G.D Final

30. Country A can produce product X, but it can also buy it at a cheaper price from Country B. Which course of action is suitable in this situation according to Adam Smith's theory of absolute advantage? A. Country A should import product X from Country B and it should not attempt to produce it at home. B. Country A should partly import the product and also produce it domestically. C. Country A should produce more of product X and should attempt to obtain an absolute advantage for the product. D. Country A should subsidize the production of product X to obtain an absolute advantage over Country B.

A. Country A should import product X from Country B and it should not attempt to produce it at home.

27. Which observation is consistent with Michael Porter's theory of national competitive advantage? A. Factors such as domestic demand and domestic rivalry explain nations' dominance in production. B. Countries should produce only those goods for which they have a comparative advantage. C. Interplay between the factors of production cause international marketing decisions. D. International differences in labor productivity determine nations' supremacy in production.

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

25. Identify the correct statement about the rights theories. A. Human beings have fundamental rights and privileges that transcend national boundaries. B. The moral worth of actions or practices is determined by their consequences. C. People should be treated as ends, never purely as means to the ends of others. D. The only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

A. Human beings have fundamental rights and privileges that transcend national boundaries.

14. Which statement represents a first-mover advantage? A. International firms may gain experience in that country's business practices. B. An international firm can reap the rewards of growth in a new market without incurring the risks. C. A firm may have the opportunity to be the first to introduce generic brands to a market. D. A firm can gauge how well their product will do in the market without taking the risk of investing there.

A. International firms may gain experience in that country's business practices.

46. ________ include the design, creation, and delivery of a product. A. Primary activities B. Core competencies C. Support activities D. Universal needs

A. Primary activities

17. Max Weber theorized that there was a relationship between Protestantism and the emergence of modern capitalism because A. Protestant ethics emphasize the importance of hard work and wealth creation and frugality. B. Protestantism promotes the hierarchical domination of religious and social life. C. Protestantism states that spiritual growth is more important than material wealth. D. Protestantism promotes blind loyalty to employers.

A. Protestant ethics emphasize the importance of hard work and wealth creation and frugality.

23. Kyler was managing a factory in Thailand, and had a decision to make. The factory used child labor, which he disapproved of, but he knew the families of these children might starve without their income. This situation, in which none of the available alternatives seems morally acceptable, is called A. an ethical dilemma. B. noblesse oblige. C. the tragedy of the commons. D. the free rider problem.

A. an ethical dilemma.

45. Systematic risk refers to movements in a stock portfolio's value that are A. attributable to macroeconomic forces affecting an economy. B. specific to the firm or individuals who invest in a portfolio. C. attributable to factors pertaining to an individual firm. D. specific to the company that facilitates the investment portfolio.

A. attributable to macroeconomic forces affecting an economy.

60. In a letter of credit transaction, the importer secures the letter of credit A. before product shipment. B. after product shipment. C. from the exporter's bank. D. after receiving the product.

A. before product shipment.

33. How is it that spot exchange rates are determined? A. by the interaction between the demand and supply of one currency relative to other currencies B. by taking the previous days' average of both currencies to be traded C. by the daily set rate posted by the International Monetary Fund D. by predicting future currency movements and applying a factor to the current day's trade

A. by the interaction between the demand and supply of one currency relative to other currencies

24. According to the ________ point of view, a firm should adopt the ethics of the culture in which it is operating. A. cultural relativism B. righteous moralist C. naive immoralist D. utilitarian approach

A. cultural relativism

31. The rate at which one currency is converted into another is known as the: A. exchange rate. B. currency swap rate. C. fluctuation rate. D. carry over rate.

A. exchange rate

42. The cost of capital is A. higher in a purely domestic capital market than in a global market. B. lower in a domestic capital market than in an international market. C. higher in a global market than in a purely domestic capital market. D. the same in either a global market or a purely domestic capital market.

A. higher in a purely domestic capital market than in a global market.

5. In a(n) ________ society, the welfare of society is best served by letting people pursue their own economic self-interest. A. individualist B. collectivist C. communist D. totalitarian

A. individualist

54. In many countries, political considerations make ________ the only feasible entry mode. A. joint ventures B. franchises C. licensing agreements D. wholly owned subsidiaries

A. joint ventures

41. Banks such as JPMorgan Chase and investment firms such as Charles Schwab are referred to as ________ in that they connect investors and borrowers, either directly or indirectly. A. market makers B. currency traders C. financial advisors D. venture capitalists

A. market makers

36. The currency of Lebanon is fixed relative to the U.S. dollar. This means that the exchange rate between the Lebanese pound and other currencies is determined by the dollar exchange rate. This reflects a A. pegged exchange rate. B. floating exchange rate. C. managed float system. D. fixed exchange rate.

A. pegged exchanges rate

35. Capital flight is most likely to occur when A. the value of the domestic currency is depreciating rapidly because of hyperinflation. B. a country's economic prospects are solid and promising. C. the value of the domestic currency is appreciating rapidly. D. the value of the foreign currency is depreciating rapidly.

A. the value of the domestic currency is depreciating rapidly because of hyperinflation.

59. During the 1960s, the old Soviet Union and the then-communist states of eastern Europe used countertrade to purchase imports because A. their currencies were generally nonconvertible. B. licensing options had diminished. C. their currencies traded higher than all other currencies. D. switch trading had become too cumbersome as a means of trade.

A. their currencies were generally nonconvertible.

What impedes firms from achieving maximum reach of their productive activities to locations around the globe? A. transportation costs B. government deregulations C. reduction of barriers to trade between countries D. reduction of barriers to foreign direct investment

A. transportation costs

20. Identify the incorrect statement about environmental regulations A. Environmental regulations are often lacking in developing nations. B. Environmental regulations are similar across developed and developing nations. C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, and so on. D. Inferior environmental regulations in host nations, as compared to the home nation, can lead to ethical issues.

B. Environmental regulations are similar across developed and developing nations.

37. Increasingly the ________ has been acting as macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt certain macroeconomic policies. A. Economic and Social Council (ECOSOC) B. International Monetary Fund (IMF) C. United Nations (UN) D. World Bank

B. International Monetary Fund (IMF)

7. For what reason might command economies tend to stagnate? A. Costs are tightly controlled and business are forced to be efficient rather than dynamic and innovative. B. The abolition of private ownership means there is no incentive for individuals and no competition. C. All economic resources are mobilized for the public good. D. Individuals in command economy countries lack the skills to be innovative.

B. The abolition of private ownership means there is no incentive for individuals and no competition.

18. Which observation is correct? A. The economic principles established in the Koran are against free enterprise. B. The economic principles of Islam prohibit the payment or receipt of interest. C. The Koran speaks disapprovingly of earning legitimate profit through trade and commerce. D. Protection of the right to private property is not acceptable within Islam.

B. The economic principles of Islam prohibit the payment or receipt of interest.

15. A newly established U.S-based firm trying to secure business in a foreign country bribes a foreign government official in order to obtain business over which that foreign official has authority. Which statement regarding the Foreign Corrupt Practices Act (FCPA) applies to this scenario? A. This practice is allowed by the FCPA because the bribe was to a government official rather than a business owner or representative. B. This would be an illegal practice in all respects according to the FCPA. C. Because this is a U.S.-based business operating overseas, this practice is acceptable to the FCPA. D. The FCPA will overlook this practice for now; once the U.S. company has an established business overseas, any subsequent bribes will be illegal.

B. This would be an illegal practice in all respects according to the FCPA.

39. Which argument strengthens the idea of floating exchange rates? A. External agencies should not interfere in the monetary policies of a country. B. Trade deficits can be corrected through changes in exchange rates. C. Changes in exchange rates will not impact the trade balance in a country. D. Governments should act in ways to minimize the uncertainty in monetary markets.

B. Trade deficits can be corrected through changes in exchange rates.

3. The downside of increased globalization is A. global financial contagions are less likely. B. a severe crisis in one region can affect the entire globe. C. one nation may become too powerful. D. the potential for increased exploitation of undeveloped nations by developed nations.

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

38. Exchange rates are ________ under a pure "free float" system. A. completely balanced B. determined by market forces C. wildly variable and unpredictable D. determined by the government

B. determined by market forces

51. A company has developed a new, innovative product. If it is quick to enter a new market, it will have the ability to preempt rivals and capture demand by establishing a strong brand name and customer satisfaction. In other words, this company will have captured A. pioneering advantages. B. first-mover advantages. C. initial competencies. D. late-mover advantages.

B. first-mover advantages.

2. Which factor has contributed to the globalization of markets? A. a decrease in foreign direct investment B. global convergence of consumer tastes and preferences C. an increase in cross-border barriers to trade D. the trend to separate a homogeneous market into separate national markets

B. global convergence of consumer tastes and preferences

11. A nation wanting to fuel long-term economic growth will focus on which two factors? A. state ownership of enterprises and control of trade activities B. innovation and entrepreneurial activity C. education and tax relief. D. strong infrastructure and business incentives to growth

B. innovation and entrepreneurial activity

19. According to Geert Hofstede's study, which cultural dimension would be characterized by a greater readiness to take risks and less emotional resistance to change? A. high power distance cultures B. low uncertainty avoidance C. high collectivism D. low power distance cultures

B. low uncertainty avoidance

28. The theory of comparative advantage suggests that trade is a ________ game in which all countries that participate realize economic gains. A. net-sum B. positive-sum C. zero-sum D. negative-sum

B. positive-sum

49. What is one of the two types of competitive pressure that affects the ability of multinational enterprises to compete in the global marketplace? A. pressure for cost increases B. pressure for local responsiveness C. pressure for value creation D. pressure for increased profitability

B. pressure for local responsiveness

6. In a pure market economy, A. all productive activities are owned by the state. B. production is determined by the interaction of market forces of supply and demand. C. collectivist goals are given priority over individual goals. D. the prices at which goods are sold are determined by the government.

B. production is determined by the interaction of market forces of supply and demand.

48. Economies of scale arise from which source? A. increasing fixed costs by limiting them to small volumes B. serving domestic and international markets from the same production facilities C. serving only domestic markets D. bargaining with distributors to drive up the product costs

B. serving domestic and international markets from the same production facilities

44. Which statement is true of the deregulation of the financial industry? A. Countries can strengthen the global capital market by encouraging strict regulations. B. Financial services have historically been the most deregulated of all industries. C. Deregulation helped the development of an international capital market. D. Deregulation compels financial services companies to remain as domestic companies.

C. Deregulation helped the development of an international capital market.

43. Which statement is true of Eurocurrency? A. The Eurocurrency market is a relatively high-cost source of funds. B. It is produced and banked within European countries. C. Eurocurrency can be created anywhere in the world. D. It is used only for internal transactions within European Union.

C. Eurocurrency can be created anywhere in the world.

16. Which statement is true about a class system? A. A class system is a more rigid form of social stratification, compared to a caste system. B. A class system is a closed form of stratification. C. Social mobility within a class system varies from society to society. D. In a class system, social position is determined at birth and cannot be changed during an individual's lifetime.

C. Social mobility within a class system varies from society to society.

21. Which observation about the Foreign Corrupt Practices Act is true? A. The act outlawed the paying of bribes to foreign government officials to gain business. B. There is enough evidence that it put U.S. firms at a competitive disadvantage. C. The act originally allowed for "facilitating payments." D. The Nike case was the impetus for the 1977 passage of this act.

C. The act originally allowed for "facilitating payments."

52. In ________, the contractor agrees to handle every detail of the project for a foreign client. A. a joint venture B. an exporting agreement C. a turnkey project D. a licensing agreement

C. a turnkey project

4. When ________ is emphasized, an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society." A. individualism B. totalitarianism C. collectivism D. theocracy

C. collectivism

8. One key component of a country's legal system is A. establishing a mixed economy. B. taking a hands-off approach to business practices. C. defining the rights and obligations of those involved in business transactions. D. leaving the monitoring of the way business transactions are executed to the United Nations.

C. defining the rights and obligations of those involved in business transactions.

12. Many states in Asia, Latin America, and Western Europe have shifted away from a mixed economy to a market-based economy. Which measure is most likely to be promoted by such states? A. state ownership of enterprises B. fixing of prices by the government C. deregulation of the economy D. lowering competition

C. deregulation of the economy

9. Investing in ________ is an important determinant of economic development as it leads to higher growth rates and a more productive population. A. services B. centralized urban centers C. education D. manufacturing

C. education

26. Antonio is an artisan. The country he lives in allows him to sell his goods to people in other countries without any quotas or tariffs. Likewise, he is free to buy materials he needs for his craft from other countries without any restrictions. The country in which Antonio lives practices A. fair trade. B. socialism. C. free trade. D. mercantilism.

C. free trade.

53. An advantage of ________ with a local partner is the knowledge of the local environment that the local partner contributes to the venture. A. turnkey contracts B. licensing contracts C. joint ventures D. wholly owned subsidiary contracts

C. joint ventures

55. An advantage of forming a strategic alliance is that it helps firms A. protect their procedures and technologies. B. reduce the level of conflicts that occur within an organization. C. share the risks of developing new products or processes. D. increase the cultural similarities between employees.

C. share the risks of developing new products or processes.

32. Currency ________ typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates. A. hedging B. risk mitigation C. speculation D. arbitrage

C. speculation

10. GNI per person figures can be misleading because A. they also include barter agreements. B. they provide a dynamic picture of development. C. they don't consider differences in the cost of living. D. they don't consider exchange rate.

C. they don't consider differences in the cost of living

50. When the firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness, the ideal strategy to follow is the ________ strategy. A. global standardization B. localization C. transnational D. international

C. transnational

57. Which statement is true of countertrade? A. Countertrade reduces the profitability of competing firms and is considered an unethical practice. B. Countertrade is a conventional means to pay exporters. C. Smaller organizations commonly use countertrade in international transactions. D. Countertrade occurs when goods and services are traded for other goods and services.

D. Countertrade occurs when goods and services are traded for other goods and services.

56. What is a common difficulty that traders face when exporting goods or services to other countries? A. Small firms tend to be more aggressive than larger firms in global trade. B. Governments do not provide much assistance to exporters. C. Growth opportunities are often limited in global markets. D. Exporters often face voluminous paperwork and complex formalities.

D. Exporters often face voluminous paperwork and complex formalities.

47. ________ are most likely to discourage global expansion of businesses. A. Factor endowments B. Economies of scale C. Location economies D. Trade barriers

D. Trade barriers

13. Which country is engaged in deregulation efforts? A. a country that implements a simplified income tax filing system B. a country that takes over a leading private bank to prevent it from filing for bankruptcy C. a country that provides agricultural subsidies to farmers D. a country that encourages competition and attracts foreign direct investment

D. a country that encourages competition and attracts foreign direct investment

40. An advantage of using the gold standard is that the standard A. makes sure that goods are not priced out from markets due to inflation. B. does not require a commitment from a nation to maintain its currency's value. C. effectively prevents the devaluation of currencies across the world. D. contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries.

D. contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries.

34. The simultaneous purchase and sale of a given amount of foreign exchange for two different value dates is referred to as A. currency pairing. B. carry trade. C. currency exchange. D. currency swap.

D. currency swap

58. A U.S. company would invest in export credit insurance when it A. is dealing in a country with nonconvertible currency. B. has received a letter of credit from the importer's bank. C. is unable to obtain any pre-export financing. D. is exposed to the risk that an importer may default on payment.

D. is exposed to the risk that an importer may default on payment.

29. New trade theory suggests that nations A. increase their commitment to research and development. B. adopt policies that promote strong competition within domestic markets. C. cannot benefit from trade when they do not differ in resource endowments or technology. D. may benefit from trade even when they do not differ in resource endowments or technology.

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

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

D. permitted under the amended Foreign Corrupt Practices Act.