International Business Exam 1-Multiple Choice
He perpetrated a financial scandal in the 1920s by using money received from later investors to provide early investors with returns on their investment.
Charles Ponzi
Which is the largest nation in the world with a communist economic ideology?
China
A legal system based on a comprehensive listing of legal rules in sets of written codes of law is known as a _____ law legal system.
Civil
A party wishing to sell a given piece of commercial real estate to another party would enter into a real estate agreement with the other party. This is an example of which type of law?
Contract
Critics argue that open trade and foreign direct investment always take jobs from workers in developing economies and transfer them to workers in advanced industrial countries which leave the workers in the developing country, out of work.
False
NAFTA is in which stage of the economic integration process?
First Stage (free trade area)
Someone who believes in the infant industry argument would be MOST likely to support ______ for a new industry.
High Tariffs
According to the authors, which of the following is NOT true regarding globalization lessons for developing countries?
Import oriented nations must switch to concentrate on domestication.
Increasingly, emerging economies are
Innovative and technologically advanced.
Which of the following is NOT true regarding globalization?
It guarantees that quality of life for all people will increase.
Of the following, which is NOT a cost of foreign direct investment?
It led to a lapse in job creation and economic flow in the United States.
How does Porter's model of national competitive advantage differ from the Heckscher-Ohlin theory?
It looks more closely at the quality of factor endowments.
All of the following are arguments against globalization EXCEPT:
It may lead to an increase in the appearance of old industries.
In ______, teachers are so revered that walking in their shadows is viewed as impolite.
Korea
According to the text, which of the following entry strategies has the lowest degree of risk?
Licensing
_____ refers to the way a society does things.
Manners and customs
Of the following, which is NOT true about the export-import business?
Many employees, often 100+, are required for an export-import business to operate.
The oldest form of trade theory is called _____.
Mercantilism
______ communication refers to tone of voice, gestures, eye contact, body positions, facial grimaces, and other body language that accompanies verbal communication.
Nonverbal
Of the following, which is NOT true about managing and marketing in overseas markets?
Only one management style need be used.
Which of the following is a U.S. government agency that sells political risk insurance to U.S. businesses operating in countries with which the U.S. has a bilateral investment treaty?
Overseas Private Investment Corporation
Which of the following is an example of corruption?
Paying a bribe to a company executive in order to be awarded a contract.
Which of the following would NOT be considered a factor of production?
Trade
Of the following statements about trade, which is NOT true?
Trade does not influence culture.
"Coca-Cola," the Nike "swoosh" logo, and McDonald's "golden arches" are examples of _____.
Trademarks
Both common markets and economic unions abolish restrictions on factor movements.
True
Generally, countries within trading blocs that have significantly lowered trade barriers have done better economically than others.
True
Key aspects of globalization include the elimination of barriers to trade and information technology.
True
The appropriate approach for countries interested in regional integration could include the following three fundamentals: start small, think global, and compensate the least fortunate.
True
Under a preferential duties system, goods imported from a country outside the preferred group are subject to a higher tariff.
True
The difference between bid and ask prices of a currency, or the fee earned by the bank is called the _____.
bid-ask spread
A company's obligations to society, including the welfare of people and places affected by company activities is called _____.
corporate social responsibility
The branch of philosophy that addresses the values pertaining to human behavior, with regard to the "rightness" and "wrongness" of actions and to the "goodness" and "badness" of the intent and results of such actions is called _____.
ethics
The system in which the country pegs its currency at a fixed rate to a major currency or basket of currencies, while the exchange rate fluctuates within a narrow margin around a central rate is called a(n) _____.
fixed exchange rate system
Acquisitions of a foreign company, creation of new manufacturing or research facilities abroad, and expansion of an existing plant in a foreign country are all examples of _____.
foreign direct investment
The _____ market is an informal OTC market run by banks.
forward
The forex market consists of spot, forward, and _____ markets.
futures
Do what is right, but filter the action by consideration of its consequences. Make a decision by considering the consequences if everyone made the same choice under similar circumstances. These statements refer to the _____ argument.
generalization
The words "aspirin," "escalator," and "zipper" are examples of _____.
generalized trademarks
According to Hofstede, the United States is considered a(n)
highly individualistic country.
An agreement between two or more firms that do not involve the creation of a separate entity with joint ownership and in which the firms stand to gain revenues and maximize profits through cooperation for a given period of time is called a(n) _____.
strategic alliance
A person of integrity has two essential characteristics: (1) knowledge about what morally constitutes the right thing to do and (2) _____.
the courage to do what is right
In a civil law country, the real power lies with
the legislative branch of government.
If a colleague tells you about a new investment opportunity that is virtually risk free and will guarantee high returns, you can probably safely assume that it is too good to be true. That type of investment opportunity would violate
the risk/reward tradeoff
Do what produces the greatest good. This statement refers to the _____ principle.
utilitarian
The government can force an individual to sell his or her land so that a road can be built for the benefit of the public as a whole. This is an example of the _____ principle.
utilitarian
According to the text, which of the following entry strategies has the highest degree of risk?
wholly-owned foreign subsidiary
In this system, a currency's value depends partly upon active government intervention in the foreign exchange market.
managed floating exchange rate system
A challenge faced by strategic alliances is that
any member could prematurely quit the alliance.
All 28 EU countries are permitted to use the euro as their currency.
False
An office uses printer paper made primarily of recycled paper. This is an example of a ______ policy.
Sustainable development
Of the following statements regarding the euro, which is NOT true?
The U.K., Denmark, and Sweden use the euro as their currency.
_____ refers to the added return required by investors for risk associated with a security or asset.
A risk premium
Assume that because of soil and climatic conditions, Brazil is more efficient in the production of coffee than the United States. At the same time, the United States is more efficient in the production of apples than Brazil. Each of these countries can be said to have a(n) _____.
Absolute advantage
During the mid-18 th century, British economist ________, who came to be known as the father of free market and open trade systems, recognized the absurdity of Mercantilism.
Adam Smith
The color black in the United States indicates mourning, but in Japan white is the color of mourning. Green is an acceptable color in Muslim countries; all flags of those countries contain green. These are examples of which of the following?
Aesthetics
Laws to promote "fair competition" among businesses are known as _____ laws.
Antitrust
Which of the following is NOT true regarding competitive markets?
Antitrust laws must be eliminated if competitive markets re to be sustained.
According to the text, _____ countries' exports are growing the fastest.
Asian
Feelings or opinions are called
Attitudes
In ____ translation, a message is translated from English to another language, then someone skilled in that foreign language translates it back into English; this second translation can then be compared to the original English version.
Backward
In which country is the EU headquartered?
Belgium
The _____ is a report published each year by Transparency International, providing metrics to the potential corruption risk for 174 countries.
Corruption Perceptions Index
Of the following, which is NOT a characteristic of culture that is important for global companies to recognize?
Culture can be imposed from home country to host country.
Taxes on imports that are collected by a designated government agency responsible for regulating imports are called _____.
Custom Duties
According to the text, which of the following is the second stage of regional integration?
Customs Union
Of the following, which is NOT a mandate that companies with corporate social responsibility strive to do?
Do whatever it takes to be profitable
Of the following statements about mercantilism, which is NOT true?
During the time it was practiced, wealth was largely determined by the amount of land one had access to.
Countries that have been moving toward more open trade and free market policies are known as _____.
Emerging economies
Of the following, which is NOT a cost of regional integration?
Enhancing the flow of capital, labor, and technology
_____ is considered by many to be the most infamous financial scandal in United States history.
Enron
A specific tariff describes a tax on imports levied as a constant percentage of the monetary value of one unit of the imported good. T/F
False
_____ risks are the risks that political forces or problems in a given country will have a meaningful negative impact upon the conduct of business in that country.
Political
The union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country is known as a(n) _____.
Political Union
Of the following, which dimension identified by Hofstede refers to the level of egalitarianism in a society?
Power distance
Paying "protection money" or giving sales kickbacks to an organized crime group would represent at example of _____ corruption.
Private
_____ corruption is business corruption involving other private businesses, individuals, or groups.
Private
The practice of making illegal payments to government officials or engaging in blackmail, extortion, or other related activities to obtain government contracts or governmental approval for business activities is called _____ corruption.
Public
Most, if not all, democracies today are what are known as _____ democracies.
Representative
_____ infrastructure refers to housing, medical services, and educational institutions.
Social
_____ involves an economic ideology in which the government or state plays a strong role in the economy and may own stakes in certain businesses.
Socialism
_____ refers to the process of allowing efficient geographic distribution of business activities within and among countries.
Spatial transformations
A British firm may need dollars to pay for U.S. imports. It can work with banks in London to exchange pounds for dollars to make this payment via electronic transfer. This is an example of a(n) _____ market.
Spot
Which of the following is NOT an objective of NAFTA?
The creation of a uniform currency in North America
An agreement where a large number of developed counties permit duty-free imports of a selected list of products that originate from specific countries is known as _____.
The generalized system of preferences
What is dollarization?
Using the dollar or some other foreign currency together with or instead of a domestic currency.
In some countries, a high premium is placed upon foreigners and foreign items, as they are associated with sophistication -Belgian chocolate, for example, or Swedish automobiles. In other countries, there is subtle resistance to foreign items. This is an example of a cultural _____.
Value
Of the following, which is NOT listed in the text as a reason why currency values can change?
WTO Mandates
A group of states with convergent social, economic, and monetary policies is called a(n) _____.
economic union
A business that is jointly owned and operated by two or more firms that pool their resources to penetrate host country markets, generate and split profits, and share commercial risk is called a(n) _____.
international joint venture
The first stage of the product life cycle is _____.
introduction
The main difference between joint ventures and strategic alliances is
joint venture creates a new jointly-owned company
In China, consumers drink soup, which usually contains rice, and do not use a spoon. In Muslim countries, it would be inappropriate to bring a gift for another man's wife. These are examples of cultural_____.
manners and customs
In a free enterprise system, the overriding objective of firms wanting to invest abroad is to _____.
maximize shareholder wealth
A country's potential nationalization of companies in the automobile industry would represent a(n) _____ risk.
micropolitical
Brazil is one of the world's lowest cost producers of ethanol and soybeans. Japanese corporations have heavily invested in Brazil to lease large tracts of land to grow soybeans for export to Japan, where they are used to derive products such as soy sauce and chicken feed. These Japanese companies are cutting costs by _____.
minimizing factor input costs
General Electric, Microsoft, Sony, Toyota, and BMW are examples of _____.
multinational enterprises
The net of services exports and imports is called the ______.
services balance
Which is NOT an example of a preventive control?
production quality control
All of the following statements about regional integration are true EXCEPT:
regional integration should initially address a broad, ill-defined area of cooperation.