Global Business Mid-term

40) After TurboAir opened a facility in a foreign country, it learned that child labor was acceptable in that nation and agreed to hire a group of 15-year-old children as full-time employees. Which philosophical approach to ethics is TurboAir using? A) Cultural relativism B) Just distribution C) Kantian ethics D) Righteous moralist E) Sullivan principles

A) cultural relativism

58) Factor endowments, demand conditions, related and supporting industries, and ________ are the four broad attributes that make up Porter's Diamond Model A) firm strategy, structure, and rivalry B) diminishing returns C) government intervention policies D) first-mover advantages E) staff hierarchy and training

A) firm strategy, structure, and rivalry

55) The economic and strategic advantages that accrue to early entrants in an industry are called A) first-mover advantages. B) comparative advantages. C) absolute advantages. D) economies of scale. E) factor endowments.

A) first-mover advantages

76) A firm will favor FDI over exporting as an entry strategy when A) the costs of establishing production facilities are high. B) the transportation costs or trade barriers are high. C) there are problems associated with doing business in a different culture. D) the products involved have a high value-to-weight ratio. E) the firm wants to occupy a position that falls inside the efficiency frontier.

B) the transportation costs or trade barriers are high

26) China, South Korea, Taiwan, Singapore, and Hong Kong have had the fastest-growing economies in the past 40 years. What did these five countries have in common at the start of their economic spur? A) extensive trade agreements B) undemocratic governments C) active entrepreneurial activity D) high tariff barriers E) strong property rights protection

B) undemocratic governments

20) As a result of ________, large amounts of economic activity in India are not made official and the GDP figures of the country fail to tell the entire story of the economy. A) a large population B) unrecorded cash transactions C) deregulation D) nationalization E) closed totalitarianism

B) unrecorded cash transactions

37) Ten years after he proposed what came to be known as Sullivan's principles, Leon Sullivan concluded that following his principles A) was the most ethical way of doing business in South Africa. B) was not sufficient to ethically justify the existence of Western businesses in South Africa. C) would be effective only when companies opposed democracy in South Africa. D) had led international companies to successfully combat the apartheid regime in South Africa. E) would safeguard the citizens and businesses in South Africa from Western businesses.

B) was not sufficient to ethically justify the existence of Western businesses in South Africa

32) What is the common aspect of the teachings of Hinduism and Buddhism? A) Both stress the afterlife and spiritual achievement rather than material progress. B) Both support the existence of a caste system. C) Both advocate the same kind of extreme ascetic behavior. D) Both propagate the Noble Eightfold Path as a route for transformation. E) Both condemn the payment or the receipt of interest on loans and deposits.

A) Both stress the afterlife and spiritual achievement rather than material progress

14) Which legal system is based on tradition, precedent, and custom? A) common law B) civil law C) autocracy law D) monarchy law E) universal law

A) common law

52) What is true of the relationship between trade and economic growth? A) Countries open to international trade display higher growth rates than those that close their economies to trade. B) Within a group of developing countries, closed economies grow faster than open economies. C) The Leontief paradox notes that adopting an open economy and embracing free trade does not reward a nation with higher economic growth. D) Free trade hampers economic growth and leads to lower living standards in the long run. E) Free trade has historically benefited poor counties and hence trade barriers should be introduced to protect rich countries from exploitation.

A) Countries open to international trade display higher growth rates than those that close their economies to trade

68) Which multilateral trade agreement was established under U.S. leadership in 1947, with the objective to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like? A) General Agreement on Tariffs and Trade (GATT) B) North American Free Trade Agreement (NAFTA) C) Central American Free Trade Agreement (CAFTA) D) Free Trade Areas of the Americas (FTAA) E) North Atlantic Treaty Organization (NATO)

A) General Agreement on Tariffs and Trade (GATT)

59) Which statement reflects a pervasive finding of Porter's study? A) Successful industries within a country tend to be grouped into clusters of related industries. B) Trade increases the specialization of production within an industry. C) The pattern of trade we observe in the world economy may be the result of first-mover advantages. D) Purchasing power parity of a country determines its demand conditions. E) Differences in technology may lead to differences in productivity, which in turn, drives international trade patterns.

A) Successful industries within a country tend to be grouped into clusters of related industries

50) Garments are exported from China to the United States on a daily basis. In turn, the United States exports agricultural products like soybeans to China. Which statement best explains the trade equation between China and the United States? A) Tariff barriers determine the flow of goods and services between nations. B) Countries are simultaneously encouraging exports and discouraging imports. C) First entrants to the industry ensure their nations have the first-mover advantages. D) Nations with an absolute advantage in producing certain goods trade them for goods produced by other countries. E) Gold and silver are the mainstays of national wealth and essential to vigorous commerce.

A) Tariff barriers determine the flow of goods and services between nations

79) One way to describe the free market view is to say that A) a country should specialize in the production of a good that it can produce most efficiently. B) a country should focus on importing goods that it can also produce if those goods are produced at a higher cost elsewhere. C) an MNE is an instrument of imperialist domination. D) host-country nations of a company are never given the same consideration as a home-country nation. E) less-developed nations are kept relatively backward and dependent on advanced capitalist nations for employment.

A) a country should specialize in the production of a good that it can produce most efficiently

48) One of the central beliefs of mercantilism is that A) a country's government should intervene to achieve a surplus in the balance of trade. B) a large volume of trade is essential regardless of whether it comes from imports or exports. C) trade is a positive-sum game in which all countries benefit from trading with each other. D) a country that has an absolute advantage in the production of all goods derives no benefits from international trade. E) potential world production is greater with unrestricted free trade than it is with restricted trade.

A) a country's government should intervene to achieve a surplus in the balance of trade

77) Knickerbocker's concept of multipoint competition enhances the strategic behavior theory by making sure that A) a rival does not dominate one market and use the profits from there to drive competitive attacks elsewhere. B) the competitors cooperate with each other to establish a cartel. C) no other competitors can enter the market unless they resort to licensing or franchising with the initial pioneers. D) growing technologies or business methods in new markets are transferred to established markets. E) the firms in an industry prefer FDI over licensing or exporting.

A) a rival does not dominate one market and use the profits from there to drive competitive attacks elsewhere

5) While the lowering of trade barriers made globalization of markets and production a theoretical possibility, what has made it a tangible reality? A) the advances in communication, information processing, and transportation technologies B) the rise of communism and the need for independent economies on a global scale C) the increasing diversity in consumer tastes and preferences worldwide D) the increasing differences in the material culture the world over E) the decreasing significance of the World Trade Organization

A) advances in communication, information processing, and transportation technologies

45) In a business setting, the term noblesse oblige refers to A) benevolent behavior that is considered the responsibility of successful enterprises. B) obliging a government official with the expectation of a reciprocal favor. C) wealthy corporations abusing their power for private gain. D) preferential treatment received by successful companies from governments. E) tax exemptions that are given only to local companies but not to foreign companies.

A) benevolent behavior that is considered the responsibility of successful enterprises

44) When thinking through an ethical issue, the first step you should take is to A) identify which stakeholders a decision would affect and in what ways. B) judge the ethics of the proposed strategic decision. C) establish a moral intent. D) audit a decision to check for its consistency with ethical principles. E) review a decision to check for its consistency with Rawls's veil of ignorance.

A) identify which stakeholders a decision would affect and in what ways

18) Purchasing power parity is used to adjust gross national income in order to make a more direct comparison of ________ in various countries. A) living standards B) population density C) geographical area D) factor endowments E) labor productivity

A) living standards

56) New trade theory supports the ideas that trade increases specialization of production and it also A) lowers average prices. B) decreases the number of available products. C) is not dependent on government intervention to succeed. D) distances itself from customization of products. E) is reliant upon factor endowments.

A) lowers average prices

13) The sale of state-owned enterprises to independent, nonpublic investors is referred to as A) privatization. B) nationalization. C) collectivism. D) communalism. E) public action.

A) privatization

21) According to the Human Development Index, average income adjusted for PPP should be sufficient to A) provide basic needs such as food and shelter. B) promote economic development. C) foster decentralization. D) boost social class. E) foster entrepreneurial dynamism.

A) provide basic needs such as food and shelter

10) Karl Marx promoted the idea of a(n) ________ society in which the state owned the means of production, distribution, and exchange. A) socialist B) capitalist C) individualist D) monarchist E) feudalist

A) socialist

66) According to ________, a government should use subsidies to support promising firms that are active in newly emerging industries. A) strategic trade policy B) public policy C) absolute advantage D) product life-cycle theory E) industrialization

A) strategic trade policy

64) Firms engage in dumping in order to A) unload excess production in foreign markets. B) cut labor costs to reduce the costs of production. C) provide a wider range of products for consumers in foreign markets. D) meet the voluntary export requirements imposed on it. E) obtain subsidies from the importing country.

A) unload excess production in foreign markets

39) Bethany works for FastFashion Inc. which has set the same sales target for all employees in their 550 stores across the globe. The company fails to take into account any environmental constraints which might hamper sales and to avoid being penalized, employees often falsify their sales reports. What is triggering the employees' unethical behavior? A) unrealistic performance goals B) cultural differences of countries C) strong personal ethics among employees D) varying ethical standards in different nations E) national differences in factors of production

A) unrealistic performance goals

8) Growing income inequality between the skilled and unskilled workers in advanced nations, such as the United States, is a result of the A) wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted. B) decrease in the outsourcing of low-wage manufacturing jobs offshore and a corresponding increase in demand for unskilled workers. C) shift within advanced economies toward jobs where the only qualification is the willingness to turn up for work every day. D) increasing wage gap between developing and developed nations. E) shortage of unskilled workers and an excess supply of highly skilled workers.

A) wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted

11) Those who attempt to achieve the same ideologies as that of the communists without violent revolution and totalitarian dictatorship are called A) pure capitalists. B) social democrats. C) individualists. D) anarchists. E) aristocrats.

B) social democrats

46) According to the Smith, Ricardo, and Heckscher-Ohlin theories, a country's economy may gain if its citizens buy some products from other nations that could be produced in their home nation. What is the reasoning behind this idea? A) The natural resources of a country limit the types and quantities of items that can be produced. B) International trade is typically regulated by government forces that prevent a business from exporting. C) International trade allows a country to specialize in items that can be produced most efficiently in that country. D) First-mover advantages limit a country from producing every product that citizens need or want. E) Innovative products are typically produced in the home country, but high-demand products should be imported.

B) International trade is typically regulated by government forces that prevent a business from exporting

29) How does privatization help stimulate gains in economic efficiency? A) It allows newly privatized firms to gain monopoly position in a particular industry. B) It provides incentives to new private owners to search for increases in productivity and to enter new markets. C) It encourages state control over price and production output. D) It raises barriers to direct investment by foreign enterprises. E) It results in reservation of heavy industry for state ownership and the increase of import tariffs.

B) It provides incentives to new private owners to search for increases in productivity and to enter new markets

35) What is a characteristic of high uncertainty avoidance cultures? A) They do not place importance on job security, career patterns, retirement benefits, and so on. B) They allow a manager to tightly control subordinates' initiatives. C) They demonstrate less emotional resistance to change. D) They are characterized by a greater readiness to take risks. E) They oppose the use of rules and regulations to exercise control over individuals.

B) They allow a manager to tightly control subordinates' initiatives

2) Which global institution has focused on making low-interest loans to governments in poor nations that want to make significant infrastructure investments such as building a road or a bridge? A) World Trade Organization B) World Bank C) Peace Corps D) International Monetary Fund E) United Nations

B) World Bank

71) Rather than acquire an existing textile manufacturer in Jakarta, FauxFabric Inc. chose to establish new operations in Indonesia. This form of FDI is called A) consolidation. B) a greenfield investment. C) an acquisition. D) a licensing agreement. E) mass customization.

B) a greenfield investment

51) Nikoli lives in New Salom which specializes in component parts, while its geographical neighbor, Durma specializes in heavy machinery. New Salom exports component parts to Durma, which in turn exports heavy machinery to New Salom. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates A) the significance of trade barriers. B) a positive-sum game. C) a first-mover advantage. D) the advantages of mercantilism. E) a zero-sum game.

B) a positive-sum game

9) One suggestion for helping poor countries enjoy the benefits of free trade is for richer nations to reduce barriers to importing products from those nations particularly for textiles and ________ products. A) electronic B) agricultural C) service D) financial E) manufacturing

B) agricultural

74) Business executives view foreign direct investment as a way to A) erase the fear of protectionist pressures. B) circumvent future trade barriers. C) promote totalitarian political institutions. D) diminish privatization. E) shift toward centrally planned command economies.

B) circumvent future trade barriers

43) A(n) ________ is considered an external stakeholder of an organization. A) employee B) customer C) trustee D) director E) stockholder

B) customer

63) If Indonesia exports vast quantities of cheap textiles to Italy, selling them at below their costs of production, it would be an example of A) monopolism. B) dumping. C) offshoring. D) nearshoring. E) subsidizing.

B) dumping

54) Software development is an expensive process, but manufacturers are able to spread out the costs of the development over the hundreds of thousands of software packages sold to consumers. What is helping to drive down costs per unit in this situation? A) antidumping measures B) economies of scale C) diminishing returns D) labor productivity E) first-mover advantages

B) economies of scale

25) According to economist Hernando de Soto, the key issue in the relationship between capitalism and property rights is the inability of owners to A) pay the necessary taxes on their property. B) establish legal title to the property they own. C) adapt to a planned economic system. D) create a production monopoly. E) foster dynamism through entrepreneurial activity.

B) establish legal title to the property they own

70) CopperCore Inc., a U.S. business, took a 31 percent equity interest in Javier Holdings, a family business based in Spain. According to the U.S. Department of Commerce, this would be an example of A) multilateral investment. B) foreign direct investment. C) reciprocal foreign investment. D) international divestment. E) asset divestment.

B) foreign direct investment

73) Compared to the growth in world trade and world output, FDI has A) grown at about the same rate. B) grown more rapidly. C) failed to match the growth of world trade. D) grown at a slower rate. E) remained stagnant.

B) grown more rapidly

62) Domestic producers experience limited import competition when a VER is in place. As a result, these producers make extra profit because supply is artificially limited by the import quota. This extra profit is called A) net profit. B) quota rent. C) trade surplus. D) profit margin. E) quota share.

B) quota rent

24) People in the West tend to associate a(n) ________with a free market system, strong property rights protection, and economic progress. A) anarchist state B) representative democracy C) planned economy D) communist state E) command economy

B) representative democracy

36) Janet believes that the cultural group she belongs to is superior and as a result, she is highly intolerant toward employees from the cultures of other countries. This behavior of Janet is known as A) cultural convergence. B) Confucian dynamism. C) ethnocentrism. D) cultural literacy. E) class consciousness.

C) ethnocentrism

53) According to the Heckscher-Ohlin theory, the pattern of international trade is determined by differences in A) labor productivity. B) diminishing returns. C) factor endowments. D) management practices. E) trade barriers.

C) factor endowments

7) What country in Latin America has seen a significant expansion in their economy in the past two decades? A) Argentina B) Peru C) Chile D) Paraguay E) Panama

C) Chile

33) For more than 2,000 years until the 1949 communist revolution, what was the official ethical system of China? A) Maoism B) Feng Shui C) Confucianism D) Shintoism E) Buddhism

C) Confucianism

60) If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses? A) It would concentrate its productive activities mostly in developing countries. B) It would concentrate its productive activities in its home country. C) It would disperse its productive activities to those countries where they can be performed most efficiently. D) It would disperse its productive activities across all countries that serve as its market. E) It would concentrate its productive activities mostly in developed countries.

C) It would disperse its productive activities to those countries where they can be performed most efficiently

57) The new trade theory diverts from its advocacy of free trade by suggesting that A) the price of a new product increases along with the increase in the popularity of the product. B) nations benefit from trade even in the absence of resource endowments and technology. C) there is an economic rationale for a proactive trade policy. D) the role of luck, entrepreneurship, and innovation is important in giving a firm first-mover advantages. E) market expansion leads to better realization of economies of scale.

C) There is an economic rationale for a proactive trade policy

41) Johan is the manager of CycleUp and has agreed to build a new manufacturing plant in Argentina. He realizes this decision will cause him to shut down a small plant in Ohio, but he decides that since the new facility will cut his operating costs in half, that is worth more than closing a plant employing ten people. Which philosophical approach to ethics does this demonstrate? A) Righteous moralist B) Friedman C) Utilitarian D) Cultural relativism E) Naive immoralist

C) Utilitarian

49) A zero-sum game occurs when A) the market mechanism determines what a country imports and what it exports. B) a country engages in international trade even for products it is able to produce for itself. C) an economic gain by one country results in an economic loss by another. D) limits on imports are done in the interests of domestic producers, but not domestic consumers. E) one country has an absolute advantage in the production of all goods.

C) an economic gain by one country results in an economic loss by another

42) While Kyle realized that his company was allowed to conduct a 12-hour workday in the overseas facility he managed, he instead implemented two 8-hour shifts because he felt it was fundamentally the right thing to do. A rights theorist would say that Kyle is using ________ to make this choice. A) the tragedy of the common B) Sullivan's principle C) his moral compass D) the difference principle E) ethnocentrism

C) his moral compass

30) In a social context, the term values is used to describe the A) economic benefits inherent to a culture. B) collective wealth of the society. C) ideas about what a group believes to be good, right, and desirable. D) political preferences of a country. E) social rules and guidelines about appropriate behavior in public.

C) ideas about what a group believes to be good, right, and desirable

34) When schools emphasize respect for others, obedience to authority, honesty, neatness, being on time, and use a grading system, they are A) teaching children to be noncompetitive. B) impinging on fundamental freedoms and values. C) indirectly teaching cultural values and norms. D) indirectly creating a rigid caste system. E) unnecessarily deviating from formal education.

C) indirectly teaching cultural values and norms

78) ModShoes Inc. decides to move its manufacturing facility from Toledo, Ohio, to Jakarata, Indonesia, because it will have access to lower-cost but still highly skilled labor. This choice reflects the concept of A) a planned economy. B) supply-and-demand. C) location-specific advantages. D) an oligopoly. E) a comparative advantage.

C) location-specific advantages

23) At one time, economic stagnation resulted in Great Britain because the coal mining and telecommunications industries were A) privatized. B) sold off to foreign owners. C) monopolies owned by the state. D) compromised during the war. E) decentralized.

C) monopolies owned by the state

15) Grease payments or speed money are allowable under U.S. law as a way to expedite the A) implementation of a new government office. B) incoming federal income tax. C) performance of a routine government action. D) creation of new state-owned business. E) breach of the rule of law.

C) performance of a routine government action

67) Paul Krugman believed that a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to A) dominate the industry. B) move away from protectionism. C) provoke retaliation. D) incur huge financial debts. E) upset the special-interest groups within the economy.

C) provoke retaliation

12) Today, communism, which includes state control over all economic activity, is the political norm mainly found in A) countries throughout Europe and Asia. B) small pockets of the United States and Japan. C) small fringe nations. D) eastern Europe. E) large Westernized countries.

C) small fringe nations

61) If a country is experiencing a surge of electronic imports from a trading partner, it might ask that country to set a limit on how much can be exported. This limit is known as a A) tariff rate quota. B) quota rent. C) voluntary export restraint (VER). D) quota share. E) export embargo.

C) voluntary export restraint (VER)

38) The practice of "gift giving" between the parties to a business negotiation is considered right and proper in many Asian cultures. However, some Westerners view the practice as a form of bribery, and therefore unethical, particularly if the gifts are substantial. This demonstrates that A) notions of ethics are universal. B) Asian countries are still influenced by totalitarianism. C) what is ethical depends on one's cultural perspective. D) Asian cultures are more economically advanced. E) accepted employment practices are universal.

C) what is ethical depends on one's cultural perspective

69) The economic prosperity enjoyed by ________ during the 1980s and 1990s strained the world trading system and created the demand for increased protectionist measures. A) the United States B) India C) the Soviet Union D) Japan E) China

D) Japan

19) In 2017, if the PPP per capita of China was $16,760 and the PPP per capita of the United States was $60,200, this means that the A) GNI per capita was greater in China. B) percent of goods and services consumed in the United States was lower. C) standard of living in China was better. D) cost of living was lower in China. E) annual average GDP growth rate was lower in China.

D) cost of living was lower in China

75) WoodCore Inc. produces an entire line of office furniture at its manufacturing facility in the United States and then ships its products for sale to various companies in Europe. WoodCore Inc. is involved in A) outsourcing. B) licensing. C) franchising. D) exporting. E) diversifying.

D) exporting

65) The principal function of the trade sanctions the United States has in place against Cuba is to A) prevent other countries from trading with Cuba. B) aid Cuba in creating a direct trade route to the United States C) create a nearby dumping site for large businesses. D) impoverish Cuba to lead to the downfall of the communist government. E) force Cuba to enter into the NATO agreement.

D) impoverish Cuba to lead to the downfall of the communist government

22) ________ is broadly defined as the development of new products, processes, organizations, management practices, and strategies. A) Privatization B) Dynamism C) Demographics D) Innovation E) Benchmarking

D) innovation

17) Products of the mind, such as computer software, a screenplay, a music score, or the chemical formula for a new drug, constitute A) assets which receive no protection under law. B) non-performing assets. C) tangible assets. D) intellectual property. E) real property.

D) intellectual property

30) There are currently over 1.3 billion people living in India, which makes it a large market when measuring the number of potential consumers. However, India is still considered a smaller market in economic terms because of A) the country's orientation toward democracy. B) low birthrates. C) high living standards. D) limited purchasing power. E) a commitment to a free market system

D) limit purchasing power

6) A positive economic change from 1960 to 2018 was seen in the A) growth of the centrally planned economies of the communist world. B) U.S. position in the world economy and world trade picture. C) share of world output enjoyed by rich industrialized countries such as Great Britain, Germany, and France. D) share of world output accounted for by developing nations. E) prevalence of independent and self-contained national economies.

D) share of world output accounted for by developing nations

72) DiamondPlus Jewelers currently has $583,000 in foreign-owned assets. This represents the ________ of the company. A) net value B) gross national income C) flow of FDI D) stock of FDI E) gross domestic product

D) stock of FDI

28) According to Freedom House, just under ________ of the world's nations are considered "free." A) 5 percent B) 20 percent C) 90 percent D) 75 percent E) 50 percent

E) 50 percent

3) Countries that receive loans from the IMF are required to A) become a member of the United Nations. B) allow developed nations to create businesses in their country. C) enforce a democratic government. D) use the funds to help individual citizens. E) adopt specific economic policies to attain stabilization.

E) adopt specific economic policies to attain stabilization

27) The influential economist Jeffrey Sachs argues that which of the following, with their long engagements in international trade, have been the most supportive of market institutions throughout history? A) mountainous states B) tropical regions C) military societies D) landlocked states E) coastal states

E) coastal states

16) Brett Robertson is a playwright and in order to protect his intellectual property should secure a ________ on all of his plays. A) patent B) trademark C) grease payment D) permit E) copyright

E) copyright

1) The labor, energy, land, and capital a country relies on to source goods and services are known as A) trade tariffs. B) the globalization of markets. C) the marketing mix. D) the globalization of production. E) factors of production.

E) factors of production

31) According to Max Weber, the Protestant attributes of hard work, wealth creation, and ________ fostered the emergence of modern capitalism. A) polychronic time B) positivity C) ethnocentrism D) monochronic time E) frugality

E) frugality

47) Many years ago, the Republic of Janua believed that it was in its best interests to maintain a trade surplus, to export more than it imports. In so doing, the Republic of Janua hoped to accumulate gold and silver, and consequently, increase its national wealth, prestige, and power. What influenced the Republic of Janua's approach to international trade? A) neo-Ricardian trade theory B) Leontief's paradox C) product life-cycle theory D) new trade theory E) mercantilism

E) mercantilism

4) The main goal of GATT was to A) limit foreign competition. B) make loans to struggling nations. C) increase domestic competition. D) privatize state-owned organizations. E) reduce trade barriers.

E) reduce trade barriers