alþóðaviðsk allt nema seinasti kaflinn

26) 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. A) high: high B) high: low C) low high D) low:low

c) low:high

30) The EU organization that provides political leadership drafts laws and runs the daily programs of the EU is the ________. A) European Commission B) Council of Ministers C) European Parliament D) European Central Bureaucracy

A) European Commission

23) The central bank in the United States is the ________. A) Federal Reserve System B) U.S. Exchange Reserve C) Board of Governors D) U.S. Treasury

A) Federal Reserve System

51) A letter of credit that provides an exporter with the guarantee of another bank in addition to the importer's bank is called ________. A) a confirmed letter of credit B) a time draft letter of credit C) an amendable letter of credit D) a cash in advance letter of credit

A) a confirmed letter of credit

8) The primary result of the Jamaica Agreement was to ________. A) allow greater exchange-rate flexibility B) set austerity measures for debt control C) establish a system based on par values D) implement fixed exchange rates

A) allow greater exchange-rate flexibility

4) Which of the following best describes the special drawing right? A) an international reserve asset created to supplement members' existing reserve assets B) the official currency for international trade established by the World Bank C) a substitute for the fixed value of gold as determined by currency rates D) a contribution made by countries to join the IMF

A) an international reserve asset created to supplement members' existing reserve assets

48) A freight forwarder performs which of the following functions? A) arranging the fastest and cheapest transportation of products to and from foreign suppliers B) taking title to the goods it exports and imports from country to country C) acting as a sales representative in a foreign market D) valuing products that qualify for favorable tariffs

A) arranging the fastest and cheapest transportation of products to and from foreign suppliers

2) In the text Costa Rica devised a strategic trade policy to accomplish what goals? A) attract industries that promised high growth and higher wages B) develop and grow local industries to keep capital in Costa Rica C) attract industries that were "green" and produced sustainable products D) attract companies that were acceptable to the U.S.

A) attract industries that promised high growth and higher wages

1) Factor mobility refers to the movement of which of the following combinations? A) capital technology and people B) currency profits and raw materials C) labor capital and management D) trade profits and materials

A) capital, technology and people

17) Of the following possibilities the European Union is best described as a ________. A) customs union B) domestic organization C) global bargaining unit D) common language agreement

A) customs union

54) Which of the following is most important to the effectiveness of an internal code of conduct? A) ensuring that employees understand the code by requiring confirmation in writing B) paying bonuses to suppliers and distributors that agree to the code C) relying on nonprofit NGOs to develop guidelines D) adhering to industry standards and norms

A) ensuring that employees understand the code by requiring confirmation in writing

2) Political legal economic monetary and institutional forces comprise the ________ of international business and influence managers' actions. A) environment B) competition C) culture D) threat

A) environment

26) The basis for designing an effective export strategy most likely begins with ________. A) identifying how a firm can leverage its core competencies into foreign markets B) hiring local personnel in target markets to build the business C) enlisting the support of an export management company D) simultaneously targeting a large number of foreign markets

A) identifying how a firm can leverage its core competencies into foreign markets

30) Which of the following is NOT one of the three main types of importers? A) importers looking for suppliers abroad to concentrate their operating risks B) importers looking for any product around the world they can deliver to local citizens for a profit C) importers looking to foreign-sourcing to get the highest quality products at the lowest possible price D) importers using foreign sourcing to optimize their supply chains

A) importers looking for suppliers abroad to concentrate their operating risks

33) ________ is a general sustained rise in prices measured against a standard level of purchasing power. A) Deflation B) Inflation C) Expansion D) Reflation

B) Inflation

42) A foreign direct investment occurs when ________. A) a company owns at least 25% of a foreign firm B) a company has a controlling interest in a foreign company C) foreign ownership is in private rather than government securities D) a foreign firm agrees to a licensing agreement with a large conglomerate

B) a company has a controlling interest in a foreign company

41) Which of the following is most likely a true statement regarding the rule of law? The rule of law is a hallmark of ________. A) a totalitarian government B) a democratic government C) societies that place ultimate power in the hands of one person D) countries that are considered "partly free"

B) a democratic government

43) Companies most likely use the foreign-exchange market to ________. A) diversify their expenses from other sources B) convert money for use in financial transactions C) increase their presence on the black market D) acquire currency from emerging markets

B) convert money for use in financial transactions

15) Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate known as the ________. A) spot rate B) forward rate C) option rate D) reverse transaction rate

B) forward rate

52) Craig a manager at a global firm is studying the cyclical nature of growth and employment as a part of the process to forecast exchange rates. Which factor is Craig most likely monitoring? A) the institutional setting B) fundamental analyses C) cultural analyses D) circumstances

B) fundamental analyses

23) Which of the following is an example of an acquired group membership? A) national origin B) religion C) gender D) race

B) religion

6) Which stakeholder group is most interested in trustworthy behavior by corporate executives and increased corporate taxes? A) shareholders B) society C) employees D) customers

B) society

44) Sarah a manager at Farley Enterprises an MNE with operations in Asia Europe and North Americ is using past trends in exchange rate movements to spot future trends. Which type of forecasting approach is Sarah most likely using? A) fundamental B) technical C) application D) economic

B) technical

24) All of the following are areas in which commercial activities take place outside the territory of any nation EXCEPT ________. A) noncoastal areas of the oceans B) the Panama and Suez Canals C) outer space D) Antarctica

B) the Panama and Suez Canals

54) A global strategy tends to be more successful when ________. A) buyers are looking for customized products at bargain prices B) the industry's product is a commodity C) entry barriers are low for new firms D) suppliers have little bargaining power

B) the industry's product is a commodity

42) Some countries reverse engineer pharmaceutical products ________. A) because they know that generic products are inherently better than branded products B) to lower the cost of certain drugs to the domestic market C) as a way to charge higher prices in domestic markets D) to comply with international patent laws

B) to lower the cost of certain drugs to the domestic market

9) According to Adam Smith's theory of absolute advantage specialization allows countries to increase their efficiency for each of the following reasons EXCEPT ________. A) labor could become more skilled by repeating the same tasks B) transportation costs could be lowered by producing closer to markets C) labor would not lose time in switching from the production of one kind of product to another D) higher production would provide incentives for the development of more effective working method

B) transportation costs could be lowered by producing closer to markets

60) According to the text which currency is expected to experience the most change in the upcoming years? A) yen B) yuan C) euro D) U.S. dollar

B) yuan

29) The three major responsibilities of the ________ are legislative power control over the budget and supervision of executive decisions. A) European Commission B) European Council C) European Parliament D) European Court of Justice

C) European Parliament

3) In 2010 what was the top remittance-receiving country in the world? A) Brazil B) Mexico C) India D) China

C) India

34) 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? A) It can offshore most of its production. B) It can obtain all of its resources for the same price overseas. C) Its costs of making additional sales would not increase disproportionately. D) The foreign market has higher real interest rates.

C) Its costs of making additional sales would not increase disproportionately.

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 value. Where were Garnet's foreign operations most likely located? A) Ecuador B) France C) Japan D) China

C) Japan

38) An example of a U.S. merchandise import is an automobile made in ________ and sold ________. A) the United States by a Japanese company in the United States B) the United States by a Japanese company outside the United States C) Japan by a Japanese compan in the United States D) Japan by a U.S. company outside the United States

C) Japan by a Japanese company in the United States

23) Why is London most likely the top market for trading foreign exchange? A) The British pound is the world's top trading currency. B) Most multinational firms are headquartered in London. C) London is uniquely positioned geographically in terms of time zones. D) British traders have always been the most sophisticated in the world.

C) London is uniquely positioned geographically in terms of time zones.

8) Which of the following is a common shortcoming of studies examining culture in different countries and regions? A) Cultures are static which leads researchers to draw false conclusions from old data. B) It is impossible to compare countries because of differences in data. C) Responses are reported in averages which can lead to a belief in unrealistic stereotypes. D) People are reluctant to complain about their own cultures so they present only positive opinions to researchers.

C) Responses are reported in average which can lead to a belief in unrealistic stereotypes.

51) Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering? A) Indonesia B) Chile C) Russia D) Bangladesh

C) Russia

58) Which of the following primarily triggered Toyota's investment in the European Union? A) Europeans demanded affordable high quality cars from Japan. B) A common currency gave Europeans more buying power. C) The EU lowered trade barriers on foreign auto imports. D) Japan and the EU formed a free trade agreement.

C) The EU lowered trade barriers on foreign auto imports.

23) Which of the following is a reason for an MNE to base its standards for ethical behavior on a country's laws? A) The law embodies many of a country's moral beliefs but is an inadequate guide for proper conduct. B) The law contains unenforceable rules that are impossible for society to follow. C) The law represents a consensus derived from significant deliberation. D) The law is based on precisely defined moral concepts.

C) The law represents a consensus derived from significant deliberation.

47) Morris Lighting is a U.S. firm that wants to start exporting its high-end lighting fixtures to foreign markets. Morris Lighting should seek assistance from U.S. government agencies for all of the following EXCEPT ________. A) organizing trade events that help potential exporters make foreign contacts and explore export opportunities B) understanding how to comply with domestic and foreign trade regulations C) acting as an export marketing department or international department for the company D) providing information about market demographics and product demand

C) acting as an export marketing department or international department for the company

15) 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? A) more effective production techniques B) advances in communication systems C) advances in transportation and logistics D) cross-national cooperation

C) advances in transportation and logistics

35) The OECD Convention against bribery is an example of a(n) ________. A) bilateral agreement developed for the EU B) agreement that targets the demand side of bribery C) agreement that targets the supply side of bribery D) UN Convention dominated by developing countries

C) agreement that targets the supply side of bribery

58) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor and Quantum executives want to avoid similar problems. Which of the following guidelines enforced by Quantum would LEAST likely be supported by the International Labor Organization? A) establishing bridge schools B) monitoring workplace safety C) allowing children ages 10-15 to work a maximum of 4 hours per day D) prohibiting abusive labor conditions

C) allowing children ages 10-15 to work a maximum of 4 hours per day

48) Ethnocentrism in international business refers to the ________. A) study of group ethics and approaches to corporate social responsibility B) comparison of the Protestant ethic with other religious views C) belief that what works best at home should work best everywhere D) ethnic segmentation of marketing programs within countries

C) belief that what works best at home should work best everywhere

60) What was the primary purpose of the formation of Sinergia? A) charge tariffs on Walmart imports B) purchase Walmart's major suppliers C) better compete with Walmart on price D) include Walmart in the regional supply chain

C) better compete with Walmart on price

29) 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? A) spread B) offer C) bid D) cross rate

C) bid

15) 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 ________. A) customs union B) global free trade agreement C) bilateral agreement D) multilateral agreement

C) bilateral agreement

6) Proponents of ________ argue that individual interests are not as important as the welfare of the group. A) pluralism B) capitalism C) collectivism D) individualism

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? A) market economy B) mixed economy C) command economy D) democratic economy

C) command economy

50) Some key ________ factors in a company's international business external environment are its product strategy and access to resources. A) geographic B) political C) competitive D) behavioral

C) competitive

40) Which of the following recently threatened the future of the EU's common currency? A) refusal of the UK to use the euro B) failed mergers and acquisitions C) debt crisis in Greece D) human rights issues

C) debt crisis in Greece

45) The term "cultural distance" refers to the ________. A) physical space between people during communication B) time it takes people to adjust to the language traditions and norms of a foreign culture C) degree to which countries differ on cultural dimensions D) preferred relationship between superiors and subordinates in a given culture

C) degree to which countries differ on cultural dimensions

19) 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 ________. A) people have been too reluctant to leave rural areas to go to the cities B) food shortages have increased in rural areas because of worker shortages C) demand for social and political services has increased excessively in the cities D) developed countries have retaliated with protection of products from the developing countries

C) demand for social and political services has increased excessively in the cities

11) Institutional development of services by business and government has aided the expansion of international business by ________. A) providing a universally agreed upon language for conducting international transactions B) removing immigration restrictions so that global firms can move personnel easily C) developing means to ease the flow of goods among countries D) spurring competition among domestic producers

C) developing means to ease the flow of goods among countries

53) Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect the Hong Kong government to ________. A) monitor market prices B) control natural resources C) ensure fair competition D) provide innovation incentives

C) ensure fair competition

34) The ________ is the common currency of the European Union. A) franc B) pound C) euro D) mark

C) euro

12) The distinguishing feature of political ideologies along the political spectrum is ________ with some emphasizing its primacy and others opposing it. A) capitalism B) socialism C) freedom D) liberalism

C) freedom

17) 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) ________. A) spot contract B) forward contract C) futures contract D) equity currency contract

C) futures contract

20) If inflation in the United States is relatively higher than inflation in Japan and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar it should most likely ________. A) allow its currency to rise against the dollar B) allow its currency to fall against the dollar C) increase the supply of yen in the market D) decrease the supply of yen in the market

C) increase the supply of yen in the market

5) The principle that an individual has the freedom to pursue his or her interests is called ________. A) socialism B) totalitarianism C) individualism D) collectivism

C) individualism

16) Encouraging ethical behavior for the purpose of developing competitive advantages will most likely result in all of the following for a firm EXCEPT ________. A) strategic accomplishment B) consumer commitment C) industry resolutions D) financial success

C) industry resolutions

60) The term ________ refers to a global company that thrives on seeking unique ideas and insights from locations around the world and then leveraging that knowledge in international markets. A) multidomestic B) domestic C) metanational D) cross-cultural

C) metanational

44) Which of the following has been the primary reason for the recent growth of India's pharmaceutical industry? A) globalized supply chains B) tiered pricing guidelines C) patent-protection laws D) foreign investors

C) patent-protection laws

53) Which of the following is most important when designing an internal code of conduct? A) requesting U.N. oversight and intervention when necessary B) communicating the code of conduct only to employees C) reporting results to external stakeholders D) forming local policies for each subsidiary

C) reporting results to external stakeholders

7) Which of the following statements is most likely true regarding relationships between MNEs and stakeholders? A) An MNE typically serves all stakeholder groups equally at any given time. B) No individual stakeholder group is powerful enough to cause the demise of an MNE. C) All stakeholders of an MNE have the same short-term and long-term goals and interests. D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.

D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.

19) The ________ is the most widely traded currency in the world. A) pound B) yen C) euro D) U.S. dollar

D) U.S. dollar

58) 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 ________. A) royalty B) portfolio investment C) turnkey operation D) joint venture

D) joint venture

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. A) political system B) political philosophy C) philosophical orientation D) legal system

D) legal system

40) The International Fisher Effect ________. A) links interest rates and inflation B) implies that the currency of the country with the lower interest rate will weaken in the future C) implies that the country with the higher interest rate should have lower inflation D) links interest rates and exchange rates

D) links interest rates and exchange rates

18) Unlike the infant-industry argument the industrialization argument for trade protection ________. A) requires independence from other countries B) stresses labor-intensive production methods despite high costs C) emphasizes use of locally available raw materials for manufacturing inputs D) presumes that economic growth will occur even if domestic manufactured prices are not globally competitive

D) presumes that economic growth will occur even if domestic manufactured prices are not globally competitive

35) Which of the following is NOT a component of modern legal systems? A) constitutional law B) criminal law C) commercial law D) private law

D) private law

3) In order to join the IMF a country must contribute a certain sum of money called a ________. A) special drawing right B) trade balance C) monetary reserve D) quota

D) quota

13) Comparative advantage differs from absolute advantage in that the former ________ whereas the latter ________. A) holds that countries should specialize their production does not B) holds that trade should be kept as nearly in balance as possible says countries should seek a favorable balance of trade C) bases trade on natural advantages bases trade on acquired advantage D) states that there is a basis of trade even if one country can produce everything more efficiently than another country does not deal with this issue

D) states that there is a basis of trade even if one country can produce everything more efficiently than another country does not deal with this issue

13) Which of the following has the greatest potential to transform an industry's structure? A) a change in a competitor's management B) a change in a competitor's pricing structure C) the expansion of a distribution channel D) the exit of a competitor from the industry

D) the exit of a competitor from the industry

23) 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? A) their low inflation B) their increased FDI C) their industry diversity D) their rapid economic growth

D) their rapid economic growth

14) Which of the following is the purpose of a company's value proposition? A) to exceed customers' expectations B) to force competitors into a price war C) to identify consumers for whom the company creates products D) to explain why a consumer should buy the company's products

D) to explain why a consumer should buy the company's products

46) Which of the following is NOT a reason a company would deal in foreign exchange? A) to pay or receive dividends in a foreign currency B) to speculate on possible future movements in a currency C) to buy and sell merchandise denominated in a foreign currency D) to import merchandise denominated in its currency rather than the currency of the exporter

D) to import merchandise denominated in its currency rather than the currency of the exporter

12) It is most accurate to say that within most nations' borders people largely share such essential attributes as ________ and ________. A) work attitudes occupations B) lifestyles education level C) education level ethnicity D) values language

D) values language

32) A broker or other import consultant can help an importer minimize import duties by ________. A) bypassing duty rebates available through drawback provisions B) incurring duties by using non-bonded warehouses and foreign trade zones C) maximizing liability by improperly marking an import's country of origin D) valuing products in such a way that they qualify for more favorable duty treatment

D) valuing products in such a way that they qualify for more favorable duty treatment

10) A problem of using the nation as a reference point for culture is that ________. A) nations fail to mediate the different interests within their boundaries B) self-stereotypes tend to fall along national lines C) such an approach tends to be polycentric D) variations tend to be great within a country (state)

D) variations tend to be great within a country (state)

28) Based on the hierarchy-of-needs theory in which of the following would fulfillment of lower-order needs be the best motivator? A) wealthy countries B) Protestant countries C) high femininity countries D) very poor countries

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? A) strict religious constraints B) fair election procedures C) respect for civil liberties D) weak rule of law

D) weak rule of law

30) Countries most likely establish export restrictions to ________. A) ensure their population obtain the goods first B) raise prices in foreign markets C) encourage substitute products D) reduce domestic production

B) raise prices in foreign markets

21) Successful implementation of a ________ strategy requires a company to develop unique competencies that rivals find hard if not impossible to match or copy. A) differentiation B) cost leadership C) globalization D) marketing

A) differentiation

5) Which of the following transactions refers to the purchase of goods or services produced by a company based in one country from sellers that reside in a different country? A) importing B) countertrading C) exporting D) freight forwarding

A) importing

57) An MNE in which new knowledge and capabilities are developed in both domestic and foreign locations both independently and jointly and then diffused throughout the worldwide organization is following a ________ strategy. A) transnational B) multidomestic C) global D) matrix

A) transnational

47) In a ________ one party directs another party to make payment. A) reverse letter of credit B) commercial bill of exchange C) commercial bill of trade D) confirmed irrevocable foreign-exchange transaction

B) commercial bill of exchange

12) According to the teleological approach individuals base moral decisions on ________. A) personal and social responsibilities B) consequences of an action C) cultural value systems D) opinions of peers

B) consequences of an action

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. A) theocratic: mixed B) common civil C) civil customary D) customar common

B) common civil

9) ________ is a form of locking the value of a country's currency onto another currency. A) Managed floating B) Monetarization C) Dollarization D) Floating

C) Dollarization

1) The widening set of interdependent relationships among people from different parts of the world is known as ________. A) globalization B) offshoring C) franchising D) outsourcing

Globalization

5) Which of the following best describes a result of cultural collision in international business? A) A company implements practices that are less effective than intended. B) Local employees are overlooked for promotions by home country managers. C) Expatriate managers rely too heavily on local employees for negotiating business deals. D) Foreign and domestic companies make adjustments for the local culture and legal environment.

A) A company implements practices that are less effective than intended.

46) 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 B) Hierarchy of Needs C) Happy Planet Index D) Gini coefficient

A) Base of the Pyramid

33) The primary responsibilities of the ________ are the assessment and collection of all duties taxes and fees on imported merchandise the enforcement of customs and related laws and the administration of certain navigation laws and treaties. A) Bureau of Customs and Border Protection B) U.S. Secret Service C) Internal Revenue Service D) Food and Drug Administration

A) Bureau of Customs and Border Protection

11) Which of the following countries has a soft peg currency? A) China B) Brazil C) Japan D) India

A) China

59) Which of the following most accurately describes the economic situation in El Salvador? A) It is facing significant competition from neighboring countries that are not tied to the dollar. B) It relies exclusively on the United States as a market for its products. C) It now has the same exchange rate as other members of CACM. D) It is putting more resources into industries that have a history of earning profits.

A) It is facing significant competition from neighboring countries that are not tied to the dollar.

48) The major trade group in South America involving Brazil Paraguay Uruguay and Argentina is ________. A) MERCOSUR B) UNASUR C) APEC D) CACM

A) MERCOSUR

49) 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. A) APEC B) OAU C) ASEAN D) CAFTA

A) MERCOSUR

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. B) Passive political risk management assumes that it is difficult if not impossible to systematically model political risk. C) Active political risk management assumes that positive and negative political events in any country are neither independent nor random events. D) Active political risk management assumes that political events unfold in observable patterns that statistical methods can detect.

A) Passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards.

36) Which of the following members of the European Union has NOT adopted the euro? A) United Kingdom B) Estonia C) Germany D) Greece

A) United Kingdom

57) Research shows that urbanization leads to higher productivity. Which of the following is the LEAST likely reason for this? A) Urbanization establishes an inflow of immigrants who will work for less money. B) In urban areas firms can more easily find people with the exact skills they need. C) Urbanization allows for economies in moving supplies and finished products. D) In urban areas knowledge flows more easily from one company to another and from one industry to another.

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 B) Pakistan C) India D) Brazil

A) Vietnam

43) In addition to protectiomn tariffs serve to ________. A) generate revenue B) subsidize exports C) subsidize imports D) increase consumption

A) generate revenue

1) The widening set of interdependent relationships among people from different parts of the world is known as ________. A) globalization B) offshoring C) franchising D) outsourcing

A) globalization

6) Which of the following is NOT among the five forces in the Five-Forces Model of Industry Structure? A) governments B) substitute products C) potential new entrants D) suppliers of raw materials

A) governments

1) The recent global economic crisis has led to which of the following? A) governments seeking to impose more constraints on capitalism B) governments seeking to eliminate constraints on capitalism C) governments seeking to increase the interdependence of developing economies D) governments seeking to eliminate the interdependence of developing economies

A) governments seeking to impose more constraints on capitalism

51) Shelly a manager at a global firm is studying the foreign currency intervention practices of Indonesia. Shelly is most likely examining ________ factors. A) institutional setting B) fundamental analysis C) confidence D) circumstantial

A) institutional setting

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 B) trademark credential C) patent certificate D) TRIPS permit

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 B) environmental hazards C) child labor violations D) embezzlement

A) intellectual property violations

56) Which of the following is an example of interest arbitrage? A) investing in debt instruments in different currencies or different countries B) selling U.S. dollars for Swiss francs then selling Swiss francs for British pounds then selling British pounds for U.S. dollars C) investigating different commercial banks to find the best exchange rate D) an American investing in a London-based company

A) investing in debt instruments in different currencies or different countries

18) Ethical dilemmas tend to be ________ for MNE managers than for domestic managers. A) more complicated B) less controversial C) easier to decide D) less common

A) more complicated

9) The ________ clause embodied the fundamental principle of GATT—trade without discrimination. A) most-favored-nation B) nontariff barriers C) free rider D) normal trade relations

A) most-favored-nation

46) 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 B) polycentrism C) culture shock D) ethnocentrism

A) reverse culture shock

53) When companies face the same competitors in almost all countries where they operate ________. A) what they learn about each other in one country is useful in predicting the other's strategies and actions elsewhere B) the market leader is the same everywhere C) there is less need to understand the physical and societal factors of each country D) they are less likely to enter joint ventures with other companies

A) what they learn about each other in one country is useful in predicting the other's strategies and actions elsewhere

34) In societies where trust is high ________. A) people tend to be more future-oriented B) business costs are typically lower C) people tend to be more fatalistic D) family businesses are dominant

B) business costs are typically lower

49) In a country's balance of payments the ________ tracks all trade activity in merchandise. A) capital account B) current account C) payment account D) deficit account

B) current account

19) Members of the Andean Community (CAN) have a common external tariff. CAN is most likely a ________. A) free trade agreement B) customs union C) domestic trade zone D) free trade sovereignty

B) customs union

50) Which of the following is the primary focus of the African Union (AU)? A) FDI influx B) democracy C) economic integration D) intrazonal trade relations

B) democracy

28) Fully convertible currencies are also called ________. A) external currencies B) hard currencies C) unlimited currencies D) soft currencies

B) hard currencies

45) Between now and 2050 countries undergoing a simultaneous population reduction and an increased percentage of retirees in the population most likely will need more ________. A) imports B) immigrants C) domestic products D) favorable balances of trade

B) immigrants

41) The most common type of tariff is the ________ tariff. A) export B) import C) transit D) ad valorem

B) import

9) Unemployed workers are most apt to form a pressure group to support ________. A) export restrictions B) import restrictions C) price limitations D) import subsidies

B) import restrictions

4) Iverson Products is a U.S. firm that is considering expanding internationally by exporting. Which of the following is the LEAST likely benefit for Iverson? A) boosting marketplace flexibility B) improving economies of scale C) facing lower business risk compared to other foreign market entry options D) requiring fairly few resources

B) improving economies of scale

25) A free trade agreement is likely to increase efficiency because of ________. A) decreased competition B) increased competition C) decreased trade diversion D) decreased trade creation

B) increased competition

39) The so-called "misery index" is the sum of a country's ________. A) foreign and national debt B) inflation and unemployment rates C) unemployment level and total debt D) trade deficit and long-term inflation rate

B) inflation and unemployment rates

21) A manager who refuses to bribe customs officials in a foreign country even though it is morally acceptable in that country is most likely to believe in which of the following perspectives on ethics? A) relativism B) normativism C) humanism D) existentialism

B) normativism

46) Research has shown that past exchange rates are an accurate predictor of future exchange rates ________. A) only in the long run B) only in the very short run C) only during times of economic crisis D) only during times of economic calm

B) only in the very short run

2) The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________. A) quota B) par value C) gold standard D) nominal interest rate

B) par value

44) The World Bank reports that approximately ________ percent of the world's population is poor. A) 50 B) 33 C) 80 D) 95

C) 80

13) Which of the following is a reason for global companies to NOT take religious beliefs into account? A) Religion has an impact on almost every business function. B) A company could get in trouble with local religious authorities. C) A manager's religious training should be implemented in the company he/she manages. D) Religion may influence consumer behavior.

C) A manager's religious training should be implemented in the company he/she manages.

3) Which of the following is NOT a likely reason to study international business? A) Global events affect almost all companies. B) Differences among countries in physical social and competitive conditions may cause companies to alter their operating methods from country to country. C) Business conducted outside the limits of any one country is inexplicably on the decline. D) Firms may be better able to obtain better or less expensive resources by operating internationally.

C) Business conducted outside the limits of any one country is inexplicably on the decline.

4) ________ is the framework that managers apply to determine the competitive moves and business approaches that run the company. A) Competition B) Growth C) Strategy D) Vision

C) Strategy

11) As a leading exporter of luxury automobiles Germany has built a strong reputation in engineering. Germany's trade most likely relies on a(n) ________. A) outward immigration restriction B) natural advantage C) acquired advantage D) neomercantilist policy

C) acquired advantage

19) In a strategy known as ________ many new companies locate themselves near competitors and suppliers. A) offshoring B) franchising C) clustering or agglomeration D) exporting

C) clustering or agglomeration

56) According to the concept of green economics measuring a country's economic performance should also take into account ________. A) market share B) population size C) ecological costs D) cost-of-living increases

C) ecological costs C) ecological costs

6) A(n) ________ is the price of a currency. A) tariff B) quota C) exchange rate D) subsidy

C) exchange rate

37) ________ typically results when demand decreases and supply increases. A) Inflation B) Chronic inflation C) Reflation D) Deflation

D) Deflation

26) Which of the following is NOT one of the top four locations for trading foreign exchange? A) London B) New York C) Tokyo D) Hong Kong

D) Hong Kong

18) Which of the following is most typical of a command economy? A) Consumers have choices of many substitutes for any given product. B) Quality of products and services tends to be consistent. C) The prices of goods and services frequently change. D) Many products are usually in short supply.

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. A) Governmental risk B) Operating risk C) Transaction risk D) Political risk

D) Political risk

17) Bantam Enterprises a multi-national enterprise makes significant efforts to avoid being perceived as socially irresponsible. What is the most likely reason for this? A) Social irresponsibility can lead to labor strikes by international unions. B) Socially irresponsible companies usually have fewer exports and more imports. C) Cultural barriers increase for companies that are socially irresponsible which hinders expansion into additional countries. D) Social irresponsibility can lead to negative publicity from nongovernmental organizations which could hurt a company's reputation.

D) Social irresponsibility can lead to negative publicity from nongovernmental organizations, which could hurt a company's reputation.

60) Which of the following governmental actions is LEAST likely to increase national debt? A) macroeconomic stimulus plans B) unemployment benefits C) corporate bailouts D) T-bond sales

D) T-bond sales

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? A) financial capital B) cultural training C) legal guidance D) political risk insurance

D) political risk insurance

4) Which of the following is the largest source of foreign-exchange income in Mexico? A) FDI B) tourism C) foreign aid D) remittance income

D) remittance income

43) Exporters who opt for direct exporting are most likely to ________. A) sustain long-term profitability B) sell products to domestic retailers C) depend on international marketers D) sell products to a foreign distributor

D) sell products to a foreign distributor

3) Which of the following is NOT a likely reason to study international business? A) Global events affect almost all companies. B) Differences among countries in physical, social, and competitive conditions may cause companies to alter their operating methods from country to country. C) Business conducted outside the limits of any one country is inexplicably on the decline. D) Firms may be better able to obtain better or less expensive resources by operating internationally.

c) Business conducted outside the limits of any one country is inexplicably on the decline.

5) Which stakeholder group primarily wants additional sales and increased productivity? A) customers B) shareholders C) society at large D) government

m B) shareholders

31) Export restrictions have a tendency to ________. A) favor domestic consumers B) protect employment in the export-restricted industries C) lower prices in foreign markets D) encourage the development of substitutes in the restricting country

A) favor domestic consumers

28) Which of the following is the price at which the trader is willing to sell foreign currency? A) offer B) bid C) spread D) cross rate

A) offer

29) People generally prefer little consultation between superiors and subordinates in cultures where ________ is high. A) power distance B) fatalism C) individualism D) self-actualization

A) power distance

34) According to purchasing power parity theory if Brazilian inflation was 6 percent and inflation in Argentina was 12 percent the Brazilian real would be expected to ________. A) rise by the difference in inflation rates B) fall by the difference in inflation rates C) rise by 4.5 percent D) stay the same

A) rise by the difference in inflation rates

39) Which of the following states that the country with the higher interest rate should have the higher inflation? A) the Fisher Effect B) the International Fisher Effect C) the Interest Rate Inflation Theory D) the Forward rate theory

A) the Fisher Effect

1) ________ integration is the political and economic agreements among countries that give preference to member countries to the agreement. A) Global B) Economic C) Bilateral D) Regional

B) Economic

33) Critics of offshoring claim all EXCEPT which of the following? A) Cost savings are seldom passed on to final consumers. B) Offshoring reduces the incomes of people in low-wage countries. C) Incomes of workers in countries whose companies offshored production have gone down as a percentage of national income. D) Many workers who have been displaced by offshoring do not have the skills needed for higher-value jobs.

B) Offshoring reduces the incomes of people in low-wage countries.

20) ________ effects of trade agreements are the shifting of resources from inefficient to efficient companies as trade barriers fall. A) Dynamic B) Static C) Economic D) Barrier

B) Static

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? A) What is the primary language of most workers? B) Which country has the best production location? C) Which currency has the most favorable value of the euro? D) Which country has the lowest tariffs for manufactured products?

B) Which country has the best production location?

14) Which of the following is a primary business objective for pursuing ethical behavior? A) avoiding industrial sanctions B) developing competitive advantages C) developing creative advertisements D) discouraging false commitments to the firm

B) developing competitive advantages

27) 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 ________. A) trade creation B) economies of scale C) diseconomies of scale D) increased competition

B) economies of scale

48) Local content regulations are primarily intended to ________. A) address cultural differences between local employees and expatriates B) encourage MNEs to increase production activities in a country C) address contract negotiation difficulties D) assess local tax rates on MNEs

B) encourage MNEs to increase production activities in a country

52) When a company wishes to introduce change in a foreign country its likelihood of success can most likely be improved by ________. A) introducing many changes simultaneously B) gaining the support of local opinion leaders C) agreeing to make some home-country changes in return D) employing expatriate managers to supervise local workers

B) gaining the support of local opinion leaders

3) Phillip is an international business manager with Corbin Manufacturing. Which of the following serves as an external influence on the business decisions that Phillip makes? A) production plant locations B) host country monetary policy C) supply chain linkages D) product design standards

B) host country monetary policy

32) 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. A) capital-intensive B) labor-intensive C) land-intensive D) low-cost

B) labor-intensive

27) Citibank decides to open a call center in Mumbai India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls. Citibank is exploiting ________ by running a call center in India. A) value configuration synergies B) location economies C) geographic arbitrage D) value offshoring

B) location economies

50) Preston Electronics is an MNE with facilities located in Taiwan Singapore and Germany. Preston gives its local operations the authority to adapt value activities to prevailing local economic political legal and cultural conditions. Preston is most likely using a(n) ________ strategy. A) global B) multidomestic C) international D) continental

B) multidomestic

8) The industry organization (IO) paradigm reports that on average the best predictor of firm strategy is the ________. A) company's stockpile of assets skills and capabilities B) aggressiveness of a company's marketing objectives C) link between a company's products and processes D) structure of the industry in which it competes

D) structure of the industry in which it competes

36) Which of the following is most likely true regarding options? A) An option can only be purchased from a commercial bank. B) Options are never used with foreign currency. C) An option is a right to sell foreign currency. D) Options do not provide firms with flexibility.

C) An option is a right to sell foreign currency.

32) 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. A) Gross National Index B) Net National Product C) Genuine Progress Indicator D) Human Development Index

C) Genuine Progress Indicator

20) All of the following countries have a totalitarian political system EXCEPT ________. A) China B) Russia C) South Korea D) Saudi Arabia

C) South Korea

61) 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? A) an embargo B) a tariff C) a nontariff barrier D) a direct price influence

C) a nontariff barrier

45) A technical forecaster is also known as a ________. A) CFO B) de facto economist C) chartist D) monetary administrator

C) chartist

51) Johnson & Johnson delegates to its subsidiaries a great deal of authority to respond to local conditions. Many subsidiaries have their own manufacturing marketing research and human resource functions. This value chain configuration illustrates the ________ strategy. A) transnational B) global C) multidomestic D) international

C) multidomestic

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? A) Japan B) Brazil C) Germany D) Australia

D) Australia

3) Which of the following countries has an individualistic orientation? A) Venezuela B) Japan C) Egypt D) Canada

D) Canada

34) Which of the following is permitted by the Foreign Corrupt Practices Act? A) a bribe paid by foreign firms operating in U.S. territories B) a bribe paid by U.S. firms operating in a foreign country that permits bribes to be paid C) a payment to a foreign government official to influence a customs official D) a payment to a customs official to clear legitimate merchandise

D) a payment to a customs official to clear legitimate merchandise

23) Eight of the top 10 exporting and importing countries are countries with ________. A) cheap labor forces B) small land masses C) natural advantages D) developed economies M

D) developed economies

15) ________ refers to a political system in which government is organized by and accountable to the people. A) Totalitarianism B) Fascism C) Socialism D) Democracy

m D) Democracy

16) Value-Mart has achieved the status of overall low-cost producer in its industry which means that Value-Mart ________. A) can strongly defend its market position in the event of a price war B) will earn the largest profits of any company in the industry C) makes the most appealing product in its industry D) can block the entry of new firms into the industry

A) can strongly defend its market position in the event of a price war

28) Zara creates produces and distributes most of its products from its headquarters in Spain. Zara is most likely using a ________ configuration. A) concentrated B) coordinated C) dispersed D) logical

A) concentrated

10) Which level of moral development involves an individual learning role-conformity from peers parents and laws? A) conventional B) principled C) autonomous D) preconventional

A) conventional

35) A worrisome outcome of chronic inflation is that it tends to ________. A) erode confidence in a country's currency B) give central banking officials excessive flexibility to manage monetary policy C) increase the real income of people thereby inflating their spending and borrowing levels D) lower consumer demand for foreign goods which triggers lower prices and eventually lower employment

A) erode confidence in a country's currency

42) Uneven income distribution ________. A) exists in almost every country B) is largely a problem for poorer nations C) primarily affects people in urban settings D) is limited to a small share of the world population

A) exists in almost every country

3) Which of the following best explains why SpinCent decided to export? A) growth opportunities in Asia B) labor demands in the U.S. C) declining tariffs in the EU D) promising market locations in South America

A) growth opportunities in Asia

50) 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 B) directs the movement of specific products to specific consumers C) sets the standards of competitive success for companies in the economy D) stipulates the roles and responsibilities of consumers

A) guides the allocation of resources and shapes the conduct of business activities

39) A culture that prefers to first settle general principles rather than small issues is most accurately characterized as ________. A) idealist B) polychronic C) high-context D) pragmatist

A) idealist

52) A disadvantage of the ________ strategy is that firms that adopt this strategy can decentralize too much autonomy to national subsidiaries. A) multidomestic B) continental C) international D) transnational

A) multidomestic

59) 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 B) degree of detail expected in written contract C) the meaning of slang words during presentations D) importance of adherence to schedules

A) normal proximity during conversations

30) The process of shifting production from a domestic to a foreign location is best known as ________. A) offshoring B) outsourcing C) licensing D) joint venturing

A) offshoring

45) Under NAFTA rules of origin ensure that ________. A) only goods produced mostly within the region are eligible for liberal tariff conditions B) only American products are shipped to Canada and Mexico duty-free C) all members import products only from member nations D) all members have the same external and internal tariffs

A) only goods produced mostly within the region are eligible for liberal tariff conditions

46) 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. A) 62.5% B) 50% C) 45% D) 40.5%

A) only goods produced mostly within the region are eligible for liberal tariff conditions

45) The Internet supports more companies' efforts to launch a direct exporting strategy by ________. A) providing information quickly and inexpensively B) eliminating the need for highly detailed export plans C) letting software take over customer service responsibilities D) countering the power of electronic data interchange systems

A) providing information quickly and inexpensively

39) Firms that operate in countries that have adopted the Kyoto Protocol are required to either reduce emissions or ________. A) purchase carbon credits from other firms B) file petitions to appeal the requirement C) cease manufacturing operations D) pay fines to the U.N.

A) purchase carbon credits from other firms

29) Eileen a manager at an international restaurant chain wants to know if it will be most cost effective to buy 1000 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 B) economic growth rate C) gross domestic income D) gross national product

A) purchasing power parity

33) Critics of the Lisbon Treaty primarily argue that the legislation will ________. A) reduce national sovereignty B) implement trade restrictions C) develop a monetary union D) weaken decision making

A) reduce national sovereignty

36) 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 B) low power distance C) collectivism D) fatalism M

A) self-determination

14) The major objective of the European Central Bank is to ________. A) set monetary policy for EU countries that adopt the euro B) ensure that EU interest rates are equal to U.S. rates C) control taxes as a means of monitoring EU debt D) reduce spending by EU countries

A) set monetary policy for EU countries that adopt the euro

56) An example of an effective commodity agreement is ________. A) the Organization of Petroleum Exporting Countries B) the Organization of Petroleum Importing Countries C) the International Tin Alliance D) the International Cotton Alliance

A) the Organization of Petroleum Exporting Countries

41) Which of the following are members of NAFTA? A) the United States Canada and Mexico B) North America and Latin America C) the United Kingdom the United States and Canada D) the United States Canada and Brazil

A) the United States Canada, and Mexico

13) Which of the following best explains why international business has grown rapidly in the past few decades? A) the end of the political division between the Communist and non-Communist blocs B) greater income equality in most countries C) growing concern about climate change D) increased concerns about terrorism

A) the end of the political division between the Communist and non-Communist blocs

20) Terms of trade refers to ________. A) the quantity of imports that a given quantity of a country's exports can buy B) specific requirements placed on imports and exports at the port of entry or exit C) requirements agreed upon by two countries to regulate bilateral trade D) an account statement showing a country's annual imports and exports

A) the quantity of imports that a given quantity of a country's exports can buy

32) Which of the following statements describes an inconsistency of the FCPA? A) Facilitation payments are classified as bribery. B) Facilitation payments are excluded from the FCPA's definition of bribery. C) Payments to officials who are not directly responsible for carrying out the law are legal. D) Payments to foreign officials who carry out the law are considered illegal by provisions of the FCPA.

B) Facilitation payments are excluded from the FCPA's definition of bribery.

20) Assume an enterprise is considering establishment of a foreign production facility. Which of the following best supports this decision? A) Its foreign competitors have higher production costs than it has. B) Its main competitor successfully opened a foreign plant. C) Its suppliers follow an agglomeration strategy. D) None of its competitors have foreign production facilities.

B) Its main competitor successfully opened a foreign plant.

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? A) systemic B) procedural C) distributive D) catastrophic

B) procedural

44) Evaluating the importance of potential clients or partners by the way they dress is an example of using ________. A) pragmatism B) silent language C) polychronism D) fatalism

B) silent language

29) The incremental internationalization view of exporting holds that companies first target countries that are ________ their home market. A) different from B) similar to C) smaller than D) larger than

B) similar to

41) The International Fisher Effect implies that ________. A) the country with the higher interest rate should have lower inflation B) the currency of the country with the lower interest rate will strengthen in the future C) the currency of the country with the higher interest rate will strengthen in the future D) interest rates and inflation are not linked at all

B) the currency of the country with the lower interest rate will strengthen in the future

31) Which of the following is NOT affected by the Foreign Corrupt Practices Act? A) companies registered in the U.S. B) foreign firms operating in U.S. territory C) foreign firms quoted on a U.S. stock exchange D) foreign companies managed by U.S. expatriates

D) foreign companies managed by U.S. expatriates

44) Compared to the European Union the North American Free Trade Agreement ________. A) has a stronger currency linkage due to the U.S. dollar B) has more trade problems since it is a customs union C) is significantly larger in population and total GNI D) is slightly smaller in population and GDP

D) is slightly smaller in population and GDP

46) Federal state and local governments that recognize the benefits of international trade actively aid the efforts of potential and active exporters and ________. A) ensure the quality of exported products B) establish barriers to punish foreign rivals C) collect a fee for each successful export sale D) protect the interests of struggling importers

D) protect the interests of struggling importers

50) An irrevocable letter of credit ________. A) is issued by a global credit agency B) is the basis for multilateral credit netting C) can be amended only if all parties involved agree D) obligates the exporter's bank to pay interest to the importer

C) can be amended only if all parties involved agree

30) Which of the following is characterized by low dependence on an organization and a desire for personal time freedom and challenges? A) collectivism B) democracy C) individualism D) anarchy

C) individualism

37) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as ________. A) competitive advantage B) the Kyoto Protocol C) sustainability D) externality

C) sustainability

11) Imports can stimulate exports by ________. A) redistributing the work force B) curtailing domestic competition C) generating more tax revenue D) increasing foreign income

D) increasing foreign income

5) 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 B) devaluing the currency of Country X C) lowering steel prices in Country X D) triggering boycotts in Country X

A) damaging other industries in Country X

14) Advanced communication systems have contributed to growth in international business by ________. A) enabling better oversight of global operations B) reducing the effects of global competition C) decreasing the cost of cargo transportation D) reducing export regulations

A) enabling better oversight of global operations

9) Companies are likely to export products abroad in all of the following situations EXCEPT which one? A) when their average cost per unit of home country production declines substantially by increasing output B) when they want to use the riskiest but most profitable method to engage international trade C) when they aim to increase degree of market diversification D) when they are new to international business

B) when they want to use the riskiest but most profitable method to engage international trade

16) In which of the following transactions is one currency swapped for another on one date and then swapped back on a future date? A) reverse transaction B) spot transaction C) FX swap D) outright forward transaction

C) FX swap

56) Which strategy champions worldwide consistency and standardization to support the firm's goal to become the low-cost leader? A) international strategy B) multidomestic strategy C) global strategy D) transnational strategy

C) global strategy

24) In the context of value chain analysis the support activities of a firm include ________. A) outbound logistics human resources and information systems B) production marketing and operations C) shipping and customer service D) research and development

C) shipping and customer service

18) Which of the following would most likely be used in a totalitarian system to promote unconditional support for the official ideology? A) privately owned media outlets B) a parliamentary system C) state control of the education system D) a representative legislative body

C) state control of the education system

7) 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 B) selection test methods C) bilateral trade agreements D) economic integration methods

A) operating strategies

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 totalitarian systems. B) A wave of theocratic revolutions occurred as people around the world looked to spirituality to guide them. C) Socialistic revolutions swept the world as countries aspired toward greater social justice. D) A totalitarian revolution swept the world as people looked to strong state leadership in uncertain times.

A) A wave of democratic transformations occurred as countries around the world moved away from totalitarian systems.

20) Nontradable goods are best defined as ________. A) products and services for which exporting costs are excessive B) factors of production that exceed safety regulations C) goods used for national defense D) products that comprise a portion of the inputs for finished products

A) products and services for which exporting costs are excessive

41) 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. B) Because languages and the common meaning of words are constantly evolving the intended meaning of a word may be different from what the listener or reader understands. C) Some words in one language simply don't have a direct translation into another language. D) Words mean different things in different contexts thus the wrong context may be translated.

A) All written work requires back translation in order to be understood in a second language.

42) The largest percentage of nation within a contiguous geographic region that adhere to the rule of man are located in ________. A) Central Africa B) Northern Africa C) Eastern Europe D) Central America

A) Central Africa

16) Which of the following has the greatest amount of foreign-exchange reserves in the world? A) China B) Japan C) Russia D) Taiwan

A) China

29) According to Transparency International companies from which of the following countries are more likely to pay bribes? A) China B) Japan C) Singapore D) Belgium

A) China

9) According to research which of the following countries is the strongest supporter of free markets? A) China B) India C) France D) Ukraine

A) China

3) Which of the following statements about Costa Rica and its approach to trade and factor-mobility strategy is true? A) Costa Rica decided to select industries that would produce competitive products and improve workers' skills. B) Costa Rica decided to attract industries acceptable to its major trading partners. C) Costa Rica decided to select industries on a least cost basis. D) Costa Rica decided to invite industries that were highly technical.

A) Costa Rica decided to select industries that would produce competitive products and improve workers' skills.

21) ________ 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 B) Static C) Economic D) Barrier

A) Dynamic

52) Why are offsets considered protectionist measures? A) Exporters must often find markets for goods outside their lines of expertise. B) Exports must be sold at a certain percentage price below the price of domestic producers. C) Companies must submit samples to government authorities before receiving export permission. D) Trading companies must incur additional inventory carrying charges and pay significantly higher tariffs.

A) Exporters must often find markets for goods outside their lines of expertise

3) Which of the following statements about GE and its "Green is Green" movement is true? A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States. B) GE has decided to develop new products that are environmentally friendly rather than adopt internal policies to reduce greenhouse gas emissions. C) GE has moved aggressively to reduce greenhouse gas usage internally but has not been able to develop commercially viable "clean" technologies. D) GE considered joining the U.S. Climate Action Partnership but decided the group was too radical in its approach to reducing greenhouse gas emissions.

A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States.

30) The United Nations' ________ measures life expectancy educational attainment and the standard of living in a given country. A) Human Development Index B) Emerging Economic Stability C) Genuine Progress Indicator D) Net National Product

A) Human Development Index

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. B) A strategic marketing plan can be quickly developed in the U.S. C) Contract enforcement is a simple process in the U.S. D) The U.S. is experiencing an economic recession.

A) Intellectual property rights are strongly protected by U.S. patent laws.

25) The top location for trading foreign exchange is ________. A) London B) New York C) Zurich D) Tokyo

A) London

10) Which of the following is the most important constraint on the explanatory power of the IO paradigm? A) Many industries are imperfectly competitive. B) Many companies are locally but not internationally competitive. C) Most customers have perfect knowledge of the products they select. D) Most industries have many firms that each have small market shares.

A) Many industries are imperfectly competitive.

58) Which of the following best explains why migrant workers in Dubai send money back home? A) Non-citizens cannot purchase property. B) Non-citizens have temporary visas. C) Western Union offers low rates. D) Labor demand is flexible.

A) Non-citizens cannot purchase property.

36) Which of the following statements best describes a limitation of the Big Mac Index? A) Profit margins vary by the strength of competition which affect relative prices. B) The theory of PPP incorrectly assumes that there are barriers to trade. C) The Big Mac represents all possible commodities and services. D) Taxes have no effect on Big Mac prices.

A) Profit margins vary by the strength of competition, which affect relative prices.

45) What is the primary difficulty associated with dismantling developed countries' agricultural subsidies? A) Rural areas in the United States the European Union and Japan are disproportionately represented in their governments. B) Developing countries put pressure on developed countries to maintain the subsidies so that they receive food products at a lower price. C) The subsidies are used to counter the commodity agreements set up mainly by developing countries. D) The subsidies are at the consumer rather than producer level and everyone benefits from the lower prices.

A) Rural areas in the United States, the European Union, and Japan are disproportionately represented in their governments.

14) Barton Accessories has two retail stores and one production facility where the firm's line of leather belts and purses are assembled. Barton employs 430 people and generates nearly $1 million in revenue each year through domestic and international sales. Which term best describes the status of Barton? A) SME B) MNE C) MNC D) FDI

A) SME

8) Which of the following is NOT one of the regions included in the triad regions of the world? A) South America B) Europe C) North America D) Asia

A) South America

13) An example of an electronic brokerage system used to trade foreign exchange is ________. A) Reuters B) Interbank Traders Ltd. C) Bank for International Settlements D) the reporting dealers clearing house 14) ________ 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 B) Outright forward transactions C) FX swaps D) Reverse transactions

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. B) Japan restricts North Koreans from visiting Tokyo Disneyland. C) China does not allow the importation of rice from Thailand. D) Canada does not allow Air Canada to buy Brazilian aircraft.

A) The U.S. restricts foreign companies from carrying cargo between two U.S. cities.

47) 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. B) It is more expensive to move people than capital. C) People may have to learn another language and adapt to a different culture. D) International capital transfers have less cumbersome legal restrictions than international movements of people. M

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. B) Distribution channels are not easily established in adjacent countries. C) Adjacent countries are reluctant to coordinate policies. D) Neighboring countries usually lack a common history and interests.

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. B) They earn less in their new jobs than they earned in their old ones. C) They spend their unemployment benefits on living rather than retraining. D) They have difficulty finding new work because of educational deficiencies.

A) They move abroad to take new jobs.

40) How has the Kyoto Protocol affected U.S. companies operating in Europe? A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe. B) The Kyoto Protocol has not affected U.S. companies with subsidiaries in Europe because the U.S. has not signed the Kyoto Protocol. C) Before U.S. companies can open any more European subsidiaries the U.S. government must sign the Kyoto Protocol. D) Because the United States is not a party to the Kyoto Protocol U.S. companies may not operate in European countries that have signed the Kyoto Protocol.

A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe.

25) Which of the following is an example of extraterritoriality? A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws even though China has no comparable laws B) a U.S. sweatshop operating in Thailand that does not follow U.S. labor laws but allows children to work 60 hours a week C) an MNE manager who after working in the host country tries to implement foreign practices in the home-country office D) a British subsidiary operating in Indonesia that maintains the same health and safety standards for its foreign factories that are required in Great Britain even though the British government does not require it to use those standards

A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws, even though China has no comparable laws

50) Brain drain is a term that describes ________. A) a country's loss of educated productive people B) a nation's shift from an emerging market to a developed economy C) the exportation of high-technology products in exchange for low-technology products D) the unauthorized use of patents copyrights and technology by the counterfeiting industry

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 B) there is no dispute resolution mechanism except for trade involving environmental products C) countries are allowed to place trade barriers on member countries with no particular justification because like GATT the WTO has no enforcement mechanism D) tariffs are permitted to be levied by developed countries against developing countries but not against each other

A) a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures

49) Darvin Foods is an MNE that is in the process of revising its international business strategy. Most of the firm's top executives believe that Darvin should implement a multidomestic strategy. Which of the following conditions would most likely support this type of strategy? A) a high need for local responsiveness and a low need to reduce costs via global integration B) a high need for local responsiveness and a high need to create efficiencies via global integration C) a low need for local responsiveness and a low need to reduce costs via global integration D) a low need for local responsiveness and a high need to create efficiencies via global integration

A) a high need for local responsiveness and a low need to reduce costs via global integration

20) The U.S. dollar is most likely traded widely because it is ________. A) a reserve currency held by many central banks B) one of the oldest and most stable currencies in the world C) monitored by the Bank of International Settlements and the U.S. Federal Reserve D) based on prices of the NYSE which is the world's largest foreign-exchange center

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 B) usually opens up for business as trades are winding down in the United States C) deals primarily in European currencies and is not as active in trading U.S. dollars D) deals primarily in spot rather than forward trades

A) actually trades more U.S. dollars than are traded in the United States

19) A manager practicing relativism would most likely ________. A) adapt to local conditions instead of implementing home-country practices B) enforce home-country laws on host-country employees and suppliers C) refuse to change company policies and procedures to comply with local norms D) apply universal laws to each country despite local customs and traditions

A) adapt to local conditions instead of implementing home-country practices

28) One way that developed countries specialize in order to gain acquired advantages is by ________. A) allocating research efforts more heavily in specific sectors B) emphasizing production in natural resource endowments C) restricting imports to those in the service sector D) subsidizing the transport of exports

A) allocating research efforts more heavily in specific sectors

55) 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? A) arbitrage B) speculation C) spot transaction D) outright forward

A) arbitrage

11) Improving explanatory power of the IO paradigm can be done by considering the potential for ________ to lead to a company's sustained competitive advantage. A) bright motivated managers B) political trends and events C) cultural institutions D) new markets

A) bright, motivated managers

31) According to the product life cycle theory production and sales are primarily domestic in the introductory stage because ________. A) businesses need quick market feedback B) tariff reductions remain under negotiation C) international transport costs are too high D) international patents have not been approved

A) businesses need quick market feedback

16) In a democracy ________. A) citizens have the right to participate in the decision-making process B) the opportunity to truly participate in the political process is restricted to a select few C) the court system is directly supervised by the political system D) the rights of the individual are merged with the state

A) citizens have the right to participate in the decision-making process

51) A guideline for responsible action by a firm in its operations worldwide is a(n) ________. A) code of conduct B) corporate monitoring policy C) education program D) honor code

A) code of conduct

32) Social network analysis indicates that information flows more efficiently in a(n) ________ manner. A) collaborative B) competitive C) hierarchical D) impersonal

A) collaborative

55) The MNE that applies a global strategy aims to ________. A) compete essentially the same way wherever the company does business B) empower local operations to make decisions about value activities C) adapt activities to the industry standards in critical markets D) customize its business practices to consumer expectations

A) compete essentially the same way wherever the company does business

36) Which of the following would most likely pressure an MNE to globally integrate its value activities? A) costs of producing in separate facilities exceeding those of producing in a single facility B) variability in consumers' tastes and preferences shifting across countries C) market pressures to add new product features continually D) demands imposed by host country governments

A) costs of producing in separate facilities exceeding those of producing in a single facility

55) 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 B) cultural trends come from emerging nations C) existing national borders are shifting D) material cultures are becoming universal

A) cultural diffusion is a two-way process

60) 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 B) literacy rate C) quality of life D) political stability

A) demand for high-tech products

18) A company that employs a ________ strategy creates value by generating customer insights and translating those insights into innovations. A) differentiation B) diversification C) cost leadership D) innovation

A) differentiation

34) 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 B) a lack of reliable economic data from most developed economies C) the isolation of most markets from each other D) static nature of the marketplace

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 B) keep consumer countries from controlling commodity prices C) allow producer countries to control inflation by keeping commodity prices low D) stabilize prices through regional alliances between producer and consumer countries

A) discuss issues and disseminate information about commodities

55) The vigor of IPR protection is highly related to a country's stage of ________. A) economic development B) cultural heterogeneity C) natural resource development D) standardization of patent regulations

A) economic development

5) 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 B) economic growth has a limited effect on the standard of living C) adoption of free market principles contributes to social injustices D) centrally planned economies are best designed to deliver progress

A) economic growth is directly related to economic freedom

29) Johnson Enterprises manufactures computer chips used in cell phones. The MNE has long production runs that lower the per unit cost of each chip. The firm also purchases materials in bulk from its suppliers with whom Johnson has long-term contracts. Johnson is most likely benefiting from ________. A) economies of scale B) the cluster effect C) digitization D) location economies

A) economies of scale

34) 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 B) improving the exporting country's terms of trade C) gaining imports that are sold below cost D) following import substitution objectives

A) encouraging foreign consumers to try new products

23) Which of the following has been the LEAST likely outcome of e-commerce on exporting? A) enhancing supply chains B) triggering a rise in born globals C) overcoming capital limitations for SMEs D) expanding market opportunities for traders

A) enhancing supply chains

39) A(n) ________ operates on a contractual basis and provides exclusive representation for an exporter's goods and services in a foreign market. A) export management company B) import broker C) invoice agent D) countertrader

A) export management company

24) The trade theory that says countries should concentrate production on those products using their most abundant production factors is the ________. A) factor proportions theory B) theory of comparative advantage C) theory of absolute advantage D) theory of nontradable goods

A) factor proportions theory

10) Which of the following would have the LEAST influence on price setting in the foreign-exchange market? A) Morgan Stanley B) Deutsche Bank C) Western Union D) JP Morgan

A) financial institutions that actively participate in local and global foreign-exchange markets

9) In foreign-exchange markets reporting dealers are ________. A) financial institutions that actively participate in local and global foreign-exchange markets B) located primarily in New York City since U.S. dollars are the most widely traded currency C) controlled by the Bank for International Settlements located in Switzerland D) hedge funds and pension funds monitored by the World Bank

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 B) foreign subsidy C) export tariff D) quota

A) foreign exchange

32) 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 B) forward discount C) backward discount D) discounted premium

A) forward premium

43) Ted a manager at Global Manufacturing is analyzing trends in economic variables to predict future exchange rates that might affect the MNE's international operations. Which of the following is Ted most likely doing? A) fundamental forecasting B) technical forecasting C) resource forecasting D) economic forecasting

A) fundamental forecasting

15) 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 B) private industries C) individual entrepreneurs D) local trade associations

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 B) payments to dock workers to prevent pilferage of imported shipments C) border checks to prevent entry of illegal aliens D) methods used to prevent intellectual property theft

A) governmental restrictions and competitive support actions to affect trade flows

18) Which of the following best explains the increase in trading activity in recent years? A) growing emphasis on hedge funds B) availability of more global currencies C) demands for immediate money access D) advances in communication technology

A) growing emphasis on hedge funds

59) Which of the following is NOT causing greater complexity in the regulation of trade? A) growth in export tariffs B) services available over the Internet C) heightened concern about product safety D) development of new products that must be classified

A) growth in export tariffs

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 B) using an embargo C) subsidizing D) using offsets

A) growth in export tariffs

21) Which term refers to restricting imports in order to boost domestic production and consumption of goods that would otherwise be imported? A) import substitution B) terms-of-trade C) most-favored nation D) in-sourcing

A) import substitution

57) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor and Quantum executives want to avoid similar problems. Which of the following would be the best approach for Quantum? A) improving conditions at the subcontract facilities B) developing an external ethics code for foreign partners and letting them worry about compliance C) requiring local governments to alter their labor policies D) leaving the market and focusing on domestic production

A) improving conditions at the subcontract facilities

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 B) allocate scarce resources among competing users C) develop reasonable attitudes and outlooks within the population D) protect individuals within the country from foreign threats

A) integrate the different elements of a society into a functioning unit

8) The benefits of retaining a core competency within a company and purposefully threading that core competency through the value chain are referred to as ________ advantages. A) internalization B) domestic C) location D) ownership

A) internalization

57) Companies with ________ would most likely oppose global protectionist measures. A) internationally integrated supply chains B) domestically focused supply chains C) multidomestic production facilities D) product differentiation

A) internationally integrated supply chains

15) 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 B) assistance should be given only if entry barriers to new firms are very low C) the protecting countries lose too much revenue from import duties D) a short product life cycle makes the industry quickly noncompetitive

A) it is difficult to identify industries that have a high probability of reaching competitiveness

13) Which of the following most likely complicates ethical behavior for firms that expand overseas? A) local laws and values B) expatriate management C) unstable financial settings D) international codes of conduct

A) local laws and values

40) Host governments' growing demands for increasing operational transparency will most likely spur companies to make their value chains more ________. A) locally responsive B) globally integrated C) concise D) complex

A) locally responsive

38) Meade Clocks has hired an intermediary to manage its export activity. Meade should most likely expect ________. A) lower profit margins B) greater control over global sales C) more responsibility for customer satisfaction D) frequent misunderstandings about trade regulations

A) lower profit margins

28) All of the following are reasons a country might institute import restrictions to improve its balance of trade position with other countries EXCEPT to ________. A) maintain essential industries B) reduce imports and encourage exports C) get comparable access for its companies D) bargain away restrictions by other countries

A) maintain essential industries

5) The trade theory that says a country should export more than it imports is known as ________. A) mercantilism B) absolute advantage C) comparative advantage D) import substitution

A) mercantilism

52) 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 B) standardized minimum wages C) laws favoring sustainability D) state-run corporations

A) minimal government intervention

58) 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 B) the coastal area has to trade with countries using different religious holidays C) the coastal area has a culture with a higher uncertainty avoidance D) the coastal area is secular whereas the interior of Saudi Arabia has a state religion

A) people in the port cities have more contact with foreigners

3) The European Union is an example of ________ integration. A) regional B) relative C) global D) bilateral

A) regional

1) According to the text which of the following has resulted from GE's Ecomagination initiative? A) rising profitability for many GE products B) increasing doubt among GE's foreign partners C) reducing investments by GE due to poor returns D) improving pollution levels near GE plants in China

A) rising profitability for many GE products

12) 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 B) the United States should export coal to Canada and import potatoes from Canada C) the United States should import both potatoes and coal from Canada while concentrating on production of more valuable goods D) there would be no basis for trade

A) the United States should export potatoes to Canada and import coal from Canada

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 B) markets cannot be regained after the countries become friendly C) one country's essential product is superfluous to another D) the exporting nation's cultural identity is harmed

A) the costs of the sanctions are borne by innocent people rather than by leaders

15) 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 B) workers become more efficient through specialization C) economies of scale will reduce cost D) there will be more incentive to develop cost-saving technologies

A) the country will forego producing its less efficient output in order to produce its more efficient output

52) Most counterfeit goods are made in markets in which ________ is the basis of the legal system. A) the rule of man B) the rule of law C) religious doctrine D) corporate precedent

A) the rule of man

49) A document requesting payment 30 days after delivery is known as a ________. A) time draft B) sight draft C) spot draft D) futures draft

A) time draft

47) A distinct advantage of an international strategy is ________. A) transferring core competencies to foreign markets B) reaping benefits of global learning C) customizing product offerings to local conditions D) leveraging local managers' knowledge of their markets

A) transferring core competencies to foreign markets

43) 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 B) developing non-Western countries C) emerging economies experiencing rapid growth D) countries inclined toward totalitarian-style government

A) wealthier, westernized countries

54) Commodity agreements ________. A) were initially established to attempt to stabilize commodity prices B) are effective in regulating the price of grains but not minerals C) are effective in regulating the prices of both grains and minerals D) were disbanded by the United Nations for being non-competitive

A) were initially established to attempt to stabilize commodity prices

42) In the global environment firms use an international strategy a multidomestic strategy a global strategy or a ________ strategy. A) regional B) standardization C) transnational D) locational

C) transnational

52) Which of the following is most likely a true statement about the relationship between the United Nations and NGOs? A) The UN must license an NGO for it to be involved in any international relief efforts. B) A UN committee discusses issues of importance to NGOs but does not regulate their activities. C) The UN determines which NGOs can work on international humanitarian issues and relief efforts. D) NGOs typically operate in only one country whereas UN agencies can operate anywhere in the world.

B) A UN committee discusses issues of importance to NGOs but does not regulate their activities.

57) How does arbitrage differ from speculation? A) Speculation unlike arbitrage is never used to protect against risk. B) 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. C) Speculation is the purchase of foreign currency on one market for the immediate resale on another market. D) Arbitrage is another way to speculate for profit or protect against risk.

B) 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.

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? A) India B) China C) Japan D) Guatemala

B) China

28) The ________ is the European Union's ultimate decision-making body and is composed of the different ministers of the member countries. A) European Commission B) Council of the European Union C) European Parliament D) European Court of Justice

B) Council of the European Union

33) A 1998 U.S. law that outlaws bribery payments by U.S. firms to foreign government officials is known as the ________. A) Anti-Bribery Act of 2004 B) Foreign Corrupt Practices Act C) Zero Tolerance Initiative D) Sarbanes-Oxley Act

B) Foreign Corrupt Practices Act

22) Which of the following countries is the best example of a mixed economic model? A) United States B) France C) United Kingdom D) Australia

B) France

2) General Electric has focused on being more "green" in recent years most likely because ________. A) the industry has always looked to GE as a trend setter in green technology B) GE executives believe the firm can strategically align investor and environmental interests C) GE executives realize that the firm can save significant money through the use of solar technology D) the U.S. government has decided to use GE as a test case to see if the adoption of the Kyoto Protocol can actually work for a U.S. firm

B) GE executives believe the firm can strategically align investor and environmental interests

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? A) per capita GNI B) GNI growth rate C) purchasing power parity D) degree of human development

B) GNI growth rate

43) Which of the following is most likely a FALSE statement about income inequality? A) The richest 1% of the world's population claims as much income as the bottom 57%. B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens. C) Among industrialized nations the U.S. has the largest inequality gap between rich and poor. D) Income inequality between metropolitan and rural areas threatens a country's social stability.

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? A) Total unit costs decrease through economies of scale. B) High tariffs to prevent foreign competition increase government revenues in the protected country. C) Domestic entrepreneurs need assistance to compete in industries with high entry barriers. D) Experience of operating over time triggers higher productivity and global competitiveness.

B) High tariffs to prevent foreign competition increase government revenues in the protected country.

4) 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? A) Bolivia B) Hong Kong C) Venezuela D) North Korea

B) Hong Kong

57) If the euro continues to remain strong against the U.S. dollar which of the following strategies would make the most sense for BMW? A) It might be advantageous for them to consider exporting from Germany to the U.S. to take advantage of cheaper costs. B) It might increase its manufacturing capacity in the United States to take advantage of the cheaper dollar. C) It might consider raising prices in the United States to earn more profits for BMW. D) It really doesn't make any difference to BMW since consumers will buy the cars no matter what they cost.

B) It might increase its manufacturing capacity in the United States to take advantage of the cheaper dollar.

17) Which of the following assumptions was made in the original theories of absolute and comparative advantage? A) Specialized labor seeks efficiency. B) Labor resources are fully employed. C) Countries pursue objectives other than economic efficiency. D) Production networks enable countries to concentrate on particular functions.

B) Labor resources are fully employed.

48) Which of the following best supports the idea that MNEs should remain in countries that allow child labor? A) MNEs have a positive influence on government employment policies in most foreign countries. B) Many MNEs have substantially improved the working conditions of their foreign plants. C) MNEs are required to pay child workers more than local companies. D) Most MNEs employ local managers to handle cultural differences.

B) Many MNEs have substantially improved the working conditions of their foreign plants.

33) 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? A) Doing so allows use of long production runs using capital-intensive methods. B) Many consumers are willing to pay high costs for the newest products. C) Transportation costs are reduced by focusing on markets in developed countries. D) Import restrictions prevent production in countries other than the ones making product innovations.

B) Many consumers are willing to pay high costs for the newest products.

39) 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? A) Governance processes are streamlined because local governments have been eliminated. B) Market size is larger because of the elimination of internal tariff barriers. C) Differential external tariff barriers exist for product shipments. D) The EU uses English as its official language.

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? A) Emigrants remit capital used to start businesses in their home countries. B) Nations receive more foreign aid. C) Nations lose highly educated and productive workers. D) Countries receive remittances from emigrants.

B) Nations receive more foreign aid.

11) In a practical sense the term political system is meant to signify the ________. A) organization of military power in a country B) working government in a country C) philosophical orientations in a country D) cultural values in a country

B) working government in a country

37) Why are options most likely so attractive to companies? A) The writer of the option does not charge the company any fee for writing the option. B) Options provide companies with more flexibility than a forward contract. C) Options are usually cheaper than forward contracts. D) Options can be used for only foreign-exchange deals.

B) Options provide companies with more flexibility than a forward contract.

36) Which of the following is a voluntary effort by 150 multinational construction and natural-resources companies to end bribery? A) Foreign Corrupt Practices Act B) Partnering Against Corruption Initiative C) OLAF (European Commission Anti-Fraud Office) D) Sarbanes-Oxley Act

B) Partnering Against Corruption Initiative

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. A) Systemic B) Procedural C) Catastrophic D) Distributive

B) Procedural

5) Which of the following statements most accurately describes the relationship between trading groups and MNEs? A) Trading groups have no influence on the size of the regional market. B) Regional trading groups can define the rules under which companies must operate within that region. C) Companies never need to change their organizational structure to take advantage of regional trading groups. D) Regional trading groups have no influence on an MNE's strategy since they operate worldwide.

B) Regional trading groups can define the rules under which companies must operate within that region.

63) People who argue for keeping the U.S. trade embargo with Cuba claim all of the following EXCEPT which one? A) There is not much economic potential from trade given Cuba's small population and low per capita income. B) Removal of the embargo will cause much more Cuban immigration to the United States. C) If the Cuban economy is weakened just a bit more the Cuban political-economic system cannot be sustained. D) There will be a backlash among countries supplying such commodities as sugar to the United States if the U.S. buys them from Cuba instead.

B) Removal of the embargo will cause much more Cuban immigration to the United States.

16) Which of the following statements about small and medium-sized enterprises (SMEs) is true? A) SMEs are steadily reducing their export intensity ratios. B) SMEs make up the majority of all U.S. exporters. C) SMEs are the source of more than half of the monetary value of U.S. exports. D) SMEs that export goods have fewer than 20 employees.

B) SMEs make up the majority of all U.S. exporters.

12) Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union? A) The annual government budget must be no greater than 3% of GDP. B) The annual inflation rate must remain within 1.5% of the three best-performing EU countries. C) The annual government budget deficit could be no greater than 60% of GDP. D) The annual inflation rate must remain within 5.5% of the four best-performing EU countries.

B) The annual inflation rate must remain within 1.5% of the three best-performing EU countries.

38) If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate) which of the following is most likely true? A) The peso is overvalued against the dollar. B) The dollar is overvalued against the peso. C) It should be harder for a U.S. tourist to buy a leather coat in Buenos Aires because the dollar won't go very far. D) It will be cheap for Argentine companies to invest in the United States because the dollar is relatively weak.

B) The dollar is overvalued against the peso.

41) Country X has a significant amount of external debt. Which of the following is the most likely cause? A) The government of Country X borrowed money from local banks. B) The government of Country X borrowed money from other governments. C) The government of Country X spent more than it collected in revenues. D) The government of Country X received short-term credits from selling bonds.

B) The government of Country X borrowed money from other governments.

46) Which of the following is NOT a disadvantage of the international strategy? A) Headquarters can misread foreign-market opportunities and threats. B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs. C) Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters. D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.

B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs.

24) The relationship between import substitution policies and export-led development policies is best characterized by which of the following? A) Import-substitution policies are more likely to lead to production of mature products whereas export-led development policies result in production of growth products. B) The two are hard to distinguish because production under import substitution may eventually be exported. C) Production under import substitution policies as opposed to export-led development policies is more likely to be located in urban areas. D) Production under import substitution policies as opposed to export-led development policies is likely to be more labor-intensive.

B) The two are hard to distinguish because production under import substitution may eventually be exported.

48) Most countries have agreed on how to assess values when their customs agents levy tariffs. Which of the following best expresses this agreement? A) They should use the value of similar goods arriving at about the same time. B) They should use the declared invoice price unless they doubt its authenticity. C) They should assess a value based on local costs to produce a similar product. D) They should assess a value based on the expected final consumer sales price.

B) They should use the declared invoice price unless they doubt its authenticity.

3) Why should managers have an understanding of trade protectionism? A) Trade protectionism targets factor endowments thus affecting the best country to locate production. B) Trade protectionism affects a company's ability to sell abroad and ability to compete at home. C) Trade protectionism affects the number of people permitted to practice a specific profession. D) Trade protectionism prevents companies' enactment of merger and acquisition agreements.

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? A) Lisbon Treaty B) Treaty of Maastricht C) European Finance Act D) Single European Act

B) Treaty of Maastricht

41) Which of the following is NOT one of the top exchanges that trade in foreign currency futures and options? A) CME B) UBS C) NYSE Liffe D) NASDAQ OMX

B) UBS

1) Which of the following statements about Zara is most likely FALSE? A) Zara puts fewer products on clearance racks than most of its competitors in the industry. B) Zara's large advertising budget generates word-of-mouth and attracts new buyers. C) New products and designs are delivered to Zara stores every three to four weeks. D) Most of Zara's products move through the firm's distribution center in Spain.

B) Zara's large advertising budget generates word-of-mouth and attracts new buyers.

35) Which of the hypothetical new products if successful would most likely diffuse its production and sales according to the product life cycle theory? A) a Ferrari sports car selling for $200000 to a niche upper-end market B) a Sony television that receives global transmissions without a satellite dish or cable connection introduced at a high price but targeted eventually for sale to a mass market C) a new Diet Coca-Cola soft drink flavored with cranberries D) a Kyocera plastic chip carrier which is expected to be quickly obsolete because of innovations

B) a Sony television that receives global transmissions without a satellite dish or cable connection, introduced at a high price but targeted eventually for sale to a mass market

51) An NGO is ________. A) an agency of the United Nations B) a private institution independent of a government C) any organization working on environmental issues D) an organization that is concerned only with workers' rights

B) a private institution independent of a government

49) In international trade what is a quota? A) a guarantee by one country to buy some minimum amount from another B) a quantitative limit on the amount of a product that can be imported or exported C) a countertrade arrangement that establishes the value of imports and exports D) a bilateral agreement calling for mutual access to markets

B) a quantitative limit on the amount of a product that can be imported or exported

8) Neomercantilism describes the approach of countries that try to run a favorable balance of trade to ________. A) build up gold reserves B) achieve a social or political objective C) lower their rates of inflation D) buy raw materials more cheaply

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 ________. A) destabilize poverty rates B) achieve low unemployment C) restrict economic growth D) inequitably distribute wealth

B) achieve low unemployment

27) Most world trade takes place ________. A) between developed countries and developing countries B) among developed countries C) among developing countries D) between raw material exporters and manufacturing exporters

B) among developed countries

12) The interbank market in foreign exchange is where ________. A) electronic brokerage systems are required B) banks trade currency with each other C) reporting dealers set exchange terms D) remittance payments are made

B) banks trade currency with each other

60) Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer? A) capability of handling specific currencies B) capability of assessing cultural risk C) capability of handling derivatives D) capability of engaging in analytics

B) capability of assessing cultural risk

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 ________. A) focus on developing new recruitment strategies and selection tests B) change their organizational structure to fit the norms of the foreign country C) disregard changes in trading groups because they have little effect on a company D) look to expand beyond the triad regions currently controlled by the top 500 MNEs

B) change their organizational structure to fit the norms of the foreign country

8) Monique has recently been hired as an accounts supervisor at Ballston Enterprises. She wants to understand Ballston's values and its expectations for employee behavior. Which of the following would most likely provide Monique with this information? A) mission statement B) code of conduct C) vision statement D) employee contract

B) code of conduct

34) All of the following are primary duties of the Bureau of Customs and Border Protection EXCEPT which one? A) assessing all duties taxes and fees on imported merchandise B) collecting import and export tariffs C) protecting the U.S. from threatening imports D) policing smuggling operations

B) collecting import and export tariffs

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. A) individualistic B) collectivistic C) pluralistic D) laissez-faire

B) collectivistic

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. A) theocratic B) common C) customary D) civil

B) common

18) A ________ results when free mobility of factors of production is added to a customs union. A) customs union B) common market C) free trade agreement D) regional trade agreement

B) common market

4) Which of the following is NOT a key stakeholder group that a company must work to satisfy in order to survive in a global environment? A) employees B) competitors C) shareholders D) customers

B) competitors

18) Why is China most likely considering a greater reliance on the SDR? A) gains in the foreign-exchange market B) concerns about the value of the U.S. dollar C) demands to replace the dollar with the euro for reserves D) requirements by the IMF to make China's currency more flexible

B) concerns about the value of the U.S. dollar

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. A) criminal B) constitutional C) civil D) commercial

B) constitutional

27) What is the primary argument against extraterritoriality? A) increases opportunities for corporate bribery B) contradicts demands for increased globalization C) requires oversight by nongovernmental organizations D) prohibits firms from expanding into foreign territories

B) contradicts demands for increased globalization

39) 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? A) no fees B) convenience C) low exchange rates D) cross rate capability

B) convenience

15) A strategy that focuses on lowering operating costs is referred to as a ________ strategy. A) differentiation B) cost leadership C) niche market D) diversification

B) cost leadership

21) 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? A) spot rate B) cross rate C) currency option D) current U.S. rate

B) cross rate

58) Which of the following is the primary limitation of the transnational strategy? A) poor local adaptation B) cross-unit coordination difficulties C) duplication of subsidiary activities D) inability to leverage core competencies

B) cross-unit coordination difficulties

21) Countries with varied climates and varied natural resources generally ________ than countries with less varied climates and natural resources. A) have lower per capita incomes B) depend less heavily on trade C) have more ethnic subgroups D) have higher endowments of capital relative to labor

B) depend less heavily on trade

12) A major problem with the Doha Round is that ________. A) developing countries want developed countries to better protect their intellectual property B) developing countries want a reduction in agricultural subsidies maintained by the developed countries C) the WTO does not want the developing countries to liberalize their investment rules D) because of security issues not all countries were able to attend the meetings so it was impossible to get a consensus vote

B) developing countries want a reduction in agricultural subsidies maintained by the developed countries

27) 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? A) devaluing its currency B) enacting selective import restrictions C) using tight monetary policies to deflate price levels D) spurring productivity increases through general tax breaks for industry

B) enacting selective import restrictions

7) Which of the following was NOT a result of the Smithsonian Agreement? A) revaluation of currencies other than the dollar against gold B) establishment of par values the quota system C) devaluation of the dollar against gold D) widening of exchange-rate flexibility

B) establishment of par values the quota system

8) The relationship between the value of the Brazilian and Chinese currencies is known as the ________. A) stock price B) exchange rate C) foreign-exchange market D) purchasing power parity

B) exchange rate

37) Corbin Coffee plans to initiate activities in foreign markets through indirect exporting. The firm is most likely to use ________. A) local managers to pay tariffs and duties B) external specialists to assist in the export process C) the International Trade Administration to monitor exports D) freight forwarders to act as distributors in foreign markets

B) external specialists to assist in the export process

28) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions with Cuba is an example of ________. A) utilitarianism B) extraterritoriality C) absolute advantage D) relative advantage

B) extraterritoriality

44) Companies most likely use the foreign-exchange market to ________. A) establish fair currency trading policies B) facilitate regular business transactions C) establish a global market presence D) diversify their hedge funds

B) facilitate regular business transactions

25) All of the following are common problems associated with exporting and importing EXCEPT ________. A) managing financial risks B) finding reliable intermediaries C) matching foreign rivals' prices D) establishing distribution networks

B) finding reliable intermediaries

7) 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. A) stock market B) foreign-exchange market C) New York Stock Exchange D) international export market

B) foreign-exchange market

58) Which of the following ideas calls for assessing a country's performance based on factors such as life expectancy leisure time and income equality? A) microeconomics B) happynomics C) macroeconomics D) green economics

B) happynomics

25) 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 ________. A) have a lower labor-to-land ratio than its imports from Honduras B) have a higher labor-to-land ratio than its imports from Honduras C) embody more capital per square mile than its imports from Honduras D) embody more capital per worker than its imports from Honduras

B) have a higher labor-to-land ratio than its imports from Honduras

50) Which of the following best explains Nike's quick response to criticism of unfair employment practices in developing countries? A) retaining employees B) improving public relations C) addressing product safety concerns D) cutting costs in order to improve profits

B) improving public relations

38) A possible drawback to the essential industry argument for import protectionism is ________. A) that such protection hurts the protecting country's balance of payments B) in times of military emergency almost any product could be considered essential C) other countries find supplies elsewhere D) unemployment increases in the protecting country

B) in times of military emergency, almost any product could be considered essential

7) Which of the following is the best example of a product disruption driving industry change? A) redesign of Toyota's Prius B) introduction of Apple's iPad C) AT&T's purchase of T-Mobile D) merger of United and Continental

B) introduction of Apple's iPad

2) A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________. A) it can only transfer funds in one direction B) it is facing competition from some commercial banks C) Mexican citizens do not like to use its services because it does not have strong ties with Mexican banks D) Mexican citizens trust the banks but do not trust Western Union due to its heritage as a Western bank

B) it is facing competition from some commercial banks

31) A driving factor for the growth in imports is the impact of ________. A) government programs B) labor specialization C) consumer preferences D) social trends

B) labor specialization

4) Which of the following ideas holds that a government should NOT interfere in business affairs? A) collectivism B) laissez-faire C) the rule of man D) pluralism

B) laissez-faire

8) History suggests that if the economic crisis worsens we are likely to see more people question the ________. A) fall of communism B) legitimacy of capitalism C) practicality of mixed market economies D) correlation between economic freedom and prosperit

B) legitimacy of capitalism

56) The U.S. automobile industry has attempted to counter import competition in all the following ways EXCEPT ________. A) concentrating on market niches that initially had less import competition B) lobbying for customs deposits so that importers' costs would be raised C) moving some production to lower-cost countries and exporting to the United States D) effecting internal adjustments such as cost efficiencies and improved quality

B) lobbying for customs deposits so that importers' costs would be raised

41) Costa Rica applied the concepts of the diamond of national advantage theory to help transform its economy by ________. A) building domestic demand for its products and services B) looking globally to develop favorable conditions C) following import substitution policies D) concentrating on nontradable goods

B) looking globally to develop favorable conditions

36) According to the optimum tariff theory a foreign producer will most likely ________. A) ship highly taxed goods internationally on a per-unit basis B) lower its export prices if the importing country imposes an import tax on its products C) assess a tax on goods shipped internationally based on a percentage of the goods' value D) seek import tariffs by using the comparable access argument

B) lower its export prices if the importing country imposes an import tax on its products

56) What is the primary reason that Anglo American PLC developed its ART program? A) comply with government standards B) maintain a healthy workforce C) abide by union demands D) reduce employee benefits

B) maintain a healthy workforce

13) A system in which individuals rather than the government make the majority of economic decisions is commonly referred to as a ________. A) command economy B) market economy C) private economy D) mixed economy

B) market economy

38) A culture in which people prefer to finish one task before starting another is most accurately characterized as which of the following? A) low-context B) monochronic C) pragmatic D) high power-distance

B) monochronic

42) When selecting a commercial and/or investment bank to deal in foreign exchange corporations are most likely to use ________. A) the exchange-based market rather than the over-the-counter market B) more than one bank to meet different needs C) banks located in the home country D) investment banks only

B) more than one bank to meet different needs

30) Country X has a floating rate for luxury goods and a lower rate for semi-manufactured goods. Which of the following is most likely used by Country X? A) import deposit requirements B) multiple exchange rates C) import licensing D) quantity controls

B) multiple exchange rates

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 ________. A) almost all of the world's democracies are full democracies B) nearly half of the world's democracies qualify as "full" or "flawed" democracies C) less than a quarter of the countries studied are outright authoritarian regimes D) most democracies are hybrid political systems that share theocratic and totalitarian characteristics

B) nearly half of the world's democracies qualify as "full" or "flawed" democracies

26) A black market exists when ________. A) a country closely monitors and adjusts the foreign-exchange rate B) people pay more for hard currency than the official rate C) a country is running a budget surplus D) a country is experiencing a recession

B) people pay more for hard currency than the official rate

43) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ________. A) allows rich countries to produce generic versions of patented drugs without having to pay royalties to the patent holder B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs C) requires pharmaceutical companies to provide low-cost vaccines and HIV/AIDS medications to developing countries D) requires tiered pricing for most essential drugs

B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs

59) During a time of reflation the government is most likely to ________. A) lower taxes B) print money C) reduce interest rates D) support infrastructure

B) print money

25) Which of the following is considered a primary activity in a company's value chain? A) shipping B) product design C) systems and solutions D) materials and equipment

B) product design

1) The primary objective of the International Monetary Fund is to ________. A) encourage euro adoption B) promote exchange rate stability C) establish a unilateral system of payments D) foster the power of the foreign-exchange market

B) promote exchange rate stability

6) What role has the IMF played in the Greek financial crisis of 2010-2011? A) setting the value of the drachma B) releasing funds for debt payments C) demanding the sale of state-owned assets D) lowering interest rates for international investors

B) releasing funds for debt payments

48) 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 ________. A) time draft B) sight draft C) spot draft D) futures draft

B) sight draft

53) 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? A) arbitrage B) speculation C) spot transaction D) outright forward

B) speculation

7) The recent global credit crisis has interrupted the trend of national economies ________. A) rapidly adopting the command market model B) steadily adopting the free market model C) moving from the mixed to the command model D) turning away from the mixed model

B) steadily adopting the free market model

54) The inability of a company to gain foreign production factors to use in its domestic operations most likely ________. A) entices the company to export its own production factors B) stimulates the company to adopt efficient substitute methods of production C) stimulates foreign companies to invest in that domestic market D) causes the company's products to move more rapidly through their life cycles

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 ________. A) firm strategy structure and rivalry B) strategic trade policy regulations C) related and supporting industries D) demand conditions

B) strategic trade policy regulations

16) 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 ________. A) there would be no basis for trade B) the United States should import potatoes from Canada and export coal to Canada C) the United States should export both potatoes and coal to Canada D) the United States should export potatoes to Canada and import coal from Canada

B) the United States should import potatoes from Canada and export coal to Canada

6) 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? A) the foreign producers raising the prices of their exports B) the foreign country restricting its own imports C) the foreign country restricting its exports in that industry D) the foreign producers seeking other markets

B) the foreign country restricting its own imports

16) In a command economy ________. A) businesses and consumers are assumed to be the best judges of how resources should be allocated B) the government sets goals and determines the price and quantity of what is produced C) different economic sectors coordinate the activities of the federal government D) each enterprise sets its goals before making reports to the central government

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 ________. A) less predictable operating conditions for companies B) the inevitability of democracy C) different rules for domestic versus international competition D) weaker property rights

B) the inevitability of democracy

49) Which of the following types of agents moves international cargo facilitates shipment tracking and handles product returns for exporters and importers? A) trade intermediaries B) third party logistics C) customs brokers D) freight forwarders

B) third party logistics

47) Forecasters must predict the magnitude direction and ________ of an exchange rate change or movement. A) length B) timing C) altitude D) depth

B) timing

43) NAFTA is a good example of ________. A) trade divestment B) trade diversion C) the theory of trade disruption D) the theory of trade implementation

B) trade diversion

11) In foreign-exchange markets reporting dealers ________. A) work extensively with nonfinancial institutions such as the regional banks B) trade more foreign exchange with other financial institutions than with any other category of users C) trade more currency with governments and corporations than with other reporting dealers D) are prohibited from trading currencies with other 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 ________. A) setting a fair exchange rate in multiple currencies B) transferring currency from one country to another C) transferring Mexican pesos from the United States to Mexico D) handling all money transfers that occur between North and South America

B) transferring currency from one country to another

17) The industrialization argument for trade protection in developing countries is based on the assumption that ________. A) the protected industry will become competitive over time with economies of scale B) unemployment and underemployment exist in rural areas so little agricultural output is lost as people move into industrial jobs C) subsidizing production is a better means of protection than limiting imports D) it is better to depend on buying agricultural surpluses from developed countries than to produce these agricultural goods

B) unemployment and underemployment exist in rural areas, so little agricultural output is lost as people move into industrial jobs

37) A ________ 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. A) customary B) common C) civil D) theocratic

C) civil

40) Which of the following handles the majority of all foreign-exchange activities? A) multinational enterprises B) commodities exchanges C) commercial banks D) regional banks

C) commercial banks

21) Given the daily volume of foreign-exchange transactions it is most accurate to say which of the following? A) It is impossible for a government's interventions in the foreign-exchange market to affect market psychology. B) A government's intervention in the foreign-exchange market can reverse a currency's slide for the long term. C) A government's intervention cannot force the foreign-exchange market to move in a determined direction. D) A government should focus more on intervening in foreign-exchange markets than on correcting economic fundamentals.

C) A government's intervention cannot force the foreign-exchange market to move in a determined direction.

29) Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft? A) Buyers procure similar products for replacement parts. B) Transportation costs and cultural differences limit exporters. C) Companies differentiate products to appeal to different consumers. D) Bilateral trading agreements require this interchange for a number of products.

C) Companies differentiate products to appeal to different consumers.

31) The EU organization that ensures consistent interpretation and application of EU treaties is the ________. A) European Commission B) Council of Ministers C) Court of Justice D) Council of Treaties and Laws

C) Court of Justice

14) Which of the following statements best describes a pluralistic society? A) Multiple segments of society adhere to the same political philosophy. B) Two dominant political parties rule local and federal governments. C) Different ideologies are held by different segments of society. D) Various ethnic groups belong to the official political party.

C) Different ideologies are held by different segments of society.

55) All of the following are reasons that foreign investment may stimulate exports from the home (donor) country EXCEPT which of the following? A) The investor often sends home-country components to its facilities abroad. B) The investor often sends home-country equipment to its facilities abroad. C) Home-country aid usually goes where the investments are made. D) The foreign facility is adept at selling the investors' home country products.

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? A) What selection procedures would be best in China? B) Should expatriates or locals manage the Chinese facility? C) How can the firm guard against counterfeiting in China? D) How would China's individualistic system affect the firm?

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? A) Hudson wants to implement a high-performance work system. B) Hudson plans to staff the foreign facility with local managers. C) Hudson wants to minimize costs by keeping wages low. D) Hudson recently lost money in a joint venture.

C) Hudson wants to minimize costs by keeping wages low.

40) Which of the following is typically true of an export management company? A) It is usually a division of a manufacturing company. B) Most EMCs in the United States are large representing a wide range of products and large number of companies. C) It operates on a contractual basis for a manufacturer by helping obtain orders for its clients' products. D) It usually takes title to products rather than act as an agent.

C) It operates on a contractual basis for a manufacturer by helping obtain orders for its clients' products.

8) Which of the following countries has a collectivist orientation? A) Canada B) Australia C) Japan D) Netherlands

C) Japan

22) Why is the argument that "anything legal is ethical" most likely insufficient? A) Everything that is unethical is also illegal. B) The law is an extremely efficient way to solve ethical dilemmas. C) Laws are frequently based on imprecisely defined moral concepts. D) Laws can never be changed thus rules for all possible ethical dilemmas are found in the law

C) Laws are frequently based on imprecisely defined moral concepts.

32) All of the following are potential problems of using export controls EXCEPT which one? A) There is an incentive for other countries to develop production of their own. B) Domestic producers may have less incentive to increase output. C) Prices go up in the country imposing the controls. D) There is more incentive for smuggling.

C) Prices go up in the country imposing the controls.

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? A) Japan B) Canada C) Singapore D) United Kingdom

C) Singapore

13) Which EU country has NOT adopted the euro? A) Germany B) France C) Sweden D) Greece

C) Sweden

1) Which of the following is a true statement about China? A) The Chinese government's shift from communism to capitalism has led to an increase in FDI. B) China attracts FDI because the government has eliminated elaborate bureaucracies. C) The Chinese government manipulates market activities for political purposes. D) China lacks an educated pool of employees due to slowly developing industrialization.

C) The Chinese government manipulates market activities for political purposes.

42) If the real interest rate is 5% the rate of inflation in the United States is 6% and the rate of inflation in the United Kingdom is 3% which of the following statements would NOT be true? A) The nominal rate of interest in the U.S. would be greater than the nominal interest rate in the U.K. B) The difference between the U.K. and U.S. interest rates is a function of the difference between their inflation rates. C) The nominal rate of interest in the United States and the United Kingdom would be the same because of purchasing power parity. D) Investors would get a higher return on their money in the United States.

C) The nominal rate of interest in the United States and the United Kingdom would be the same because of purchasing power parity.

8) What is the most likely reason that consumers rarely protest import restrictions that raise the prices they pay for a specific product? A) They reason that if the import restrictions are removed the foreign producers will raise their prices to those of the domestic producers anyway. B) Many countries prohibit consumers to band together to influence political actions. C) Typically although the added costs to consumers for a given product are high in aggregate they are fairly trivial for most individual consumers. D) They reason that if they do something to hurt domestic employment for one product the displaced workers will then do something that will hurt their own employment.

C) Typically, although the added costs to consumers for a given product are high in aggregate, they are fairly trivial for most individual consumers.

24) The ________ is the currency most widely used as a reserve asset. A) euro B) Japanese yen C) U.S. dollar D) British pound

C) U.S. dollar

4) Global integration occurs as countries from all over the world decide to cooperate through the ________. A) EU B) NAFTA agreement C) WTO D) CARICOM

C) WTO

3) 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? A) How much freedom will Apex have to run its foreign operations? B) What are the current economic policies related to development? C) What is the likelihood that Apex can fill manufacturing positions with locals? D) What factors in the country drive or hinder economic change?

C) What is the likelihood that Apex can fill manufacturing positions with locals?

39) The diamond of national advantage would be best used to answer which of the following questions? A) How do developed countries prevent the trade of blood diamonds? B) How can developing countries create a significant trade surplus? C) Why do specialized competitive advantages differ among countries? D) Why do most innovative products originate in developed countries?

C) Why do specialized competitive advantages differ among countries?

6) Which of the following is NOT an example of a service export? A) a management firm providing advice to a foreign client B) an investment bank arranging financing for a foreign firm C) a coffee chain opening a new store in a foreign country D) an engineering firm building roads in a foreign country

C) a coffee chain opening a new store in a foreign country

48) All of the following are examples of international labor mobility EXCEPT ________. A) a manager assigned by an MNE to work short-term abroad B) a refugee who takes up employment in another country C) a college student on a study abroad program D) an illegal immigrant working in another country

C) a college student on a study abroad program

22) Export-led development refers to ________. A) a country's efforts to promote its exports in order to reduce its trade deficits B) a policy to promote domestic production of goods that would otherwise be imported C) a program to promote industries with export potential D) decreases in infrastructure development due to the loss of revenue from export tariffs

C) a program to promote industries with export potential

51) An import license is ________. A) an agreement whereby one country gives another country permission to use a patent that a company has registered there B) a requirement that exporters take merchandise in lieu of money as payment for their sales C) a requirement that permission be secured from governmental authorities before importation can be undertaken D) a government prohibition of imports from a specific country

C) a requirement that permission be secured from governmental authorities before importation can be undertaken

1) Protectionism will most likely affect which aspect of a company's operations? A) selecting employees B) investing short-term capital C) acquiring foreign supplies D) relocating personnel overseas

C) acquiring foreign supplies

44) Which term refers to a tariff or duty assessed as a percentage of an item's value? A) specific duty B) effective tariff C) ad valorem duty D) compound tariff

C) ad valorem duty

53) 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. A) participation B) reward sharing C) an opinion leader D) materialistic motivation

C) an opinion leader

25) Advocates of the comparable access argument for trade protection primarily assert that domestic industries ________. A) will deteriorate in countries that have lower import restrictions than their trading partners B) should be required to implement export-led development policies on foreign competitors C) are entitled to the same access to foreign markets as foreign industries have to their markets D) are forced to lower prices for domestic consumers because of foreign import restrictions

C) are entitled to the same access to foreign markets as foreign industries have to their markets

15) Which of the following is a primary business objective for pursuing ethical behavior? A) replacing home-country technology with host-country technology B) minimizing federal investigations into corporate finances C) avoiding being perceived as a socially irresponsible firm D) imposing home-country behavior on the host country

C) avoiding being perceived as a socially irresponsible firm

47) 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? A) trade deficit B) Gini coefficient C) balance of payments D) purchasing power parity

C) balance of payments

12) As a result of the global economic crisis the potential for profitability in all sorts of industries has ________. A) decreased B) increased C) become less predictable D) become more projectable

C) become less predictable

19) Vandelay Designs is a small firm based in Boston that makes and sells scrapbooking products through its retail store and Web site. Many of Vandelay's first sales were made to customers located in Canada England and Japan. Vandelay Designs would best be identified as a(n) ________. A) incremental exporter B) occasional exporter C) born global D) geo-expo

C) born global

10) Successful trade retaliation is most likely achieved ________. A) on agricultural products B) on manufactured products C) by a large trading country D) by a small trading country

C) by a large trading country

45) If a company from Country A decides to sell merchandise to a company from Country B then the company from Country A ________. A) will denominate the sale in its own currency since it is too hard to convert foreign currency B) will denominate the sale in the currency of the buyer since it is too hard for them to convert foreign currency C) can denominate the sale in either currency and use the foreign-exchange market to convert currency D) can use the OTC market to convert receipts in the future and the exchange markets to convert receipts in the spot market

C) can denominate the sale in either currency and use the foreign-exchange market to convert currency

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? A) systemic political risk B) procedural political risk C) catastrophic political risk D) distributive political risk

C) catastrophic political risk

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? A) mixed B) common C) civil D) theocratic

C) civil

24) An advocate of the legal-justification standard would most likely assert that the law ________. A) develops slowly in response to evolving societal dilemmas B) protects business activities that are unethical but not illegal C) contains enforceable rules that apply to everyone D) offers necessary moral flexibility for a society

C) contains enforceable rules that apply to everyone

29) Governments use a multiple exchange rate system to ________. A) increase their budget surplus B) reduce exports C) control foreign-exchange convertibility D) limit deposit requirements

C) control foreign-exchange convertibility

31) Which of the following refers to the means by which management applies the systems that link a company's value activities whether those activities are performed in one or in many countries? A) configuration B) logistics C) coordination D) core competency

C) coordination

34) According to the PLC theory developing countries have their best production advantage in which stage of the product life cycle? A) growth B) maturity C) decline D) introduction

C) decline

34) No matter the country or culture money has three fundamental features that motivate consumers around the world to maximize purchasing power by buying the highest possible quality product for the lowest possible price. These three features include all of the following EXCEPT which one? A) scarcity B) difficulty of acquisition C) difficulty of allocation D) difficulty of saving

C) difficulty of allocation

44) An exporter that implements a(n) ________ strategy does so with the intent to develop its own international marketing capability. A) indirect selling B) freight forwarding C) direct exporting D) export intermediation

C) direct exporting

23) A company's value chain is best described as the ________. A) variable sequence of converting product ideas into value for shareholders B) mixture of activities taken to define product value standards and price points C) discrete series of steps taken to move a product from conception to end-users D) blueprint that must be followed to leverage the core capabilities of a global firm

C) discrete series of steps taken to move a product from conception to end-users

47) Which of the following is a unique provision of NAFTA? A) tariff elimination B) common currency C) environmental standards D) immigration oversights and policies

C) environmental standards

14) The comparative advantage theory holds that a country will gain from trade ________. A) when it exports products for which it has an acquired advantage and imports products for which another country has a natural advantage B) if it exports goods it can produce more efficiently than other countries and imports goods other countries can produce more efficiently than it can C) even though it can produce all goods more efficiently than other countries D) if it exports products using its abundant production factors in exchange for products for which it has scarce production factors

C) even though it can produce all goods more efficiently than other countries

15) The ________ of a firm is the share of its total output that is exported. A) freight forward B) incremental export C) export intensity D) intermodal export

C) export intensity

1) Which of the following transactions refers to the sale of goods or services produced by a company based in one country to customers that reside in a different country? A) importing B) countertrading C) exporting D) freight forwarding

C) exporting

31) The Human Development Index measures the average achievements in a country on three basic dimensions of human development including ________. A) promotion of cultural values B) quantity of free time C) extent of knowledge D) sustainability

C) extent of knowledge

52) The U.N. Global Compact is best described as a(n) ________. A) corruption mandate B) environmental initiative C) external code of conduct D) international trade guideline

C) external code of conduct

49) 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 ________. A) maximize product safety B) ensure a cultural fit C) favor domestic companies D) relieve production pressures on local companies

C) favor domestic companies

39) Defense arguments are sometimes used to prevent exports to unfriendly countries. This runs the risk of the targeted country ________. A) becoming politically destabilized B) removing import restrictions C) finding alternative sources of supply D) banding with other countries to form a cartel

C) finding alternative sources of supply

36) Which of the following is NOT one of the common ways that trade intermediaries are paid by exporters? A) commission rate B) buy-sell basis C) fixed salary D) special event contribution

C) fixed salary

35) Countries sometimes fear that foreign producers are pricing their exports artificially low. This fear is most likely based on the assumption that ________. A) foreign companies will lack the earnings to repay their foreign debt B) insufficient earnings will be available to improve product technology C) foreign producers will charge exorbitant prices after putting competitors out of business D) developing countries will be unable to maintain critical industries needed in times of war

C) foreign producers will charge exorbitant prices after putting competitors out of business

34) The pound-dollar forward rate for pounds is $1.9068 and the spot rate is $1.9100. Pounds are selling at a ________. A) discounted premium B) backward discount C) forward discount D) forward premium

C) forward discount

33) The pound-dollar forward rate for pounds is $1.9068 and the spot rate is $1.9059. Pounds are selling at a ________. A) discounted premium B) backward discount C) forward premium D) forward discount

C) forward premium

16) The goal of a ________ is to abolish all tariffs among member countries. A) customs union B) common market C) free trade agreement D) common internal tariff

C) free trade agreement

42) NAFTA was primarily formed because the member nations have ________. A) static and dynamic liberalization policies B) similarly sized economies and resources C) geographic proximity to each other D) competing interests with the EU

C) geographic proximity to each other

27) 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 ________. A) net national product (NNP) B) gross national product (GNP) C) gross domestic product (GDP) D) gross national income (GNI)

C) gross domestic product (GDP)

55) A physician who is a citizen of and licensed in Country meets the professional licensing requirements of Country B. The physician will most likely ________. A) have to pass a language proficiency exam before being allowed to work in Country B B) not be allowed to work in the not-for-profit sector in Country A or Country B for a set period C) have to get a work permit from Country B's immigration authorities to work in Country B D) have to work in the not-for-profit sector in Country B for a period of time before being permitted to work for a profit-seeking organization

C) have to get a work permit from Country B's immigration authorities to work in Country B

17) According to the research described in your text which of the following is among the factors that would increase a firm's probability of exporting? A) low domestic productivity B) high domestic labor costs C) high level of operational efficiency D) high R & D demands

C) high level of operational efficiency

22) Countries with large land areas are generally less dependent on trade than countries with small land areas because of ________. A) highly restricted economic scales B) self-sufficiency with natural resources C) higher transportation costs related to foreign trade D) the development of unique products that have a limited demand

C) higher transportation costs related to foreign trade

27) Hard currencies are usually ________. A) not fully convertible B) undesirable assets C) highly liquid D) unstable

C) highly liquid

40) The pushback against democracy has powered a rise in totalitarianism a situation that is likely to include which of the following? A) increasing adoption of the principles of the rule of law B) growing demands worldwide for greater fairness and justice in legal proceedings C) increasing adoption of the principles of the rule of man D) suppression of state-control in the direction of legal activities

C) increasing adoption of the principles of the rule of man

37) Which of the following is LEAST likely to trigger the standardization of consumer preferences? A) intrinsic functions of money B) global access to common media C) increasing nationalism D) improved communications technologies

C) increasing nationalism

9) All of the following are levels of moral development EXCEPT the ________. A) preconventional level B) autonomous level C) internalized level D) conventional level

C) internalized level

37) Contrary to the product life cycle theory there has been an increased tendency for companies to ________. A) sell products only in their home markets throughout the cycle B) produce and sell products in countries where counterfeiting is low C) introduce new products simultaneously in domestic and foreign markets D) sell new products in developing countries before expanding into developed countries

C) introduce new products simultaneously in domestic and foreign markets

13) The rationale for the infant-industry argument for trade protection is that ________. A) incubator centers in which business government and academia cooperate will develop entrepreneurial companies B) a country should give one firm in an industry a monopoly status so that it will grow large enough to be competitive internationally C) 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 D) lower restrictions should be placed on products coming from countries where a government has a large sphere of political influence

C) 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

26) Tests to substantiate the factor proportions theory have had mixed results most likely because ________. A) labor migration quickly outdates any studies B) most countries have a favorable balance of trade C) labor skills and education are not homogeneous D) large and small countries have different trade policies

C) labor skills and education are not homogeneous

15) Which of the following problems with the euro most likely worsened the financial crisis in Greece? A) excessive flexibility with interest rates B) cultural disagreements on labor reform C) lack of uniform fiscal regulation standards D) unclear policies of the European Central Bank

C) lack of uniform fiscal regulation standards

30) What is the primary concern regarding anti-corruption measures in the EU? A) resistance to an official anti-fraud commission B) inability to adopt a corruption definition C) lack of uniform laws across nations D) failure to conduct internal auditing

C) lack of uniform laws across nations

17) The global financial crisis has pushed China closer to ________. A) operating independently from the central banks of other countries B) discontinuing its relationship with the Bank for International Settlements C) liberalizing its currency D) controlling its currency

C) liberalizing its currency

6) Under mercantilism governments sought to influence trade by ________. A) establishing bilateral trading agreements with other countries B) limiting exports C) limiting imports and subsidizing exports D) encouraging the development of manufacturing in their colonies

C) limiting imports and subsidizing exports

47) One of the potential problems for an MNE that practices too much polycentrism is ________. A) demanding that local communication methods be replaced with modern technology B) underestimating the complexity of introducing new management practices C) losing innovative capabilities to less-risky host-country practices D) relying too much on home-country directions and policies

C) losing innovative capabilities to less-risky host-country practices

14) Market economies are primarily characterized by ________. A) formal cooperation among government companies and workers to achieve stable growth B) heavy government spending and high taxation to pay for a range of social services C) minimal governmental participation D) restricted consumer powers

C) minimal governmental participation

47) According to the Ethical Trading Initiative (ETI) ________. A) child labor cannot be used unless there are no suitable alternatives B) employment need not be freely chosen in order to be acceptable C) no harsh or inhumane treatment of workers should be allowed D) MNEs are not responsible for establishing codes of conduct

C) no harsh or inhumane treatment of workers should be allowed

20) The belief that there are universal standards of behavior that all cultures should follow is called ________. A) humanism B) relativism C) normativism D) naturalism

C) normativism

10) Boyce Dynamics a U.S. maker of LED flashlights fills unsolicited orders from foreign buyers. It has not proactively investigated international trade options. Boyce Dynamics is best categorized as a(n) ________. A) regular exporter B) non-exporter C) occasional exporter D) domestic exporter

C) occasional exporter

19) The essence of a differentiation strategy is to ________. A) target the most sophisticated segment of the market B) incorporate the greatest number of features into a product C) offer a unique product that supports a premium price D) outspend rivals on product advertising

C) offer a unique product that supports a premium price

38) In the U.S. the unemployment rate indicates the ________. A) percentage of the labor force that wants to work full-time but can only find part-time employment B) number of people who have stopped looking for work because full-time jobs are unavailable C) percentage of unemployed workers seeking paid work relative to the total labor force D) number of workers eligible for government services and unemployment benefits

C) percentage of unemployed workers seeking paid work relative to the total labor force

9) The Industry Organization (IO) paradigm assumes which of the following? A) stable political and cultural trends B) shifting foreign-exchange rates C) perfect competition D) unequal value

C) perfect competition

49) In a country with a currency that is not freely floating the timing of an exchange rate change is often a ________ decision. A) cultural B) consensus C) political D) market

C) political

55) What is the primary problem associated with Anglo American PLC's ART program? A) unknown side effects to drugs and treatment B) rising costs of medications and procedures C) poor treatment adherence by employees D) lack of sufficient insurance coverage

C) poor treatment adherence by employees

40) The attempt to resolve small issues before principles is a characteristic of which of the following? A) relativism B) monochronic behavior C) pragmatism D) uncertainty avoidance

C) pragmatism

23) Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________. A) standardized procedures implemented by the state B) high economic growth rates for the long-term C) privatization of many factors of production D) violent political and legal upheaval

C) privatization of many factors of production

55) Ray a marketer at a global firm monitors the exchange rate of countries in which the firm sells its products. Ray is most likely concerned about changes in ________. A) operating expenses B) exporting policies C) product demand D) quality control

C) product demand

33) The ________ theory seeks to define the relationship between currencies based on relative inflation. A) inflation growth rate B) revaluation C) purchasing power parity D) interest rate

C) purchasing power parity

36) In most cases governments ________ in order to regulate inflation. A) lower interest rates B) increase taxes C) raise interest rates D) decrease taxes

C) raise interest rates

42) When a company does business in another country whose official language is the same as its home country's the company should most likely ________. A) assume that communications will go smoothly B) use back-translation on all written documents C) realize that words may have different meanings D) assume that word meanings are the same despite spelling differences

C) realize that words may have different meanings

23) 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 B) static effect C) trade diversion D) trade reflection

C) trade diversion

18) The free trade theories of specialization primarily assume that ________. A) specialization leads to unemploymentbut production gains compensate for job losses B) resources can move internationally from the production of one good to another C) resources can move domestically from the production of one good to another D) countries have objectives other than economic efficiency

C) resources can move domestically from the production of one good to another

56) Analysts conclude that the finite supply of natural resources will most likely ________. A) cause a higher proportion of world trade to occur among developed countries B) cause a higher proportion of world trade to occur among developing countries C) serve as an advantage for developing countries in their sales to developed countries D) create a greater portion of world trade in the form of services

C) serve as an advantage for developing countries in their sales to developed countries

7) This spring break you are planning to leave the U.S. and visit London where you will stay in a hotel for 10 days. The London hotel will be performing a(n) ________. A) indirect merchandise export B) merchandise export C) service export D) service import

C) service export

11) Which of the following is usually NOT a factor that triggers companies to look to exports to boost total sales? A) maturity of the domestic market B) potential to leverage core competencies in foreign markets C) social needs in developing countries D) response to the market entry of a foreign rival

C) social needs in developing countries

35) In the demand-pull versus supply-push views of the market which of the following is best classified as a push dynamic that drives supply in the global market? A) digitization B) media access C) standardization D) market globalization

C) standardization

10) Which of the following is NOT a characteristic of capitalism? A) private ownership of assets B) right to profit from individual effort C) state control of factors of production D) private control of investment

C) state control of factors of production

24) In a country that practices state capitalism all of the following are most likely to be handled by the state EXCEPT ________. A) leveraging control of the financial system B) developing national corporations C) supporting the local activities of foreign competitors D) systematically managing trade relations

C) supporting the local activities of foreign competitors

52) A speculator is someone who ________. A) trades foreign exchange illegally B) deals in the black market in currency C) takes positions in foreign-exchange markets to earn a profit D) works for OTC financial institutions rather than nonfinancial corporations

C) takes positions in foreign-exchange markets to earn a profit

43) A governmental strategic trade (industrial) policy is one that ________. A) lessens dependence on foreign military goods B) seeks reciprocal free trade agreements between developed and developing countries C) targets the resources needed to support industries that seem to fit best with the country's advantages D) limits imports to encourage domestic production of what would otherwise be imported

C) targets the resources needed to support industries that seem to fit best with the country's advantages

19) Which of the following links together the central banks of the world and acts as a central banker's bank? A) the IMF B) the World Bank C) the BIS D) the EMU

C) the BIS

40) A government increases its internal debt for all of the following reasons EXCEPT ________. A) the tax system is so poorly run that the government cannot collect all the revenues it expects B) government costs such as security and social programs exceed total tax revenues C) the government borrows money from international financial institutions D) state-owned enterprises run large deficits

C) the government borrows money from international financial institutions

22) A country's central bank is responsible for ________. A) distributing money to foreign countries that are in a debt crisis B) encouraging disorderly conditions in foreign-exchange markets C) the policies affecting the value of its country's currency D) establishing foreign-exchange markets

C) the policies affecting the value of its country's currency

38) The 1997 Kyoto Protocol is best described as an agreement that requires ________. A) all members of the United Nations to reduce their greenhouse gas emissions by 5.2 percent B) the United States and Japan to control greenhouse gas emissions by 8% below 1995 levels C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels D) the signatory countries to reduce greenhouse gas emissions by 80% by 2050

C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels

30) In the foreign-exchange market the bid is the rate at which ________. A) the trader is willing to sell foreign exchange B) the buyer is willing to swap foreign exchange C) the trader is willing to buy foreign exchange D) the trader earns a profit

C) the trader is willing to buy foreign exchange

24) 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? A) trade specialization B) trade diversion C) trade creation D) trade internalization

C) trade creation

22) Trade shifting to countries within a regional trade agreement at the expense of trade with countries not in the agreement is called ________. A) a dynamic effect B) trade creation C) trade diversion D) economy of scale

C) trade diversion

59) Marrin Associates is an MNE with operations in Hong Kong India and Canada. The firm strives to leverage its core competencies worldwide reduce costs by exploiting location economics and adapt when efficient to local conditions. Marrin is most likely following a(n) ________ strategy. A) global B) multidomestic C) transnational D) international

C) transnational

57) The Organization of Petroleum Exporting Countries ________. A) uses import tariffs to control oil prices B) stabilizes prices based on demand C) uses quotas to control oil prices D) produces all of the world's oil

C) uses quotas to control oil prices

5) The value of the SDR is currently based on the ________. A) euro B) U.S. dollar C) weighted average of four currencies D) weighted average of six currencies

C) weighted average of four currencies

40) According to the diamond of national advantage theory the domestic existence of all four conditions best explains ________. A) the essence of an industry's development B) the position of a product in its life cycle C) where globally competitive firms develop and sustain themselves D) why countries rely on abundant factor endowments

C) where globally competitive firms develop and sustain themselves

50) Many economists have predicted that Hong Kong will change its currency system to the ________. A) U.S. dollar B) euro C) yuan D) won

C) yuan

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

2) Small and medium-size enterprises such as SpinCent as seen in the opening case for chapter 14 account for ________ of all U.S. exporters. A) 38% B) 54% C) 79% D) 98%

D) 98%

17) ________ are the two basic strategies for creating value and attaining a competitive advantage in an industry. A) Diversification and niche marketing B) Industry leadership and market dominance C) Customer satisfaction and product innovation D) Cost leadership and differentiation

D) Cost leadership and differentiation

52) 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? A) Country X will develop a long-term class of "have-nots" if the children of immigrants remain unskilled. B) Country X will need more unskilled people in the future if immigrant children become skilled. C) The continual supply of unskilled labor will delay the development of labor saving technology in Country X. D) Country X will experience a significant transfer of knowledge and a resulting rise in start-up businesses.

D) Country X will experience a significant transfer of knowledge and a resulting rise in start-up businesses.

62) People who argue for lifting the U.S. trade embargo with Cuba claim all of the following EXCEPT which one? A) The embargo has not achieved its purpose of changing Cuba's economic and political system. B) U.S. companies lose Cuban sales to competitors from other countries. C) Increased exposure to the United States would be a more effective force of change. D) Cuba has largely become a market economy already.

D) Cuba has largely become a market economy already.

41) Which of the following is a difference between export management companies (EMCs) and export trading companies (ETCs)? A) ETCs deal with both exports and imports while EMCs deal only with exports. B) ETCs are subject to antitrust laws while EMCs are not. C) ETCs typically carry inventory while EMCs typically do not. D) ETCs operate more on the basis of demand while EMCs operate more on the basis of supply.

D) ETCs operate more on the basis of demand, while EMCs operate more on the basis of supply.

2) Which of the following is most likely a true statement about the global economy since the 1980s? A) Socialist governments are intervening more in global exchanges. B) Wealthy countries are exercising total control over emerging markets. C) Developing countries are losing growing shares of their foreign-exchange reserves. D) Emerging economies are adopting the principles and practices of free markets.

D) Emerging economies are adopting the principles and practices of free markets.

24) What is the most likely reason that firms avoid aggressively seeking export opportunities? A) Exporting is an activity best left to large resource rich firms. B) Firms are unaware of opportunities in foreign markets. C) Foreign customers cannot easily communicate their needs. D) Firms are reluctant to adjust their established business practices.

D) Firms are reluctant to adjust their established business practices.

10) Which of the following accurately identifies a difference between GATT and the WTO? A) GATT could enforce member compliance with agreements but the WTO cannot. B) At its inception GATT had more member nations than the WTO currently has. C) GATT withdrew the most-favored-nation clause but the WTO reinstated it. D) GATT rules did not cover trade in services but the rules of the WTO do.

D) GATT rules did not cover trade in services but the rules of the WTO do.

42) Which of the following best supports a nation's decision to implement a strategic trade (industrial) policy? A) The policies have usually resulted in big payoffs. B) Governments rather than entrepreneurs should take the risks of developing new industries. C) Consumer needs would otherwise not be met. D) Government actions should target industries that are believed to give the country its best export advantages.

D) Government actions should target industries that are believed to give the country its best export advantages.

16) Which of the following is a problem with the infant-industry argument for protection? A) Most developed countries increasingly have a larger portion of retirees than youth. B) Consumer groups become very active in protesting the higher prices that result during infancy. C) Other countries retaliate by limiting exports of technology needed by the infant industry producers. D) If the industry does not lower costs sufficiently to be competitive it becomes a formidable pressure group for continued protection.

D) If the industry does not lower costs sufficiently to be competitive, it becomes a formidable pressure group for continued protection.

11) Which of the following statements is most likely true about the postconventional level of moral development? A) Individuals learn what is moral but not why such behavior is moral. B) Individuals behave morally because they fear negative repercussions. C) Individuals learn how to conform to society's values through observation. D) Individuals behave morally because they believe such actions are right.

D) Individuals behave morally because they believe such actions are right.

26) Which of the following is a condition that powered the worldwide spread of democracy from 1970 onward? A) Totalitarian regimes delivered acceptable economic progress to their populations. B) Economic advances caused contentment among the working class and minimized the need to push for democratic reforms. C) Many groups were able to successfully challenge the legitimacy of democratic systems. D) Information and communications technologies broke down the ability of the state to control access to uncensored information especially that from foreign sources.

D) Information and communications technologies broke down the ability of the state to control access to uncensored information, especially that from foreign sources.

50) ________ refer(s) to the creative ideas innovative expertise or intangible insights that give an individual company or country a competitive advantage. A) Proprietary goods B) Exclusive ownership C) Restrictive goods D) Intellectual property

D) Intellectual property

35) Which of the following statements about the euro is true? A) It was adopted by all existing EU members when it was first initiated. B) It must be adopted by countries as a precondition to joining the EU. C) It cannot be used by countries that are not members of the EU. D) It was designed to eliminate currency as a barrier to trade in the EU.

D) It was designed to eliminate currency as a barrier to trade in the EU.

58) Endaka the "high yen" caused financial problems for ________. A) Japanese foreign-exchange reserves B) American foreign-exchange reserves C) Japanese importers D) Japanese exporters

D) Japanese exporters

49) Which of the following is NOT a likely reason for companies to act more ethically? A) Consumer boycotts may result from unethical corporate behavior. B) Irresponsible and unethical actions may lead to legal problems for MNEs. C) Unethical or irresponsible behavior can negatively impact employee morale. D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.

D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.

30) Which of the following statements is most likely FALSE? A) Developing countries trade mainly with developed countries. B) Developed countries trade mainly with other developed countries. C) Cultural similarity among countries enhances their trade with each other. D) The greater the geographic distance between countries the greater the trade.

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? A) They did not want consumers to have to pay higher prices that would result from protection. B) These were foreign-owned companies that saw the opportunity to serve the U.S. market. C) They feared that they would lose foreign export markets because of retaliation. D) They believed that they could compete against global and domestic rivals.

D) They believed that they could compete against global and domestic rivals.

57) 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? A) They are fatalistic believing that the business outcome was predetermined. B) Their religious convictions kept them from discussing business over alcoholic drinks. C) They come from a polychronic culture that prefers to multitask. D) They come from a high-context culture in which small talk and seemingly unrelated information is important to decision making.

D) They come from a high-context culture in which small talk and seemingly unrelated information is important to decision making.

42) Which of the following is true of export trading companies in the United States? A) They are like independent distributors that match buyers with buyers. B) They are prohibited from working with a firm's competitors due to antitrust laws. C) They must be established independently of the company in order to avoid a conflict of interest. D) They have been a successful form of export intermediation in recent years.

D) They have been a successful form of export intermediation in recent years.

28) You are the manager of an SME in the United States and your firm wants to begin exporting. Since you have never been involved with exporting there are many compelling reasons that encourage contacting the ________ to obtain expert counseling on exporting. A) U.S. Treasury Department B) Small Business Administration C) Federal Credit Insurance Association D) U.S. Commerce Department

D) U.S. Commerce Department

20) A differentiation strategy works well when ________. A) a company designs a universal product for a broad market B) buyers believe minor product differences are irrelevant to price C) buyers are highly sensitive to price shifts and quality control D) a company can continually develop products that have unique features

D) a company can continually develop products that have unique features

4) 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 ________. A) nontradable goods become tradable B) products go through a lengthy life cycle C) companies adhere to laissez-faire export policies D) a company's present production location will be competitive

D) a company's present production location will be competitive

59) Costa Rica's recent economic transformation to depend more on high-tech manufacturing is largely due to its adoption of ________ trade policy. A) an import substitution B) a comparative advantage C) a factor proportions D) a strategic

D) a strategic

5) Which force in Toyota's immediate environment would most likely have the greatest impact on its strategy? A) interest rate trends B) technology developments C) shifts in U.S. political attitudes D) actions taken by Honda and Mercedes Benz

D) actions taken by Honda and Mercedes Benz

24) The more closed a society is the more important ________ group membership is. A) acquired B) age-based C) education D) ascribed

D) ascribed

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. A) fascist B) communist C) theocratic D) authoritarian

D) authoritarian

60) Assume a U.S. firm plans to expand into 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? A) requesting a translator with technical vocabulary knowledge B) simplifying vocabulary and terminology for the audience C) conducting back translations for written work D) avoiding repetition to prevent boredom

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 ________. A) be added to the GNI of the United States as well as to the GNI and GDP of Mexico B) not be added to the GNI of the United States but would be added to the GNI of Mexico C) only affect the computation of GDP and have no bearing on GNI D) be added to the GNI of the United States but not the GNI of Mexico

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? A) product technology developed by a Jamaican company B) high literacy rates among Jamaican citizens C) the use of English as the primary language D) beautiful beaches and climate

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? A) double commodity integration B) multilateral integration C) regional integration D) bilateral integration

D) bilateral integration

43) Jack an American accounts manager is preparing a presentation for a group of Japanese business people. Jack's presentation would be most effective if he ________. A) told an opening joke to put everyone at ease B) used slang to create an informal atmosphere C) used long words to impress his counterparts D) budgeted extra time for translation and clarification

D) budgeted extra time for translation and clarification

25) The Fed wants to counter downward pressure on the dollar so it will most likely ________. A) sell dollars for foreign currency B) sell dollars and buy foreign stocks C) buy Treasury bills with dollars D) buy dollars with foreign currency

D) buy dollars with foreign currency

59) 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? A) forward discount spread B) interbank transaction C) strike price option D) carry trade

D) carry trade

45) Which of the labor issues identified by the Ethical Trading Initiative (ETI) receives the most attention? A) safe and hygienic working conditions B) reasonable living wages C) inhumane treatment D) child labor

D) child labor

26) Dispersing value activities where and in how many places in the world is the issue of ________. A) logistics B) clustering C) coordination D) configuration

D) configuration

36) All of the following are types of products that are usually exceptions to what is predicted by the product life cycle theory EXCEPT ________. A) trendy clothing B) luxury items C) differentiated products D) consumer durables

D) consumer durables

12) In a market economy the patterns of resource allocation are most directly influenced by ________. A) government administrators who monitor the equilibrium of supply and demand B) industry coalitions that strive to improve the efficiency of production and service C) consumer group alliances that negotiate with firms to improve product quality D) consumers who "vote" by their personal decision to buy or not buy products

D) consumers who "vote" by their personal decision to buy or not buy products

56) 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 ________. A) although visible expressions of culture are becoming homogenized basic differences in societal values remain strong B) globalization fulfills lower order needs in Maslow's hierarchy C) cultural imperialism is increasingly widespread D) cultural hybridization is occurring

D) cultural hybridization is occurring

54) 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 ________. A) the stronger work ethic typical of developed countries B) the spread of high-context cultures C) cultural fragmentation D) cultural imperialism

D) cultural imperialism

48) The two main categories in the balance of payments are the ________. A) merchandise exchange account and the services account B) external debt and the unilateral transfers account C) merchandise trade account and the capital account D) current account and the capital account

D) current account and the capital account

10) Which of the following has NOT been a major force increasing globalization in recent decades? A) liberalization of cross-border trade B) increase in and expansion of technology C) growing pressure from consumers D) decreasing prices of natural resources

D) decreasing prices of natural resources

6) The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT ________. A) life expectancy B) literacy C) environmental sustainability D) diversity

D) diversity

46) The Ethical Trading Initiative (ETI)is primarily focused on ________. A) fair trade laws for undeveloped countries B) tiered pricing by pharmaceutical firms C) greenhouse gas emission reduction D) employment practices of MNEs

D) employment practices of MNEs

42) An import tariff may be protective ________. A) only if it is on imports the country produces domestically B) if it serves primarily to restrict entry of hazardous materials C) if it does not generate significant tax revenue for essential industries D) even though the importing country does not produce the product

D) even though the importing country does not produce the product

26) A government that enforces its own laws on foreign subsidiaries of its domestic companies practices ________. A) civil law B) relativism C) externality D) extraterritoriality

D) extraterritoriality

39) Advantages of following a strategy of local responsiveness include the ________. A) improved ability to transfer skills to employees in different locations B) opportunity to adopt a global advertising program C) ease in standardizing manufacturing methods across countries D) flexibility to apply location-specific skills to local opportunities

D) flexibility to apply location-specific skills to local opportunities

10) Which type of exchange rate arrangement is based on supply and demand? A) soft peg B) hard peg C) crawling D) floating

D) floating

31) 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 ________. A) forward premium B) backward discount C) backward premium D) forward discount

D) forward discount

22) As a trading currency the euro is ________. A) more widely traded than the U.S. dollar in seven of the top ten currency markets in the world B) widely traded in London but not in any other major foreign-exchange markets in the world C) becoming more popular than the U.S. dollar because of its global acceptance D) gaining ground against the U.S. dollar in Eastern European countries

D) gaining ground against the U.S. dollar in Eastern European countries

49) 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 ________. A) polycentrism B) ethnocentrism C) neocentrism D) geocentrism

D) geocentrism

26) It is sometimes contended that by imposing import controls a country might be able to increase its exports. This contention is premised on ________. A) the country's simultaneous currency depreciation which decreases the price of its exports B) using the import taxes to institute efficiency measures in potential export industries C) raising domestic prices in one industry so that the excess domestic profits in that industry can compensate for the cost of dumping products from another industry into foreign markets D) getting other countries to maintain or relax their current import restrictions instead of escalating restrictions in a trade wa

D) getting other countries to maintain or relax their current import restrictions instead of escalating restrictions in a trade war

53) Google essentially views the entire world as one market and assumes that there are no fundamental differences among countries with regard to consumers' preferences. Google is engaging a(n) ________ strategy. A) international B) multidomestic C) transnational D) global

D) global

11) Communism primarily relies on a system of ________. A) private business ownership B) competitive pricing and marketing C) market-generated supply and demand D) government controlled economic activity

D) government controlled economic activity

7) Which of the following UNDESIRABLE results will most likely occur for a country running a favorable balance of trade? A) higher unemployment B) higher domestic interest rates C) fewer funds to invest abroad D) granting credit that may be risky

D) granting credit that may be risky

37) 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. A) pragmatic B) idealistic C) fatalistic D) high-context

D) high-context

29) 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 ________. A) supports the development of substitutions B) provides domestic industries with tax breaks C) receives low-interest loans from foreign banks D) holds a monopoly on the product or resource

D) holds a monopoly on the product or resource

38) Which of the following is NOT a factor driving local responsiveness among global firms? A) cross-national differences in distribution channels B) diverging consumer tastes and preferences C) cross-national differences in product standards D) host government support of freer international trade

D) host government support of freer international trade

51) Organizing work differently to improve productivity will likely fail ________. A) if the work force has a low tolerance for authoritarianism B) if workers participate in planning the improvement C) unless changes are compatible to competitor's practices D) if changes interfere with strongly held value systems

D) if changes interfere with strongly held value systems

49) Labor and capital mobility are intertwined because ________. A) illegal workers sometimes pay large sums to people who smuggle them into another country B) people cannot emigrate to another country unless they bring capital with them C) companies receive tax benefits for hiring immigrants D) immigrants bring an investment in human capital with them

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 ________. A) total of all consumption and investment that takes place in a national economy B) income generated in one country regardless of who owns the productive assets C) total of all economic activity in one country less services such as government administration health services and education D) income generated by both total domestic production and the international production activities of national companies

D) income generated by both total domestic production and the international production activities of national companies

45) The Gini coefficient estimates a country's ________. A) gross national product B) economic development C) political and legal risk D) income inequality

D) income inequality

13) The probability that a business is engaged in exporting tends to ________. A) decrease with the size of the firm B) increase with the product life cycle C) decrease with the product life cycle D) increase with the size of the firm

D) increase with the size of the firm

21) The perspective of ________ holds that as a company gains experience resources and confidence it progressively increases its scope of countries to which it exports. A) serendipity B) export management C) the born-global theory D) incremental internalization

D) incremental internalization

20) An Australian company makes athletic wear for women men and adults. After several years of successfully exporting its products to the U.K. and the U.S. the company began exporting to Japan. This is an example of ________. A) a born-global company B) a location advantage C) third-party exporting D) incremental internationalization

D) incremental internationalization

35) In conducting ________ a business sells goods directly to or through an independent domestic intermediary in the exporter's home country that exports the products to foreign markets. A) direct exporting B) global marketing C) strategic planning D) indirect exporting

D) indirect exporting

44) When the pressure for global integration is high and the pressure for local responsiveness is low a company is most likely to pursue a(n) ________ strategy. A) global B) transnational C) multidomestic D) international

D) international

45) Firms that pursue a(n) ________ strategy create value by transferring core competencies from the home market to foreign markets in which local rivals lack a competitive alternative. A) transnational B) multidomestic C) global D) international

D) international

38) Compared with a forward contract a futures contract ________. A) is more flexible B) is normally available through commercial banks C) does not guarantee a future exchange rate D) is only traded on an exchange

D) is only traded on an exchange

50) A voluntary export restriction (VER) refers to ________. A) an agreement between two countries to reciprocally restrict exports to one another B) requests by governments for companies to limit exports of militarily useful technology C) limiting companies' exports to increase domestic supplies D) limits placed on exports by a government of an exporting country at the request of the government of an importing country

D) limits placed on exports by a government of an exporting country at the request of the government of an importing country

55) A firm with operations in Denmark can most likely expect all of the following EXCEPT ________. A) high taxes B) significant regulation C) tough job-protection laws D) minimal monetary policies

D) minimal monetary policies

19) 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. A) state-directed B) market C) command D) mixed

D) mixed

39) A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system. A) civil B) common C) customary D) mixed

D) mixed

17) In a totalitarian political system ________. A) political power resides with the citizens of the country B) governments direct most economic activity but few social ones C) an individualistic outlook shapes political debate and policy formation D) one agent monopolizes political power

D) one agent monopolizes political power

22) Which of the following best describes the concept of serendipity in exporting? A) modifying products to meet cultural preferences B) initiating global sales through e-commerce methods C) relying too much on exports when domestic sales suddenly increase D) opportunistically responding to unsolicited orders from foreign customers

D) opportunistically responding to unsolicited orders from foreign customers

35) 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. A) forward rate B) bid C) offer D) option

D) option

27) In designing an export plan managers initially do all of the following EXCEPT ________. A) sequence tactics B) specify objectives C) identify useful resources D) organize financial support

D) organize financial support

50) A firm that concentrates on national cultural differences in terms of averages is more likely to ________. A) underestimate market demands B) increase political risks C) seek cultural collision D) overlook outliers

D) overlook outliers

12) The CEO of Coffman Enterprises wants to export products to foreign markets. However top executives at Coffman are concerned that the firm will face fierce competition from foreign rivals because Coffman lacks significant core competencies. The executives are most likely worried that Coffman lacks ________. A) capital advantages B) internalization advantages C) location advantages D) ownership advantages

D) ownership advantages

13) A(n) ________ ideology is the system of ideas that expresses the goals theories and aims of how society should work. A) technological B) economic C) legal D) political

D) political

54) Which of the following best describes arbitrage? A) using foreign exchange to fund new foreign direct investments B) purchasing foreign currency in anticipation of long-term trends C) using foreign-exchange instruments to speculate for profit D) purchasing foreign currency on one market for immediate resale on another market

D) purchasing foreign currency on one market for immediate resale on another market

31) Thomas is planning a vacation to Country X. On a tourism Web site he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency. Country X most likely uses which of the following? A) import deposit requirements B) multiple exchange rates C) import licensing D) quantity controls

D) quantity controls

48) A distinct disadvantage of an international strategy is ________. A) restricting the movement of core competencies to local markets B) capitalizing on the benefits of global learning C) customizing product offerings to local conditions D) relying on home managers' knowledge of foreign markets

D) relying on home managers' knowledge of foreign markets

46) The most internationally mobile factor of production is ________. A) labor B) management C) long-term capital D) short-term capital

D) short-term capital

47) Tied aid requires a recipient to ________. A) donate a portion of the funds to the donor country's infrastructure needs B) use the capital in any way as long as donor country approval is granted C) employ local workers in management positions D) spend the funds in the donor country

D) spend the funds in the donor country

27) In the spot market the ________ is the difference between the bid and offer rates and is the trader's profit margin. A) bid B) offer C) cross rate D) spread

D) spread

43) The integration-responsiveness (IR) grid expresses how a company's ________ is a function of the relationship between its value chain and the prevailing pressures for global integration or local responsiveness in its industry. A) value proposition B) target market C) mission D) strategy

D) strategy

7) 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? A) politicians in areas that grow sugar B) employees of sugar companies C) sugar company owners D) sugar consumers

D) sugar consumers

57) Which of the following calls for economic activity that meets present needs without hindering the future needs of society? A) privatization B) state capitalism C) economic freedom D) sustainable development

D) sustainable development

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? A) catastrophic B) distributive C) procedural D) systemic

D) systemic

58) The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________. A) depend more on production of nontradable goods and services B) encourage urbanization in emerging countries that lack infrastructure C) establish facilities in dispersed locations to hinder domestic competition D) take advantage of wage and skill differences among countries

D) take advantage of wage and skill differences among countries

50) What is typically the most difficult aspect of an export plan for SMEs? A) finding a freight forwarder B) identifying core competencies C) creating countertrade activities D) targeting the right foreign market

D) targeting the right foreign market

46) In most cases which type of government protection assistance is most controversial? A) business development services B) foreign business contacts C) trade expositions D) tariffs

D) tariffs

35) Which of the following is used as an illustration of the PPP theory for estimating exchange rates? A) the Composition of Official Foreign Exchange Reserves (COFER) B) the black market rate C) the import licensing ratio D) the Big Mac Index

D) the Big Mac Index

7) In a country that emphasizes collectivism ________. A) the interests of the individual are more important than the interests of the state B) one person or political party exercises absolute control over the political and economic systems C) the needs of society and the needs of individuals are treated as equally important D) the needs of society take precedence over individual freedoms

D) the needs of society take precedence over individual freedoms

54) All of the following are reasons piracy has occurred EXCEPT ________. A) technology allows copyrighted material to be reproduced cheaply without much loss of quality B) some countries offer little protection for certain products C) in some cultures people see little morally wrong in buying counterfeit goods D) the protection of intellectual property rights varies little from country to country

D) the protection of intellectual property rights varies little from country to country

54) The fact that there are few reciprocal agreements among countries on the licensing of professionals most likely means that ________. A) universities' study abroad programs do not enable students to obtain dual degrees and licenses from more than one country B) more service functions are being handled as not-for-profit C) people immigrate to those countries with the highest standards so as to more easily become licensed anywhere else D) there is an effective limitation on trade in services

D) there is an effective limitation on trade in services

53) In this exampl 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? A) those made in Japan with Japanese labor and capital B) those made in the United States with U.S. labor and capital C) those made in Japan with Japanese labor and U.S. capital D) those made in the United States with Japanese labor and U.S. capital

D) those made in the United States with Japanese labor and U.S. capital

41) Medco Pharmaceuticals charges a market price for heart medication to distributors in Italy and a discounted price for the same medication to distributors in Bangladesh. Medco is most likely using ________. A) discounted pricing B) skimmed pricing C) penetrated pricing D) tiered pricing

D) tiered pricing

40) What is the main motive for countries' protection of their film/cinema industries? A) to keep prices low for their citizens B) to improve their balance of payments C) to diversify their economies D) to maintain their cultural sovereignty

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 ________. A) trade specialization B) trade internalization C) trade creation D) trade diversion

D) trade diversion

4) Managers should understand the effect of trade protectionism because ________. A) trade protectionism may limit the number of people permitted to practice a specific profession B) trade protectionism requires the payment of high insurance rates to transport goods internationally C) trade protectionism may prevent companies' enactment of merger and acquisition agreements D) trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers

D) trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers

22) A useful way to understanding the purpose of strategy is to think of the firm as a(n) ________ composed of a series of distinct activities including production marketing materials management R&D human resources information systems and the firm infrastructure. A) activity network B) value constellation C) task succession D) value chain

D) value chain

33) Exporting below cost or below the home country price is called ________. A) countertrade B) an export-led development policy C) a strategic trade policy D) dumping

dumping

44) Which of the following statements most likely undermines the arguments for a strategic trade policy? A) Entrepreneurs rather than governments should take business risks. B) Developed countries have production lead time over developing countries. C) If big companies can figure out what products to develop so can governments. D) Governments have limited resources so industries with greater growth potential should be targeted.

m A) Entrepreneurs, rather than governments, should take business risks.

54) Presently which of the following countries is best characterized as a pure example of a command economy? A) Russia B) North Korea C) China D) Vietnam

m B) North Korea

19) The free trade theories of specialization primarily assume that ________. A) domestic resources are unable to move from the production of one good to another B) countries have objectives other than economic efficiency C) specialization triggers unemployment D) resources are immobile internationally

m D) resources are immobile internationally

53) Which of the following statements referring to intellectual property rights and violations is INCORRECT? A) Richer countries claim looser regulation of intellectual property rights will hinder innovation. B) Companies can register a global patent trademark or copyright through the World Trade Organization (WTO). C) The International Anti-Counterfeiting Coalition estimates international trade in counterfeit products at $600 billion a year. D) Developing markets claim tougher regulation of IPRs will slow if not halt

their economic development. , B) Companies can register a global patent, trademark, or copyright through the World Trade Organization (WTO).

59) Which of the following is Walmart's competitive advantage in Mexico? A) Walmart purchased all Mexican retail chains and eliminated competitors. B) Walmart is able to transfer its "everyday low prices" concept to Mexico. C) Walmart offers affordable

unique products for niche markets in Mexico. D) Customers prefer to buy from American companies instead of Mexican companies. , B) Walmart is able to transfer its "everyday low prices" concept to Mexico.

19) ________ people account for the largest percentage of global production. A) English-speaking B) Mandarin-speaking C) French-speaking D) Spanish-speaking

A) English-speaking

27) Which of the following statements would most likely be made by a SUPPORTER of globalization? A) Globalization encourages the adoption of uniform and superior standards for combating environmental problems. B) Economic growth created by globalization is largely in services. which involves the use of few nonrenewable resources. C) Global competition discourages resource-saving technologies which are costly. D) Air pollution and toxic runoff problems increase with global economic growth.

A) Globalization encourages the adoption of uniform and superior standards for combating environmental problems.

23) Governments have signed treaties to protect foreign-owned property rights such as investments and patents. A primary reason for doing so is to ________. A) gain reciprocal advantages B) reduce the domestic effects of other countries' economic policies C) deal with areas of concern outside the territory of any one country D) reduce national conflicts leading to violent political demonstrations

A) gain reciprocal advantages

57) 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 ________. A) globalization will slow in the future B) globalization is nevertheless inevitable C) international business will grow primarily on a regional basis D) private companies will replace international organizations in running the world's economy

A) globalization will slow in the future

27) 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 B) physiological C) non-fatalistic D) high-femininity

A) high masculinity

59) Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________. A) hiring host-country nationals who pay no taxes B) taking advantage of taxation laws in foreign countries C) sailing in international waters outside countries' tax jurisdiction D) paying substantial port fees instead of taxes during stopovers

A) hiring host-country nationals who pay no taxes

39) Visible exports and imports are ________. A) merchandise imports and exports B) the sum total of goods and services traded C) international transactions paid for in money rather than barter D) typically a country's least common international economic transactions

A) merchandise imports and exports

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) observe the behavior of people who have gained respect within that cultural environment B) rely on stereotypes which are based on averages to gain an understanding of the culture C) avoid cultural research studies because they perpetuate unjustified stereotypes and behaviors D) memorize the cultural variations that are typically encountered in a specific cultural environment

A) observe the behavior of people who have gained respect within that cultural environme

21) When a company successfully responds to foreign production and market opportunities ________. A) other companies will likely emulate its successful practices B) it likely has a long-term advantage over competitors C) it will downsize its domestic operations D) its home government likely raises taxes on the company

A) other companies will likely emulate its successful practices

16) Because consumers want a greater variety of goods and services at lower prices. many governments have ________. A) reduced their restrictions on the international movement of goods and services B) acted to tax most imports at a lower rate than domestic products C) sought to eliminate reciprocal advantages negotiated through international organizations and treaties D) increased their participation in multinational problem-solving efforts

A) reduced their restrictions on the international movement of goods and services

55) Critics of the view that regionalization will prevail over globalization most likely base their argument on the belief that ________. A) regionalization is a transition stage toward globalization B) neighboring countries are more apt to disagree politically than distant countries C) neighboring countries are too geographically similar to benefit from trade D) business in non-territorial areas is not regional

A) regionalization is a transition stage toward globalization

46) 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. A) social B) physical C) competitive D) political

A) social

37) Which of the following BEST explains how a firm reduces risk by operating internationally? A) taking advantage of business-cycle differences among countries B) buying competitive risk insurance unavailable domestically C) preventing competitors from operating in the countries it has entered D) operating in less competitive environments than those at home

A) taking advantage of business-cycle differences among countries

3) Managing and cultivating diverse teams is facilitated by first encouraging team members to ________. A) understand each other's culture before dealing with the tasks at hand B) jump into the task allowing the team members to react and adapt to each other C) allow team members to deal with the fellows as they would in their own culture D) establish strict rules on how the task will be performed

A) understand each other's culture before dealing with the tasks at hand

6) Which of the following is the most accurate statement about culture? A) Cultural variables can easily be isolated from other factors such as economic and political conditions. B) Although most cultural variables are universal the forms these variables take differ from culture to culture. C) Most cultural variables are superficial and can easily be influenced by environmental factors. D) Within a culture everyone responds to particular cultural variables the same way.

B) Although most cultural variables are universal, the forms these variables take differ from culture to culture.

12) Which of the following has MOST influenced consumers to demand access to foreign-made products? A) Declining global affluence has caused consumers to seek out lower-priced products from abroad. B) Consumers have become more efficient in using media and technologies to compare prices worldwide. C) Fearing that their governments will enact restrictive policies on imports consumers are stocking up on foreign products before restrictions are put in place. D) Expectations of rising prices of foreign products have caused consumers to seek foreign products before their prices become prohibitive.

B) Consumers have become more efficient in using media and technologies to compare prices worldwide.

2) Which of the following is NOT true about cultural diversity? A) Companies may gain competitive advantages by bringing together people of diverse backgrounds. B) Cultural diversity is most successful when domestic and foreign firms establish joint ventures. C) Cultural diversity may help a company gain deeper knowledge about products and services. D) The process of bringing people of different national cultures together is often difficult.

B) Cultural diversity is most successful when domestic and foreign firms establish joint ventures.

51) 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 ________. A) Fiat competes mainly on a focus strategy whereas Ferrari competes mainly on a mass-market strategy B) Fiat competes mainly on a mass-market strategy whereas Ferrari competes mainly on a focus strategy C) Ferrari faces global competitors in China whereas Fiat competes in China mainly against Chinese competitors D) although Ferrari did not build an engine plant it will use the same Fiat engines in its models

B) Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly on a focus strategy

18) Which of the following languages has the most NATIVE speakers? A) English B) Mandarin C) Spanish D) Hindi

B) Mandarin

31) Which of the following statements would most likely NOT be supported by an advocate of offshoring? A) Offshoring increases the number of high-value jobs in the home countries of offshoring companies. B) Offshoring is fundamentally better for workers than the introduction of labor-saving technologies. C) Workers displaced due to offshoring are able to find new jobs as easily as those displaced by technology. D) There are upper limits to offshoring because of the lack of skilled workers willing to work permanently for low wages.

B) Offshoring is fundamentally better for workers than the introduction of labor-saving technologies.

56) Which of the following is NOT a common argument for the slowing of future globalization? A) Antiglobalization interests have been successful in electing parties that oppose freer movement of trade or people. B) Technological transportation and communication advances will decline in the near future. C) Major countries have either ignored certain international treaties or have refused to sign them. D) The growing split between those who succeed in a global environment and those who do not will foster greater antiglobalization sentiments.

B) Technological transportation, and communication advances will decline in the near future.

7) Which of the following is an indication of the increased globalization of business since the end of World War II? A) Foreign trade has largely replaced foreign ownership as a means of conducting international business. B) World trade has grown more rapidly than world production. C) Globally. consumers now depend on foreign output for more than half their consumption. D) Countries have increased their import restrictions to counter the rising tide of imports.

B) World trade has grown more rapidly than world production.

25) Studies indicate a strong correlation between the intensity of religious belief and ________. A) a desire to convert productivity gains into more leisure time B) an adherence to some attributes that lead to economic growth C) the belief that material success is related to salvation D) the degree of ethnocentrism exhibited in a culture

B) an adherence to some attributes that lead to economic growth

5) Devon an 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 ________. A) conduct better job interviews B) better understand how foreign operations affect the company's competitive position C) supervise and evaluate subordinates who have global assignments D) understand the legalities of importing and exporting products overseas

B) better understand how foreign operations affect the company's competitive position

5) Devon, an 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 ________. A) conduct better job interviews B) better understand how foreign operations affect the company's competitive position C) supervise and evaluate subordinates who have global assignments D) understand the legalities of importing and exporting products overseas

B) better understand how foreign operations affect the company's competitive position

32) Safe work environments motivate ________ challenges motivate ________. A) individualist collectivists B) collectivists individualists C) non-fatalist fatalists D) materialists non-materialists

B) collectivists individualists

17) Cultural change imposed by an alien culture is called ________. A) multicultural ethnocentrism B) cultural imperialism C) collectivism D) high-context

B) cultural imperialism

11) Certain attitudes can link groups such as managers from different nations more closely than managers within a given nation. As a result international businesspeople should most likely ________. A) assume that there are few significant cultural differences among nations B) examine relevant groups when comparing nations C) adopt universal operating methods D) avoid cultural imperialism

B) examine relevant groups when comparing nations

32) A major criticism of offshoring is that it ________. A) increases production costs B) exchanges good jobs for bad jobs C) threatens the sovereignty of larger countries D) allows companies to avoid payment of any taxes

B) exchanges good jobs for bad jobs

47) Managers who are knowledgeable about ________ are better able to identify the location quantity quality and availability of the world's natural resources. A) political factors B) geographic factors C) competitive factors D) cultural factors

B) geographic factors

35) Expatriate managers located in cultures characterized by ________ have noticed that local employees are highly motivated by retirement programs. A) low uncertainty avoidance B) high future orientation C) low masculinity D) high power distance

B) high future orientation

8) Most of the world's goods and services are sold ________. A) in international markets B) in the countries where they are produced C) through exports to small countries D) through exports to large countries

B) in the countries where they are produced

41) 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 ________. A) turnkey operation contract B) licensing agreement C) portfolio investment D) joint venture

B) licensing agreement

9) The nation offers a workable reference for studying cultural differences because ________. A) a nation contains only one distinct culture B) similarity among people is both a cause and effect of national boundaries C) the commonality of language within a nation eases the process of conducting surveys D) different groups within the same country always have more in common with each other than with groups in other countries

B) similarity among people is both a cause and effect of national boundaries

22) International businesspeople need to understand social stratification systems where they do business because ________. A) such systems reflect a culture's willingness to accept new products B) such systems indicate who people in a given culture will likely respect more C) the high similarity among countries lets firms effectively use global hiring practices D) what is an ascribed group membership in one country is an acquired one in another

B) such systems indicate who people in a given culture will likely respect more

29) Although globalization may bring economic growth critics nevertheless contend that ________. A) the growth is too fast B) the inequality of gains puts some people in a relatively worse economic situation C) this growth is mainly for the future. thus ignoring present economic growth needs D) the cultural foundations of sovereignty are supported by globalization

B) the inequality of gains puts some people in a relatively worse economic situation

16) Creolization refers to ________. A) government efforts to maintain a distinct cultural identity through legislation and language B) the process of mixing elements of an outside culture with those of a national culture C) the use of stereotypes to describe a culture D) changes as cultures evolve over time

B) the process of mixing elements of an outside culture with those of a national culture

45) The term used by the United Nations as a synonym for multinational enterprise is ________. A) multinational corporation B) transnational company C) international firm D) born-global

B) transnational company

1) ________ consists of specific learned norms based on attitudes values and beliefs of a group of people. A) Ethnology B) Civilization C) Culture D) Doctrine

C) Culture

20) Which of the following statements about the English language is most likely NOT true? A) The largest portion of global output is in English-speaking countries. B) A large portion of MNEs are headquartered in English-speaking countries. C) English is the official national language in most countries where FDI is encouraged. D) Many MNEs from non-English speaking countries use English as their operating language.

C) English is the official national language in most countries where FDI is encouraged.

6) The shifting of national borders has most likely created which of the following situations for international business? A) It has left rural residents more isolated from technology. B) It has complicated the understanding of behavioral factors affecting business. C) It has increased physical barriers to exporting. D) It has slowed communications between a company's headquarters and foreign operations.

C) It has increased physical barriers to exporting.

2) Which of the following best defines international business? A) It includes all economic flows between two or more countries. B) It includes all private economic flows between two or more countries. C) It includes all business transactions involving two or more countries. D) It includes all business transactions in countries other than your home country

C) It includes all business transactions involving two or more countries.

2) Which of the following best defines international business? A) It includes all economic flows between two or more countries. B) It includes all private economic flows between two or more countries. C) It includes all business transactions involving two or more countries. D) It includes all business transactions in countries other than your home country.

C) It includes all business transactions involving two or more countries.

48) 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. A) political B) geographic C) behavioral D) legal

C) behavioral

4) When divergent cultures come in contact ________ occurs. A) power distance B) culture shock C) cultural collision D) group membership

C) cultural collision

15) Contact among countries brings about cultural change which is a process called ________. A) cultural collision B) cultural imperialism C) cultural diffusion D) polycentrism

C) cultural diffusion

36) A firm is currently seeking resources from foreign countries. Which of the following is the LEAST likely reason for doing so? A) manufacturing products at a lower cost B) gaining knowledge about a specific market C) following a customer into the global market D) differentiating its products from the competition

C) following a customer into the global market

35) 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? A) acquiring new resources B) minimizing corporate risks C) increasing sales and profits D) obtaining competitive advantages

C) increasing sales and profits

43) Which term refers to two or more companies that share ownership of an FDI? A) turnkey operation B) transnational firm C) joint venture D) franchise

C) joint venture

4) In terms of international business it is most accurate to say that ________. A) there is a universal "best way" to conduct business B) global competition affects large companies but not small ones C) most firms depend either on foreign markets and supplies or compete against companies that do D) government regulation of international business has little effect on a company's profits

C) most firms depend either on foreign markets and supplies or compete against companies that do

4) In terms of international business, it is most accurate to say that ________. A) there is a universal "best way" to conduct business B) global competition affects large companies but not small ones C) most firms depend either on foreign markets and supplies or compete against companies that do D) government regulation of international business has little effect on a company's profits

C) most firms depend either on foreign markets and supplies or compete against companies that do

60) A flag of convenience is ________. A) the declaration that a product is made in a country that has easier legal access to a given foreign market B) a designation for products originating within a particular trading group C) the registration of a ship by a shipping company in a country that charges low taxes D) the indication that a shipping organization can sail in international waters

C) the registration of a ship by a shipping company in a country that charges low taxes

25) What is the most likely reason that governments cooperate with each other through treaties agreements and consultations? A) to gain an advantageous division of labor B) to be in compliance with United Nations' requirements C) to attack problems jointly that one country acting alone cannot solve D) to assure that all countries get an equitable share of taxes from multinational enterprises

C) to attack problems jointly that one country acting alone cannot solve

33) Managers should be more precise in their directions to subordinates when ________. A) the company has a philosophy of geocentrism B) the society believes age equals wisdom C) uncertainty avoidance is high D) power distance is low

C) uncertainty avoidance is high

26) Which of the following is the LEAST likely reason that small countries worry about overdependence caused by globalization? A) A large country on which they depend may pressure them on political matters. B) A large international firm may dictate its terms of operations in a small country. C) A large company may exploit legal loopholes to avoid tax payments. D) A large country may substantially increase its demand for the small country's production.

D) A large country may substantially increase its demand for the small country's production.

52) 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? A) Although countries' market sizes differ companies usually face about the same number of competitors in each national market. B) In most industries companies face the same competitors in each country where they operate. C) It takes about the same amount of resources to gain national distribution in one country versus another. D) Being a leader in one country does not guarantee market leadership in another country.

D) Being a leader in one country does not guarantee market leadership in another country.

17) Which of the following best explains recent governmental relaxation of restrictions on cross-border trade or resource movements? A) Most countries face shortages of workers. so they seek immigrants who can help them produce more. B) Governments believe that this will decrease the need to make their own companies more innovative. C) Consumers increasingly want to buy goods and services produced in their own countries. making restrictions less necessary. D) Governments believe that domestic producers will become more efficient as a result of foreign competition.

D) Governments believe that domestic producers will become more efficient as a result of foreign competition.

40) An example of a Japanese service export is a visit by a ________. A) Japanese citizen to Disneyland in the United States B) Japanese citizen to the Japan Pavilion at Epcot Center in the United States C) U.S. citizen to the Japan Pavilion at Epcot Center in the United States D) U.S. citizen to Tokyo Disneyland in Japan

D) U.S. citizen to Tokyo Disneyland in Japan

14) Most people's basic value system is ________. A) modified significantly between childhood and adulthood B) altered during adulthood through imposition C) affected primarily by teenage peer pressure D) acquired mainly during early childhood

D) acquired mainly during early childhood

18) A company starting out with a global focus usually because of the international experience of its founders is called a ________. A) multinational enterprise B) transnational company C) strategically allied company D) born-global company

D) born-global company

49) In addition to understanding the laws affecting business in countries where their companies operate it is most important for managers to understand the ________. A) methods for appointing local judges B) ethical rationale behind the laws C) history of the local legal system D) degree of law enforcement

D) degree of law enforcement

31) 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? A) "employee-of-the-month" programs B) extensive vacation time C) on-the-job challenges D) good health benefits

D) good health benefits

28) Limitation 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? A) why smaller countries are concerned that large international companies are powerful enough to dictate operating terms B) why globalization is needed to foster uniform standards for combating environmental problems C) how cultural homogeneity threatens the cultural foundation of smaller nations D) how global interests can conflict with a country's local interests

D) how global interests can conflict with a country's local interests

21) Although English is referred to as the "international language of business"________. A) it is less frequently used than French in international business B) there is a growing disagreement over which version of English to use e.g. British American or Australian C) companies headquartered outside English-speaking countries all use their official language as their operating language D) monolingual English speakers may experience more difficulty in the future in communicating on a worldwide basis

D) monolingual English speakers may experience more difficulty in the future in communicating on a worldwide basis

9) According to the A.T. Kearny/Foreign Policy Globalization Index. countries ________. A) tend to be ranked similarly on all four dimensions B) are more globalized on the political dimension than on personal contact C) that are large in land mass and population are less globalized than small countries D) sometimes rank high on one dimension and low on another

D) sometimes rank high on one dimension and low on another

54) The view that globalization is inevitable is most likely based on the belief that ________. A) international organizations will replace nation-states B) protesters against globalization will be persuaded to change their views C) people want more global homogeneity of cultures D) technical advances in transportation and communications are highly persistent

D) technical advances in transportation and communications are highly persistent

22) Which of the following is NOT one of the three main reasons affecting international business for governments to cooperate with each other? A) to attack problems jointly that one country acting alone cannot solve B) to deal with issues that lie outside the territory of any nation C) to gain reciprocal advantages D) to establish a common language

D) to establish a common language

44) A multinational enterprise (MNE) is best defined as a firm ________. A) that is a member of the Fortune 500 B) with foreign business partners C) involved in global franchising D) with foreign direct investments

D) with foreign direct investments