the International Monetary Fund the price of gold and silver central bank negotiations market forces of supply and demand

market forces of supply and demand

High levels of debt in a nation can lead to which of the following? (Check all that apply.) more resources spent on interest payments increased economic uncertainty lower government investment in infrastructure higher consumer confidence

more resources spent on interest payments increased economic uncertainty lower government investment in infrastructure

Which of the following can businesses use to protect themselves against threats? (Check all that apply.) outsourced skills employee training programs trade protectionism insurance

outsourced skills employee training programs insurance

Those against the gold standard argue that Blank______. the gold standard is too complex a system to maintain in today's global environment the discipline required by the gold standard limits a government's monetary flexibility the nature of the system leads to trade imbalances and benefits only the wealthiest of countries the gold standard gives governments too much freedom in setting monetary policy

the discipline required by the gold standard limits a government's monetary flexibility

Who typically holds ultimate responsibility for data collection and report preparation when conducting business internationally? Multiple choice question. local representatives the chamber of commerce the foreign subsidiary field representatives the home office

the home office

Where are the greatest urban shifts now occurring? nations with high foreign direct investment the least developed countries technologically-advanced nations high-income regions

the least developed countries

The types of information a firm will need to judge country risks vary according to (Check all that apply) the legal involvement needed the length of time needed for the investment to yield a return the amount of competition already in the market the nature of its business

the length of time needed for the investment to yield a return the nature of its business

The balance of payments is a record of a country's transactions with ________. Multiple choice question. any Westernized country the rest of the world intranational trading partners local businesses

the rest of the world

Miscellaneous foreign laws can cause difficulties for the uninformed businessperson because - these laws may not be obvious or in accord with laws at home. - they are ambiguous enough that they can be applied to the foreigner at almost any time. - they may violate them and be arrested, yet ignorance of the law is an acceptable defense. - they are aimed to take advantage of the foreigner's ignorance, a trade barrier.

these laws may not be obvious or in accord with laws at home.

Which of the following are reasons why governments nationalize private firms? (Check all that apply.) to follow an economic or political ideology to control an earlier investment in a firm to increase profitability to reduce the extent of bureaucracy to extract more money from the firms

to follow an economic or political ideology to control an earlier investment in a firm to increase profitability to extract more money from the firms

Which of the following are reasons that governments decide to own businesses? (check all that apply) to protect against corruption to ensure equal access to public goods to provide vital services such as national defense to ensure economic goals are pursued ahead of social goals to ensure control over basic services

to protect against corruption to ensure equal access to public goods to provide vital services such as national defense to ensure control over basic services

Keene's favorite restaurant sells sandwiches that have a "kicker sauce." Everyone loves the sauce, but the company won't reveal what's in it. This sauce is an example of a copyright. patent. trademark. trade secret.

trade secret.

Advocates for the protection of an infant industry claim that firms need protection from imports until they Blank______. (Check all that apply.) train the labor force master production techniques obtain the required investment capital obtain all the factors of production achieve economies of scale

train the labor force master production techniques obtain the required investment capital achieve economies of scale

An agreement between nations is called a treaty. regulation. contract. trade practice.

treaty

Pirated copies of copyrighted music or video are part of the barter system. underground economy. hidden economy. gray market.

underground economy.

Which type of general tax is an indirect tax levied on passive incomes like dividends and interest? sales tax withholding tax value-added tax income tax

withholding tax

Which of the following are types of taxes that governments use to generate revenue? (Check all that apply.) withholding tax value-added tax income tax inflationary tax

withholding tax value-added tax income tax