International Business: Module 7

Marketers are interested in knowing the trend of women entering the workforce because this may result in A) a need to alter promotional methods. B) a smaller market for consumer durables. C) an increased birth rate. D) a reduction in rural-to-urban shift.

A) a need to alter promotional methods.

Currently, what percentage of the world's total population is found in developing countries? A) about 84 percent B) about 25 percent C) close to 5 percent D) under 50 percent

A) about 84 percent

The three factors that contribute to changes in labor costs include A) compensation, productivity, exchange rates. B) education, inflation, recession. C) exchange rates, manufacturing rates, political policy. D) poverty rates, birthrates, death rates.

A) compensation, productivity, exchange rates.

One factor for relative changes in labor costs is increases or decreases in A) compensation. B) total output. C) inflation rates. D) hours worked.

A) compensation.

The ratio between the number of older people and younger people, on whom elders are dependent to supply the funds to provide social security benefits, is called the A) dependency ratio. B) population distribution. C) population density. D) graying challenge.

A) dependency ratio.

A marketing manager has been tasked with the job of analyzing the economy of three South American countries to determine if they have business potential. In her final report, she makes note of national income that may not be reported because it involves illegal activity. This indicates that the marketing manager is accounting for A) shadow production B) litigation and arbitration C) the gray market D) the underground economy

D) the underground economy

As a general rule, the underground economy in a country will be bigger when A) tax rates are lower. B) drug use is higher. C) income levels are low. D) there is a lot of government red tape.

D) there is a lot of government red tape.

Which countries are considered to be emerging nations? A) China, Turkey, and South Africa B) Brazil, Venezuela, and Chad C) India, Canada, and Ireland D) Mexico, Chile, and Israel

A) China, Turkey, and South Africa

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

A) GNI.

What occurs when GNI increases faster than the population? A) There probably is an expanding market. B) The market is probably contracting. C) The country where this occurs may be subject to political unrest. D) The market is becoming less attractive for business.

A) There probably is an expanding market.

Jess works for an all-natural breakfast cereal company. He has recommended that the company market their high-cost Oats 'n More Cereal to parts of South America because there are millions of people there that have never heard of their products. Which socioeconomic factor is Jess basing his recommendation on? A) population size B) market activity C) age distribution D) rural-to-urban shift

A) population size

The international monetary fund would characterize a developing economy as one in which A) technology is not as developed B) political activism is tempered C) there is a fair distribution of income D) the economy is more dependent on argarian production that manufacturing

A) technology is not as developed

Because of the importance of economic information to the control and planning functions at headquarters, the collection of data and preparation of reports are usually the responsibility of A) the home office. B) national agencies. C) economic consultants. D) the international affiliate.

A) the home office.

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

A) the least developed countries

A measure of the degree to which family income within a country is distributed equally is called A) gross national income B) the GINI index C) gross domestic product D) the Atlas conversion factor

B) the GINI index

________ refers to the total value of all income generated by the residents of a nation, including both the domestic production of goods and services and income from abroad. A) Gross domestic product B) Gross domestic income C) Gross national income D) Net national product

C) Gross national income

Because ________ consumer expenditures eliminate differences in relative prices, marketers use these data to analyze how the composition of consumption changes with the level of development. A) normalized B) inflation-free C) PPP-based D) historical-cost

C) PPP-based

Food that is grown for personal consumption and not sold in the marketplace is part of the _________ economy. A) developing B) underground C) informal D) developed

C) informal

Unrecorded transactions in an economy, such as goods and services that are bartered, are said to be part of which economy? A) developing B) forward C) informal D) developed

C) informal

If a nation's GNI is small, but a small percentage of its population receives a large percentage of that income, it may be a good market for A) high-priced industrial products. B) high-volume, high-priced consumer products. C) low-volume, high-priced luxury products. D) low-priced, high-volume discretionary goods.

C) low-volume, high-priced luxury products.

When an international manager is considering where to do business, one of the first considerations is A) whether the country has a democratically elected government. B) the dominant religion in the country. C) the size of the economy. D) whether the country has a manufacturing sector.

C) the size of the economy.

According to the text, what is the purpose of economic analyses? A) to anticipate political developments within and across countries B) to forecast exchange rates C) to assess the overall outlook for the economy and the impact of economic changes on the firm D) to compare the rate of economic and political change in order to determine financial variances

C) to assess the overall outlook for the economy and the impact of economic changes on the firm

Reductions in birthrates are occurring worldwide because A) governments are scaling back family planning programs. B) of a reduced level of urbanization. C) women are gaining an enhanced status. D) governments are supporting alternatives to marriage.

C) women are gaining an enhanced status.

Olivia is a human resource manager, and she is interested in the increase in the number of working women at her company. This is most likely because A) more working women means fewer working men. B) it causes a larger labor supply that may change production processes. C) it causes changes to employee rules and regulations. D) it increases the overall wage and benefit calculation.

B) it causes a larger labor supply that may change production processes.

What typically occurs as the level of a government's debt increases? A) A higher proportion of resources is invested into productive uses. B) Government investments will increase. C) Consumer confidence will rise. D) More resources are redirected toward payment of interest.

D) More resources are redirected toward payment of interest.

What benefit does population size provide when determining market potential? A) Population size alone is an excellent indicator of economic strength. B) Population size alone is a good predictor of demand for consumer durables. C) Population size alone is an excellent indicator of market potential. D) Population size alone is a poor indicator of market potential.

D) Population size alone is a poor indicator of market potential.

A business is practicing vertical integration when it receives inputs for its production processes from outside sources.

FALSE

Analysts know that a country with a large population is always a better market than a country with fewer people.

FALSE

Developed is the term given to nations that have achieved sustainable income per capita.

FALSE

Economic analysts work solely with government-published data.

FALSE

GDP is the preferred measurement for assessing economic development.

FALSE

The economic forces associated with the external environment are considered one of the most controllable forces.

FALSE

The population of developing countries accounts for very little of the world's total population.

FALSE

Wages tend to vary more widely than hourly compensation because of the differences in the level of fringe benefits.

FALSE

When you look at your paycheck, the amount that is left after paying taxes is your discretionary income.

FALSE

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? A) population density B) birthrate C) population distribution D) age distribution

A) population density

The ________ environment includes the interactions between domestic and foreign environmental forces, or between sets of foreign environmental forces when an affiliate in one country does business with customers in another. A) foreign B) international C) host country D) global

B) international

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

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

Higher birthrates generally cause developing countries to have A) lower infant mortality rates. B) more youthful populations than developed nations. C) more purchasing power D) more highly-skilled medical facilities

B) more youthful populations than developed nations.

Reductions in birthrates are occurring worldwide, in part, because A) governments are scaling back family planning programs. B) of an increased level of urbanization. C) women are experiencing a decline in status. D) the level of women's health worldwide is decreasing.

B) of an increased level of urbanization.

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are referred to as emerging market economies.

TRUE

Generally, the higher the GNI per capita is, the more advanced the nation's economy will be.

TRUE

Income distribution studies show that income is more evenly distributed in richer nations.

TRUE

International economic analyses should provide economic data on both actual and prospective markets.

TRUE

Purchasing power parity is a means of adjusting the exchange rates for two currencies so the currencies have equivalent purchasing power.

TRUE

The International Monetary Fund is a source of economic data that analysts can access to assess economic conditions.

TRUE

The World Bank has found that populations of high-income economies use over six times as much commercial energy per capita as do people in developing economies.

TRUE

The international environment includes all the uncontrollable forces originating outside the home country that surround and influence the firm.

TRUE

To be a potential market, there must be a sufficient number of people with the means to buy a firm's products.

TRUE

To compare the purchasing power of nations, managers need to know among how many people the gross national income (GNI) is divided.

TRUE

Today, the rural-to-urban shift shows that half of the world's population is living in cities.

TRUE

What is significant about Japan's age distribution? A) It is the fastest-graying nation in the industrial world. B) In the future it may have almost as many retirees as children. C) Its declining population means that the country's wealth will be spread among a smaller number of people, increasing its overall prosperity. D) Its declining population means that the country's social security funds will last longer.

A) It is the fastest-graying nation in the industrial world.

Incomes measured by the Atlas conversion factor are generally A) more stable over time. B) less stable over time. C) impossible to stabilize. D) not ready to be stabilized.

A) more stable over time.

The ________ includes all the uncontrollable forces originating outside the home country that surround and influence the firm. A) foreign environment B) international environment C) host country environment D) global environment

A) foreign environment

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? A) gross domestic product B) international income debt C) gross national income D) purchasing power parity

A) gross domestic product

From comparisons of income distribution studies over time, it generally appears that A) income is more evenly distributed in the richer nations. B) there are few variations in income distribution among developed and developing nations. C) comparisons over time demonstrate that income redistribution changes relatively quickly, so older data have limited value. D) the middle quintiles in most nations are growing at the expense of the bottom 20 percent.

A) income is more evenly distributed in the richer nations.

A developing economy is characterized as A) less technically developed. B) more politically active. C) having a fair distribution of income. D) a heavily agrarian economy.

A) less technically developed.

A large international debt may cause a government to impose wage controls, which result in A) limiting consumer purchasing power. B) increasing government spending. C) eliminating price controls. D) expanding to a larger market.

A) limiting consumer purchasing power.

Dissatisfaction with both the purchasing power parity (PPP) and conversions using official exchange rates caused the World Bank to adopt what methodology to derive per capita GNI estimates? A) GINI coefficients B) Atlas conversion factors C) inflation-growth coefficient D) Zurich formula

B) Atlas conversion factors

A market analyst may determine a country is not a good market by making a simple calculation based on A) GNI/capita, total population, and the size of the hidden economy. B) GNI, total population, and income distribution. C) GNI/capita, population by state or province, and the number of businesses. D) GDP and PPP.

B) GNI, total population, and income distribution.

What is predicted to happen with the population of many developed countries? A) Population levels will soar as the result of economic upturn. B) Population levels will fall by mid-century due to low birthrates. C) Population levels will become static as younger generations remain childless. D) Population levels will continue to move upward and downward as a reflection of political involvement.

B) Population levels will fall by mid-century due to low birthrates.

Jason lives in a country with oppressive tax rates and overwhelming government red tape that a company must go through to export its products. How might these factors affect the economy in this country? A) The GNI would reflect the underground economy. B) The underground economy would be bigger. C) The underground economy would be smaller. D) The underground economy would move to a country where taxes were lower.

B) The underground economy would be bigger.

The rate of growth of GNI/capita may be more important to marketers than just the value of GNI/capita because A) a stable rate indicates low risk for entry. B) a high rate indicates a fast-growing market. C) a high rate indicates economic instability. D) low rates indicate political stability.

B) a high rate indicates a fast-growing market.

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

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

The amount of income left after paying taxes and making essential purchases is known as A) personal savings. B) discretionary income. C) gross income. D) disposable income.

B) discretionary income.

A measure of an economy's size based on the market value of goods and services produced within a nation in a year is A) net national income. B) gross domestic product. C) gross national product. D) gross national income.

B) gross domestic product.

Patel reminded coworkers that regardless of the number of consumers living in the target area, they should focus on where people live specifically within the target area. What aspect of the population is Patel concerned with? A) population density B) population distribution C) population shift D) population propensity

B) population distribution

Unit costs of labor will decrease even though the firm is required to pay more to workers, provided A) management compensation decreases significantly. B) productivity increases fast enough. C) advertising costs are proportional. D) interest rates rise slowly.

B) productivity increases fast enough.

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

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

Harbinger Electric Corp. previously outsourced all the component parts it needed for its lighting products but now produces those parts in-house to use in the manufacture of these items. What concept did Harbinger Electric Corp. adopt? A) economies of scale B) vertical integration C) purchasing power parity D) parallel exchange

B) vertical integration

_________ is a measure of how the population is distributed over a nation's area, such as urban versus rural. A) Urbanization B) Population size C) Population distribution D) Population density

C) Population distribution

A measure of the number of children born to a woman during her lifetime is the A) net reproductive rate B) average fecundity C) fertility rate D) birth rate

C) fertility rate

One response to a large international debt is for a government to A) remove wage controls. B) increase government spending. C) impose price controls. D) reduce debt payments.

C) impose price controls.

A measure of how a nation's income is apportioned among its people is called A) purchasing power parity. B) gross domestic product. C) income distribution. D) the Atlas conversion factor.

C) income distribution.

GNI/capita, a crude estimate of purchasing power, must be further refined by A) an examination of the amount of income tax paid B) a census to determine the total population C) incorporating data on how the national income is actually distributed D) determining the amount of discretionary income

C) incorporating data on how the national income is actually distributed

GNI/capita, a crude estimate of purchasing power, must be further refined by A) an examination of the amount of income tax paid. B) a census to determine the total population. C) incorporating data on how the national income is actually distributed. D) determining the amount of discretionary income.

C) incorporating data on how the national income is actually distributed.

The arithmetic average of the current exchange rate and the exchange rates in the two preceding years, adjusted by the ratio of domestic inflation to the combined inflation rates of the euro zone, Japan, the United Kingdom, and the United States, is known as the A) GINI coefficient. B) Kolgorov coefficient. C) Zurich formula. D) Atlas conversion factor.

D) Atlas conversion factor.

In 2018, the United States imposed trade sanctions against its partners in the North American Free Trade Agreement (NAFTA), Mexico and Canada, and threatened to pull out of NAFTA altogether unless the agreement could be renegotiated to address U.S. concerns. This demonstrates the impact of _________ when monitoring the foreign environment. A) the World Trade Organization on government policy B) international political disputes C) economic trends D) actions taken by trading blocs

D) actions taken by trading blocs

An examination of the world's population and predictions for future populations suggests that A) the population of developing countries is nearly half of the world's total population. B) the 10 nations predicted to have the largest populations by the year 2050 are all developing countries. C) developed nations will have a decreased demand for tourism and housing. D) developed nations will have an increased demand for financial services.

D) developed nations will have an increased demand for financial services.

After the taxes are taken out of her pay, Sue takes home $1,254 in her paycheck. This dollar amount represents her A) personal savings. B) discretionary income. C) gross income. D) disposable income.

D) disposable income.

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are known as A) undeveloped economies. B) socialist economies. C) high-income economies. D) emerging market economies.

D) emerging market economies.

The World Bank categorizes countries based on GNI per capita, using the following categories A) undeveloped economies, developing economies, developed economies B) developed economies, industrializing economies, developing economies C) developing economies, newly industrializing economies, developed economies D) high-income economies, middle-income economies, low-income economies

D) high-income economies, middle-income economies, low-income economies

According to the World Bank, populations in high-income economies use how much commercial energy per capita as do people in developing economies? A) half as much B) twice as much C) ten times as much D) over six times as much

D) over six times as much

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? A) economic B) psychosocial C) political D) socioeconomic

D) socioeconomic

The rural-to-urban shift is a reflection of A) varying government standards on birthrates and population. B) a change from industrialization to agricultural efforts. C) property tax differences between geographic areas. D) the movement of the population in search of jobs and conveniences.

D) the movement of the population in search of jobs and conveniences.

Examples of socioeconomic data are A) GNI, GNI/capita, income distribution. B) total population, production density, and population distribution. C) GNI/capita, total population, and population distribution. D) total population, age distribution, and population density and distribution.

D) total population, age distribution, and population density and distribution.

When analysts examine potential market size, they begin with A) population distribution. B) population density. C) population growth. D) total population.

D) total population.

The percentages of household expenditures spent on transportation, communication, and health care by residents of developed nations are _________ the percentages spent by residents of developing nations. A) half B) two-thirds C) equal to D) twice

D) twice

Pirated copies of copyrighted music or video are part of the A) hidden economy. B) gray market. C) barter system. D) underground economy.

D) underground economy.

A country with a GNI per capita of $5,000 would be categorized as A) high-income. B) lower-middle-income. C) low-income. D) upper-middle-income.

D) upper-middle-income.

According to the text, commercial energy use per capita is related to the size of what set of modern sectors? A) commercial buildings, agriculture, transportation B) housing, agriculture, industry C) manufacturing, agriculture, housing D) urban areas, industry, motorized transport

D) urban areas, industry, motorized transport