IB Midterm Exam Test

Which of the following legal systems is based on precedent and is found primarily in countries that have a past linkage with Great Britain? Group of answer choices Civil Law Shari'ah Law Common Law Socialist Law

Common Law

The phrase "from each according to their ability, to each according to their need" is a fundamental tenet of which of the following political/economic frameworks? A. Theocracy B. Fascism C. Communism D. Capitalism

Communism

Which of the following refers to a set of moral principles, or values, that are used to guide and shape behavior? A. Ethical system B. Class consciousness C. Caste system D. Class system

Ethical system

Which of the following is NOT a characteristic of Market Socialism? Group of answer choices Regulated Markets Protection of Social Welfare Progressive Tax System Free Trade

Free Trade

The Five Dimensions of National Culture; (Power Distance, Individualism/Collectivism, Masculinity/Femininity, Uncertainty Avoidance and Long/Short Term Orientation) is a cultural comparison model created by the researcher: Group of answer choices Geert Hofstede David Ricardo John Dunning Michael Porter

Geert Hofstede

________ theory is also known as the market imperfections theory. A. Product life-cycle B. Random walk C. Perfect markets D. Internalization

Internalization

Which of the following is considered a lender of last resort? A. World Bank B. International Monetary Fund (IMF) C. International Development Organization D. World Trade Organization

International Monetary Fund (IMF)

Hofstede's cultural dimensions theory uses which of the following metrics to measure *the preference for achievement and assertiveness* versus *cooperation and caring for the weak*? A. Uncertainty avoidance index (UAI) B. Power distance index (PDI) C. Masculinity vs. femininity (MAS) D. Long-term orientation vs. short-term orientation (LTO) E. Individualism vs. collectivism (IDV)

Masculinity vs. femininity (MAS)

The value of global networks is best explained by which of the following theories? A. Occam's Razor B. Pareto Principle C. Moore's Law D. Metcalfe's Law

Metcalfe's Law

________ argues that a strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry boosts national income at the expense of other countries. A. Paul Krugman B. David Ricardo C. Milton Friedman D. Adam Smith

Paul Krugman

When a rich country enters into a free trade agreement with a poor country, the poor country benefits more than the rich country. This is the concept behind A. Ricardo's theory. B. Porter's critique. C. Paul Samuelson's critique. D. Adam Smith's theory.

Paul Samuelson's critique

________ are controls over the behavior of the MNE's local subsidiary. The most common of these are related to local content, exports, technology transfer, and local participation in top management. A. Performance requirements B. Subsidies C. Ownership restraints D. Tax concessions

Performance requirements

What principle or theory argues that it is in a country's best interests to maintain a trade surplus? A. Principle of mercantilism B. Theory of national competitive advantage C. Principle of absolute advantage D. New trade theory

Principle of mercantilism

Which of the following theories explains global trade in terms of the international differences in labor productivity? A. Smith's theory of absolute advantage B. Heckscher-Ohlin theory C. Ricardo's theory of comparative advantage D. product life-cycle theory

Ricardo's theory of comparative advantage

The World Trade Organization (WTO) does all of the following EXCEPT: A. Requires transparency of trade regulations among all member nations B. Requires member nations to give Most Favored Nation trading status to all other member nations. C. Provides a forum for new trade agreements and dispute settlement D. Serves as a "lender of last resort" to troubled world economies

Serves as a "lender of last resort" to troubled world economies

A pen costs £50 in Britain. An identical pen costs $70 in the United States when the exchange rate is £1 = $1.50. Which of the following is correct? A. A trader can make money by buying the pen in Britain and selling it in the United States at $70. B. The U.S. offers a better deal. C. Britain offers a better deal. D. The deal is the same in both countries.

The U.S. offers a better deal.

When is a currency said to be externally convertible? A. When only nonresidents can convert it into a foreign currency without any limitations. B. When only residents can convert it into a foreign currency. C. When both residents and nonresidents can purchase unlimited amounts of a foreign currency. D. When neither residents nor nonresidents are allowed to convert it into a foreign currency.

When only nonresidents can convert it into a foreign currency without any limitations.

Which of the following organizations has as its primary purpose to provide loans to developing countries for capital improvement projects? A. International Monetary Fund B. World Bank C. World Trade Organization D. United Nations

World Bank

A lobbyist from California argues that the U.S. government needs to protect the U.S. semiconductor industry from foreign competition. She argues that semiconductors are now such important components of defense products that it would be dangerous to rely primarily on foreign producers for them. This is an example of ________ argument for government intervention. A. an infant-industry argument B. an environmental C. an economical D. a political

a political

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. theocracy B. totalitarianism C. individualism D. collectivism

collectivism

The EU began as a ________, which eliminates trade barriers between member countries and adopts a common external trade policy, but does not allow free movement of factors of production between member nations. A. free trade area B. common market C. customs union D. political union

customs union

The extent to which a firm's future international earning power is affected by changes in exchange rates in the long-run is known as ________ exposure. A. transaction B. economic C. translation D. financial

economic

If Porter's theory is correct, we would expect his model to predict the pattern of international trade that we observe in the real world. For example, countries should be A. both importing and exporting products from those industries where all four components of the diamond are favorable. B. importing products from those industries where all four components of the diamond are favorable. C. exporting in those industries where the four components of the diamond are not favorable. D. exporting products from those industries where all four components of the diamond are favorable.

exporting products from those industries where all four components of the diamond are favorable.

Factor endowments refer to the A. that exist in a country or geographical region. B. extent to which a country has developed advanced facilities as technological infrastructure. C. extent of domestic rivalry that exists in a market or industry. D. extent to which a country is gifted with such resources as land, labor, and capital.

extent to which a country is gifted with such resources as land, labor, and capital

The lack of progress in the Doha Round negotiations has resulted in countries that are A. forging ahead with their own bilateral and multilateral agreements. B. refusing to listen to the WTO's recommendations. C. starting negotiations with new trade partners. D. deciding to boycott future meetings in Doha.

forging ahead with their own bilateral and multilateral agreements

Identify the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements. A. economic unions B. common markets C. customs unions D. free trade areas

free trade areas

The WTO argues that by removing all tariff barriers and subsidies to agriculture, A. prices would rise for consumers. B. global economic growth would rise. C. there would be overproduction of products that are heavily subsidized. D. the overall level of trade would decrease.

global economic growth would rise

Several studies have shown that economic advancement and _____ are important factors in societal change. A. individualism B. collectivism C. globalization D. improved technology

globalization

Initially, the Andean Community struggled, but in the late 1980s, this trend started to reverse when A. governments of Latin America began to adopt free market economic policies. B. the United States agreed to provide protection for intellectual property rights. C. the majority of African countries agreed to a single currency. D. Brazil and Argentina agreed to reduce tariffs.

governments of Latin America began to adopt free market economic policies.

Which of the following is a home-country policy aimed at limiting outward FDI flow? A. double taxation of foreign income B. limiting capital outflows C. persuading host countries to relax their restrictions on inbound FDI D. implementing government-backed insurance programs to cover major types of foreign investment risk

limiting capital flows

The threat of antidumping action affects a firm by A. lowering its costs of exporting products to a country. B. limiting its ability to use aggressive pricing to gain market share in a country. C. increasing its ability to serve a country from locations outside of that country. D. enabling it to leverage economies of scale and increase its profits.

limiting its ability to use aggressive pricing to gain market share in a country.

Culture is A. unchanging B. static C. abstract D. not static

not static

The term _____ refers to the values and norms that are shared among employees of an organization. A. environmental factors B. organizational culture C. performance goals D. multinational behavior

organizational culture

Newly privatized entities often have little incentive to restructure their operations to become more efficient when A. they are faced with intense foreign competition. B. foreign investment is permitted by the state. C. prices are set by the forces of demand and supply. D. they continue to receive subsidies from the state.

they continue to receive subsidies from the state.

Country A and Country B entered into a free trade agreement recently. After this, Country A started importing heavy machinery from Country B, which Country A had previously produced domestically at a higher cost. Which of the following has occurred in this scenario? A. trade diversion B. efficiency gain C. trade deficit D. trade creation

trade creation

Which of these is a characteristic of a pure command economy? A. The goods and services that a country produces are planned by consumers. B. There is free and fair competition between private producers. C. All businesses are owned by the state. D. Prices are determined by market forces.

All businesses are owned by the state.

Products which are undifferentiated by place of origin or manufacture are called: A. Qualitative differentiation B. High-value added C. Toiletries D. Commodities

Commodities

As it currently exists, NAFTA is best characterized as which of the following: Group of answer choices A free trade area. A customs union. A common market. An economic union.

A free trade area

Which of the following is a form of Foreign Direct Investment? Group of answer choices A merger or acquisition between two companies in two developed nations The registration of patents with the local government to protect intellectual property Purchase of publicly traded stock on the open market by foreign individuals. Investment by a nation's sovereign fund in the debt of another nation.

A merger or acquisition between two companies in two developed nations

The steady rise of regional economic integration has recently seen some retrenchment. What factor is considered to be primarily responsible for this drawback? A. The collapse of governments in the Middle East and North Africa B. Increasing immigration C. The rise of populist politics D. Increasing globalization

The rise of populist politics

The government is considering placing additional taxes on foreign steel imports that are a proportion of the value of the imported steel. This is an example of A. a subsidy tax. B. a specific tariff. C. an ad valorem tariff. D. an import quota.

an ad valorem tariff

The practice of "gift-giving" between the parties in a business negotiation is considered right and proper behavior in many Asian cultures, while some Westerners view the practice as a form of bribery. What is this an example of? A. organization cultural decisions. B. a veil of ignorance C. an ethical dilemma. D. a tragedy of the commons.

an ethical dilemma

The ________ view is that FDI has both benefits and costs. FDI can benefit a host country by bringing capital, skills, technology, and jobs, but those benefits come at a cost. A. pragmatic nationalist B. conservative C. free market D. radical

pragmatic nationalist

The ________ theory argues that such advanced nations as the United States have an incentive to develop consumer products and hence such nations tend to produce newer products. A. new trade B. product life-cycle C. Ricardo D. Heckscher-Ohlin

product life-cycle

________ can be seen as an attempt to achieve additional gains from the free flow of trade and investment between countries beyond those attainable under global agreements. A. Regional economic integration B. Foreign direct investment C. Government intervention D. Unrestricted trade

regional economic integration

In the case of command economies, deregulation involves A. exercising tight control over foreign trade. B. detailed state planning. C. encouraging state ownership of enterprises. D. removing price controls.

removing price controls

The total accumulated value of foreign-owned assets at a given time is called the ________ of FDI. A. flow B. merger C. stock D. product

stock

What is the ultimate controlling authority within the EU because it has the power to turn legislation into law? A. the European Court of Justice B. the European Commission C. the European Parliament D. the European Council

the European Council

The relative decline of the United States in the share of world output and world exports reflects A. the reduced industrialization in developing nations. B. the growth in the economic development of the world economy. C. an increase in the barriers to foreign trade in the United States. D. the deepening of the global financial crisis.

the growth in the economic development of the world economy

Which of the following is true about the economic risks of doing business in a country? A. Economic risks are independent of political risks. B. It is less costly to do business in relatively primitive or undeveloped economies. C. The inflation rate in a country is an indicator of the economic risks of doing business in a country. D. Countries with weaker property laws tend to have higher economic growth, and involve less risk.

the inflation rate in a country is an indicator of the economic risks of doing business in a country