BUS exam 1

the WTO argues that by removing all tariff barriers and subsidies to agriculture: a. there will be overproduction of products that are heavily subsidized b. the overall level of trade would decrease c. prices would rise for consumers d. global economic growth would rise

global economic growth would rise

advances in communication technology: a. better ability to export goods b. better ability to optimize location economics c. growth in e commerce d. lowered distance between countries

growth in e commerce

in which situation would FDI deteriorate the current account of the host countrys balance of payments a. when foreign subsidiary imports number of its inputs from abroad b. when the indirect labor created by FDI is more than direct labor creation c. when MNE uses foreign subsidiary to export goods and services to other countries d. when the FDI is a substitute for goods or services imported previously

a. when foreign subsidiary imports number of its inputs from abroad

the government is considering placing additional taxes on foreign lumber imports that are a proportion of the value of the imported lumber. this is an example of: a. ad valorem tariff b. specific tariff c. subsidy tax d. import quota

ad valorem tariff

Trade wars benefit countries with interventionist governments: a. true b. false

false interventionist governments are governments that use policies to favor companies in their own countries

what primarily explains why developing nations are characterized by a lower percentage of cross border mergers and acquisitions compared to developed nations a. fewer target firms to acquire in developing nations b. fierce opposition to mergers in developed nations c. unwillingness of foreign companies to invest in developing nations d. presence of import quotas in developing nations

fewer target firms to acquire in developing nations

the strategic trade policy arguments of the new trade theorists suggest an economic justification for government intervention in international trade a. true b. false

true

the environment argument for globalization

tougher laws lead to lower pollution rates

in a market economy, a supply restriction occurs when a single firm monopolizes a market a. true b.false

true

in general, Fdi in the form of greenfield investments should increase competition a. true b. false

true

the exchange rate is the rate a currency is converted to another a. true b. false

true

the spot rate is $1= 130 yen and the 30 day forward rate is $1=140 yen, the dollar is selling at a premium in the forward market: a. true b. false

true

created at Bretton woods in 1944 by 44 nations to maintain order in the international monetary system: a. International monetary Fund b. World Bank c. United Nations D. WTO E. G20

International Monetary Fund

since the late 1980's, there has been a strong move away from a more free market economic model and towards more centrally planned and mixed economies: a. true b. false

false

the lead strategy involves delaying collection of foreign currency receivables if that currency is expected to appreciate and delaying payables if the currency is expected to depreciate a. true b. false

false

Finance ministers and central bank governors of major economies coordinate policy on global financial crises: a. International monetary Fund b. World Bank c. United Nations D. WTO E. G20

a. International monetary Fund b. World Bank c. United Nations D. WTO E. G20

according to the law of one price, identical products sold in different countries must sell for the same price when a. the price is expressed in terms of the same currency b. the price is based on the lowest currency available c. they are sold by the same company d. they are sold by competing companies

a. the price is expressed in terms of the same currency

the location specific advantages argument associated with john dunning explains why firms prefer FDI to licensing exporting a. true b. flase

false

primarily responsible for policing the world trade center: a. International monetary Fund b. World Bank c. United Nations D. WTO E. G20

WTO

Created at Bretton Woods in 1944 by 44 nations to promote economic development: a. International monetary Fund b. World Bank c. United Nations D. WTO E. G20

World bank

Which situation would require the use of a trademark

a clothing manufacturer wants to differentiate its new lone of jeans by naming the line "ocean blue"

which scenario exemplifies privatization: a. a country reduces trade barriers allowing individuals to engage in export and import b. a country sells its postal services to a consortium of companies that runs it as profit making venture without any state funding c. a country enlists the services of Somers consultancy, a global management consulting firm to improve the profitability of the state owned airlines company d. a country allows state owned coal companies to sell coal to private parties

a country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding

most economists would argue that the best interests of international businesses are served by: a. laissez-faire stance b. government aggressively blocking trade c. free trade stance d. government efforts to support certain domestic industries in a manner consistent with recommendations of strategic trade policy

a free trade stance

an infant industry argument relies on an assumption that firms can make efficient long term investments by borrowing money from the domestic or international capital market a. true b. false

false

the first thing analise does when she arrives in italy is convert her Us dollars to euros. she will do this through a. currency market b. foreign exchange market c. world bank d. carry trade market

b. foreign exchange market

a company wishing to engage in foreign direct investment must evaluate all its options. which statement is an important consideration for the modern firm wishing to expand into new markets a. it is less risk to expand through greenfield that acquisition b. mergers and acquisitions are quicker to execute than greenfield c. mergers do not allow the acquiring firm to tap into strategic assets of the foreign firm d. greenfield do not allow the expanding firm to have control over new operation

b. mergers and acquisitions are quicker to execute than greenfield

declining trade barriers: a. better ability to export goods b. better ability to optimize location economics c. growth in e commerce d. lowered distance between countries

better ability to export goods

declining investment barriers; a. better ability to export goods b. better ability to optimize location economies c. growth in e commerce d. lowered distance between countries

better ability to optimize location economies

producers argument against globalization:

can go bankrupt due to competition

in samuel huntingtons thesis, global terrorism is a product of the a. advances in communication technology b. low level of education and literacy c. unequal distribution of income in developing nations d. clash of value systems and ideology

clash of value systems and ideology

when _____ is emphasized an individuals 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

collectivism

historically, command economies were found in ____ countries where collectivist goals were given priority over individual goals a. democrat b. communist

communist

tariffs do not benefit a. consumers b. domestic producers c. governments d. domestic firms

comsumers

innovations and entrepreneurial activity help increase economic activity by: a. providing more authority to government officials b. creating new products and markets

create new products and markets

what are the 2 main functions of the foreign exchange market: a. trading foreign company equities and converting currency b. reducing currency volatility and setting interest rates c. insuring companies against interest rate risk and enabling imports and exports d. converting currency and providing some insurance against foreign exchange risk

d. converting currency and providing some insurance against foreign exchange risk

if many people want euros and they are in short supply and few people want dollars and dollars are in plenty supply then the dollar is likely to ____ against the euro

depreciate

the workers argument for globalization

development of better skills

the consumers argument against globalization

don't know how products are made

multinational firms: a. government policies have little direct impact on multinational businesses b. due to their pivotal role in international trade, firms can and do exert a strong influence on government policy towards trade c. multinational firms try to encourage their government to resist the wto and keep constraints on trade among nations d. despite their pivitol role in international trade, firms do no exert strong influence on government policy toward trade

due to their pivotal role in international trade, firms can and do exert a strong influence on government policy toward trade

if the spot exchange rate is 1 euro=1.5 dollars when the market opens and 1 euro=1.48 at the end of the day, the pound has appreciated and the dollar has depreciated: a. true b. false

false

in calculating Gdp data, the official figures account for barter agreements that take place as part of daily business a. true b. false

false

investing in _____ is an important determinant of economic development as it leads to higher growth rates and more productive population a. services b. centralized urban centers c. education d. manufacturing

education

A common feature of many right wind dictatorships is their support for socialist or communist ideas

false

a civil law system tends to be more adversarial than a common law system: a. true b. false

false

a common law system is a relatively new form of law that emerged in the United States and is based on codes written within the last 80 years or so

false

according to globalization critics, decline in unskilled wage rates is due to migration of low wage manufacturing jobs offshore and corresponding reduction in demand for unskilled workers a. true b. false

true

deregulation involves the establishment and operations of private enterprises a. true b. false

true

maribels company has made a greenfield investment. what does this mean a. it merged with an existing firm in a foreign country b. it established a new operation in a foreign country c. it acquired an existing firm in a foreign country d. it collaborated with a firm in a foreign country

it established a new operation in a foreign country

the environment argument against globalization

lack of adequate regulations causes abuse

the workers argument against globalization

loss of jobs due to competition

advances in transportation technology: a. better ability to export goods b. better ability to optimize location economics c. growth in e commerce d. lowered distance between countries

lowered distance between countries

an economy in which the interaction of supply and demand determines the quantity in which goods and services are produced is called a a. planned economy b. command economy c. closed economy d. market economy

market economy

producers argument for globalization

more markets to sell in

the consumers argument for globalization

more products to choose from

the term ___ stresses that the political, economic, and legal systems of a country are interdependent a. political economy b. common law c. socialism d. collectivism

political economy

the benefits, costs, and risks associated with doing business in a country are a function of that countries

political, economic, and legal systems

the total accumulated value of foreign owned assets at a given time is called the ___ of FDI a. stock b. merger c. flow d. product

stock

direct effects of FDI on unemployment arise when a foreign MNE employs a number of host country citizens a. true b. false

true

what impedes firms from achieving the optimal dispersion of the productive activities to locations around the globe a. transpiration costs b. government deregulations c. reduction of barriers to trade between countries d. reduction of barriers to foreign direct investment

transportation costs

As much as 70% of its work is devoted to establishing higher standards of living, full employment, and conditions of economic and social progress and development: a. International monetary Fund b. World Bank c. United Nations D. WTO E. G20

united Nations

When is a currency said to be externally convertible?

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