IBUS 380 Test 1

International Mon

International institution set up to maintain order in the international monetary system. 1944

World Bank

International institution set up to promote general economic development in the world's poorer nations

General Agreement on Tariffs

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and led to the WTO

What reason can be attributed to the pressure for greater protectionism that occurred during the 1980s and early 1990s?

Many countries found way to get around GATT regulations

Globalization of Market

Moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market.

What happened as barriers to the free flow of goods and services fell?

Non-U.S. firms increasingly invested across national borders

What does the United Nations (UN) promote?

Peace through international cooperation and collective security

What is a feature of right-wing totalitarianism?

Provision of partial individual economic freedom along with restricted individual political freedom.

Why is the trade in goods and services and FDIs been growing faster than world output

- More firms dispersing production process to different locations around the globe - economies of the world's nation-states are becoming more intertwined -world has come significantly wealthier in the past two decades

Antiglobalization Protests

- began with 1999 protests at WTO meeting in Seattle - protestors now typically show up at major meetings of global institutions - protestors believe globalization causes detrimental effects on living standards, wage rates, and the environment - theory and evidence suggest these fears may be exaggerated

What does the WTO do?

-Polices the world trade system -Ensures nation-states adhere to the rules -facilitates multinational agreements among members

What do supporters of Globalization argue?

-benefits outweigh the costs - free trade will result in countries specializing in production of goods and services that they can produce most efficiently, while importing goods and services that cannot produce as efficiently -companies can reduce their cost structure, and consumers benefit

What do critics of globalization argue?

-falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower, destroying manufacturing jobs in wealthy advanced economies -services also being outsourced, contributing to higher unemployment and lower living standards in their home nations

What are the four basic purposes of the UN?

1. Maintain international peace and security 2. Develop friendly relations among nations 3. Cooperate in solving international problems and in promoting respect for human rights 4. Be a center for harmonizing the actions of nations

How many countries are members for the UN?

193

2020: U.S. accounted for ___% of world output

24.7

How much do small & medium sized companies value of us exports for manufactured goods account for in the global market?

32%

1960s: U.S. accounted for __% of world output

38.3

Sarah is to attend a business dinner with executives from her company. She knows that it will be important to dress in business attire, display good social manners, and eat with the correct utensils. These actions represent A) folkways B) values C) mandates

A) folkways

Which factor has contributed to the globalization of markets? A) global convergence of consumer tastes and preferences B) a decrease in foreign direct investment (FDI) C) an increase in cross-border barriers to trade

A) global convergence of consumer tastes and preferences

Sal has been in trouble his whole life. He stole from the local hardware store when he was 12, and as an adult he didn't feel the need to be faithful to his wife. Sal is guilty of violating A) mores B) folkways C) values

A) mores

Facilitating payments are: A. permitted under the amended Foreign Corrupt Practices Act. B. a direct violation of the Foreign Corrupt Practices Act. C. permitted so long as they designed only to gain exclusive preferential treatment. D. used to secure contracts that would otherwise not be secured.

A. permitted under the amended Foreign Corrupt Practices Act.

What is a characteristic of pure command economy?

All businesses are owned by the state

The distinctive culture of a small country has been losing its relevance among the citizens of the country because the people of this country are extensively adopting certain universally accepted values and norms. This behavior of these citizens demonstrates A) cultural stagnation B) the convergence hypothesis C) ethnocentrism D) social mobility

B

Izzy was found guilty of a crime which demanded a prison sentence. The length of her sentence was based on previous cases similar to hers and what is traditionally prescribed for the type of crime she committed. Izzy was tried and convicted under a __________ law system. A) codified B) common C) civil D) theocratic

B) Common

Which statement is true about the murbaha contract? A) Under the murabaha contract, money deposited in a savings account is treated as an equity investment in whatever activity the bank uses the capital for B) The murabaha contract is widely used among the world's Islamic bank because it is the easiest to implement

B) The murabaha contract is widely used among the world's Islamic bank because it is the easiest to implement

According to Hofstede, an employee concerned about job security, career patterns, and retirement benefits would exhibit a high level of ______. A) power distance B) uncertainty avoidance C) masculinity D) collectivism

B) uncertainty avoidance

What observation about subsidies is true? A) All subsidies are successful at increasing the international competitiveness of domestic producers B)Government subsidies must be paid for, typically by taxing individuals and corporations C) Subsidies are used to reduce exports from a sector, often for political reasons

B)Government subsidies must be paid for, typically by taxing individuals and corporations

Which statement is characteristic of an international business? A) Only firms that invest abroad are international businesses B) All international businesses are MNEs (multinational enterprise) C) All MNEs (multinational enterprise) are international businesses

C All MNEs are international business

Tanveer thinks that his individual freedoms should be guaranteed, and that people should be able to pursue their own economic self-interest. Tanveer is a proponent of A) socialism ' B) socialism C) individualism D) totalitarianism

C Individualism

Hinduism and Buddhism both stress the importance of A) life on earth B) Confucian ethics C) the afterlife D) the castle system

C) the afterlife

The government of Iran is ruled by religious figures and they ensure that citizens adhere to Islamic teachings. Iran is a ________ law system. A) common B) civil C) theocratic D) traditional

C) theocratic

What countries are growing more rapidly?

China and BRIC ( Brazil, Russia,India,China & South America)

What is the Group of Twenty (G20) ?

Comprises finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank

Which situation would require the use of a trademark? A) a children's book author wants to use his most popular book character in a new line of comic books B) a musician is seeking to obtain legal protection for a newly composed song C) a software manufacture has invented a business software program utilizing AI D) a clothing manufacture wants to differentiate its new line of jeans by naming the line "Ocean Blue"

D

Article 1 of the United Nations of the Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. This best echos

D) Kantian ethics

What does the International Monetary Fund (IMF) do?

Established to maintain order in the International monetary system. Often seen as the lender of last resort

T or F Tariffs are generally anti-producer and pro-consumer

F

Which observation is consistent with Michael Porter's theory of national competitive advantage?

Factors such as domestic demand and domestic rivalry explain nations' dominance in production

What is the focus of the World Bank?

Focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments

What institutions are needed to help manage, regulate, and police the global marketplace?

General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO), International Monetary Fund (IMF), World Bank, United Nations (UN)

The ____ predicts that countries will export those goods that make intensive use of factors that are locally abundant.

Heckscher-Ohlin theory

T or F Export tariffs are used to ensure there is sufficient supply of a good within a country

T

T or F Social mobility within a class system varies from society to society

T

T/F International Monetary Fund (IMF) is seen as the lender of last resort to nation-states whose economies are in turmoil

T

If the textile industry in a nation is characterized by vigorous domestic rivalry, which observation of this nation's international competency is most likely to be true?

The nation's textile firms will have a competitive advantage in international trade

Globalization of Production

Trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production.

T/F As of 2021, 164 nations that account for 98% if WTO members

True

T/F Between 1960-2020, the value of the world economy increased 9 times, while the value of international goods increased 19.7 times

True

T/F G20 represents 90% of the global GDP and 80% if international global trade

True

T/F Uruguay Round extended GATT and established WTO

True

T/F trade as a percentage of GDP for the US has nearly tripled since 1960

True

How do folkways and more differ?

Unlike folkways, mores can bring serious retribution

All things being equal, which nation offers a more attractive place to do business?

a nation with a market-based economic system

Under the veil of ignorance, everyone is imagined to be ignorant of

all of their particular characteristics

Multinational Enterprise (MNE)

any business that has productive activities in two or more countries

According to the Friedman doctrine,

businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business

Country A can produce product X, but it can also buy it at a cheaper price from Country B. What should they do?

country A should import product X from Country B and it should not attempt to produce it as home

Implications for the globalization of markets:

cultural distance has been reduced and has brought some convergence of consumer tastes and preferences

A multinational company is accused of paying bribes to the government of a host country to obtain permission to build a production factory. The public relations manager of the company defends the company's actions as being ethically sound; he states that in the host country, paying bribes to government officials is the accepted norm is in keeping with the social practices in the host country. The public relations manager is using which philosophical doctrine to defend the actions of the company?

cultural relativism

Article 23 of the Universal Declaration of Human Rights implies that it is unethical to employ child labor in sweatshop settings and pay less than subsistence wages, even if that happens to be common practice in some countries. This thinking is in direct contract to ______.

cultural relativism

Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though its against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?

cultural relativism

David Ricardo's theory of comparative advantage explains international trade in terms of the:

differences in productivity

Unlike a multinational enterprise, an international business

doesn't need to invest directly in operations in other countries

If Italy exports vast

dumping

The ultimate purpose of GATT(General Agreement on Tariffs and Trade) was to

eliminate barriers to free trade

The role of the government in a market economy involves

encouraging vigorous free and fair competition among private producers

The infant industry argument is criticized because it relies on an assumption that

firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market

Smith Global Industries has decided to invest resources in business activities outside its home country. This is called..

foreign direct investment (FDI)

Antonio is an artisan. The country he lives in allows him to sell his goods to people in other countries without any quotas or tariffs. Likewise, he is free to buy materials he needs for his craft from other countries without any restrictions. The country in which Anotino lives practices what?

free trade

The theory of comparative advantage provides strong rationale for supporting the idea of

free trade

globalization

growth to a global or worldwide scale

WTO rules allow countries to ____ foreign goods that are being sold cheaper than at home, or below their costs of production, when domestic producers can show that they are being harmed.

impose antidumping duties on

what is the largest global market industry ?

industrial goods & services

Exotic Collectibles is an international business. As such, it

invests in international trade or investment

A castle system differs from a class system because

it is not possible for an individual to change his or her caste, while a class system allows people to change their class through individual achievement

factors of production

land, labor, capital, management, technological know-how

Implications for the globalization of production:

locating production in geographically separate locations has become more economical

The WTO argues removing tariff barriers and subsidies the agricultural sector could

lower prices to consumers and make it fairer to developing nations

New trade theory suggests that nations

may benefit from trade even when they do not differ in resource endowments or technology.

An American manager in El Salvador routinely pays off the local drug lord to guarantee that his plant will not be bombed and that none of his employees will be kidnapped. The manager argues that such payments are ethically defensible because everyone is doing it. The manager's argument exemplifies which ethical approach?

naive immoralist

The benefits, costs, and risks associated with doing business in a country are a function of that country's

political, economic, and legal systems

The rationale for the ___ theory is that the wealth and size of the U.S. market gave the U.S. firms a strong incentive to develop a new consumer products

product life-cycle

What does the World Bank do?

promote economic development

Adam Smith (1776) "Wealth of Nations" attacked the mercantilist assumption of the zero-sum game and

promoted absolute advantage:

What does Moore's law predict?

that the power the microprocessor technology doubles and its cost of production falls in half every 18 months

Because of _____, General Motors was allowed to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations.

the Sullivan principles

Throughout the 1990s, the amount of FDI directed at both developed and developing nations increased dramatically. This trend reflects..

the increasing internationalization of business corporations

World Trade Organization (WTO) promotes

the lowering of barriers to cross-border trade and investment

What is the single most important innovation since WWII?

the microprocessor

In the international business setting, one of the most common ethical issues involves

the moral obligation of multinational corporations

World Trade Organization

the organization that succeeded the GATT as a result of the successful completion of the Uruguay Round of GATT negotiations

Porter argues that a nation's firms gain competitive advantage if

their domestic consumers are sophisticated and demanding

Identify the true statement about trade barriers

to conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise

Why did many Japanese firms invest in North American and Europe in the 1970s?

to provide a hedge against unfavorable currency movements and imposition of trade barriers

T or F The economic principles of Islam prohibit the payment or receipt of interest

true

Contracts drafted under a common law tend to be

very detailed with contingencies spelled out

International Trade

when a firm exports goods or services to consumers in another country

Foreign direct in

when a firm invests resources in business activities outside its home country

The downside of increased globalization

a severe crisis in one region can affect the entire globe.