Module Questions for Exam

Democratic nations that follow free-trade capitalism sometimes nationalize businesses, such as A. the U.S. bailout during the 2009 financial crisis, when the U.S. government took control of several large U.S. corporations. B. Canada's purchase of Hershey C. The French purchase of Totale. D. the move from New York to Russia of a major sports team owned by a Russian

A. The U.S. bailout during the 2009 financial crisis, when the U.S. government took control of several large U.S. corporations.

The Bank for International Settlements is A. a bank for central bankers. B. a last resort for overdue national debt. C. an organized arbitration panel sponsored by the UN. D. an arbitrage clearinghouse for Organisation for Economic Co-operation and Development (OECD) economies.

A. a bank for central bankers.

Extraterritoriality is A. a nation's attempt to enforce its law beyond its borders. B. added territory as a result of dispute settlements in wars, such as the Sakalin Islands. C. a citizen's claim to government assistance in a foreign environment. D. a taxable condition most international firms attempt to avoid.

A. a nation's attempt to enforce its law beyond its borders.

A currency exchange arrangement with no separate legal tender is essentially A. adopting the currency of another country. B. allowing the currency to float freely. C. giving up the possibility of holding reserves. D. a stabilized arrangement for maximum monetary control.

A. adopting the currency of another country.

The Bretton Woods system was in place from A. after World War II to 1971. B. between World War I and World War II. C. from 1952 to 1990. D. World War II to the present.

A. after World War II to 1971.

Most major currencies are A. allowed by their central banks to float freely. B. managed against either the dollar or the euro. C. pegged to the dollar. D. coordinated by their central bankers in collaboration.

A. allowed by their central banks to float freely.

Government protection of economic activities is A. an historical function of government B. a recent responsibility of government. C. a socialist characteristic. D. stronger in democracies

A. an historical function of governments.

Nuisance tariffs A. annoy importers with red tape, administrative paperwork, and added expense. B. are an historical anomaly. C. are found in developed nations more than in developing nations. D. have no point other than to indicate that tariffs regulations change quickly.

A. annoy importers with red tape, administrative paperwork, and added expense.

The U.S. and the EU both A. apply antitrust law extraterritorially. B. oppose the Japanese Anti-Monopoly Law. C. share a commitment to the per se concept in law. D. oppose the Japanese Anti-Monopoly Law as a nontariff barrier.

A. apply antitrust law extraterritorially.

Currency exchange controls are found most frequently in A. developing countries. B. developed countries. C. countries with pegged exchange rates. D. nondemocratic countries.

A. developing countries.

Tariffs may be set to A. encourage local input. B. decrease the import costs. C. stimulate imports. D. decrease consumer costs, lower price, and increase market share.

A. encourage local input.

The Jamaica Agreement A. established the rules for the floating rate currency exchange rate system. B. led to the free trade agreement in the Caribbean. C. is modeled on the EU's EMU. D. controls exchanges rates in the South Atlantic region.

A. established the rules for the floating rate currency exchange rate system.

Governments nationalize private firms in order to A. extract money from the firms when the firms are suspected of concealing profits B. decrease exports to balance the balance of payments C. learn about business development experientially. D. punish workers at the firms for their political activism

A. extract money from the firms when the firms are suspect of concealing profits.

Chinese courts A. follow the rule of law and are perceived as fair. B. are perceived as favoring Chinese litigants. C. expect payments to be made to judges to soften any penalties. D. will not hear cases involving foreigners and allocate them Hong Kong jurisdiction.

A. follow the rule of law and are perceived as fair.

Social dumping occurs when exporting producers A. have lower wage rates, social costs, and environmental regulations. B. allow for free migration, thereby exporting poverty. C. allow the import of environmentally sensitive waste. D. take knowing advantage of a social class system.

A. have lower wage rates, social costs, and environmental regulations.

The bid price is the A. highest priced buy order currently in the market. B. lowest priced buy order currently in the market. C. highest priced sell order currently in the market. D. lowest priced sell order currently in the market.

A. highest priced buy order currently in the market.

Problems of the gold standard include A. holding cost, weight, no interest, and attractiveness to thieves. B. nations' willingness to agree to it. C. its interference in the jewelry market. D. its purity levels.

A. holding cost, weight, no interest, and attractiveness to thieves.

The main goal of tariffs is to A. increase the selling price of imported goods, thereby reducing competition for domestic producers. B. raise revenues for the importing government. C. reduce earnings for the exporting government. D. penalize importers for not buying domestic goods.

A. increase the selling price of imported goods, thereby reducing competition for domestic producers.

Canada carved out a NAFTA exception for A. milk and cream tariffs from the U.S. B. tariffs on lumber from the U.S. Northwest. C. imports of agricultural goods from Mexico. D. tariffs on fish from all of the Great Lakes.

A. milk and cream tariffs from the U.S.

In the U.S., the Smoot-Hawley Tariff Act did not A. outlaw tariffs for U.S. imports. B. lead to the Wall Street crash of 1929. C. establish the highest tariffs the U.S. has known. D. intend to protect U.S. agriculture.

A. outlaw tariffs for U.S. imports.

Most FX exchanges are A. over the counter (OTC). B. limited to reported amounts (over $10,000). C. open only during established trading hours. D. on the East Coast of the U.S. for trade with Europe.

A. over the counter (OTC).

Tariff barriers may be used to A. protect domestic industry from foreign, lower-cost producers. B. reduce the need for foreign workers. C. increase government revenues. D. protect borders from gray market goods.

A. protect domestic industry from foreign, lower-cost producers.

Governments provide stability by A. protecting business from unfair competition and from attacks and theft. B. pursuing open market values. C. fostering competition and capitalist values. D. supporting imports

A. protecting business from unfair competition and from attacks and theft.

A spot exchange rate is the A. rate for exchange within two business days. B. best rate in the market for exchange within 10 days. C. rate for preferred exchanges among central bankers. D. rate established by the BIS.

A. rate for exchange within two business days.

Nuisance tariffs A. require importers to go through the administrative paperwork, even for a small payment. B. can be declined at the point of import. C. are used to activate larger duty payments related to quantity. D. can be paid in kind.

A. require importers to go through the administrative paperwork, even for a small payment.

The current free floating and managed exchange rate system A. seems to be meeting its present challenges, including the 2008 liquidity crisis. B. is in dire need for redesign due to debt defaults. C. can continue as is for a while but is holding back international finance. D. will need to be replaced with a fixed rate system soon.

A. seems to be meeting its present challenges, including the 2008 liquidity crisis.

One difference between the U.S. and EU approach to antitrust law is that A. the U.S. follows the per se concept, wherein actions are illegal whether they have done harm. B. the EU forbids market dominance by cartels, no matter the conditions, whereas the U.S. does not. C. the U.S. focus is on impact on competition, whereas the EU focus is on the consumer. D. the EU avoids competition, whereas the U.S. seeks it.

A. the U.S. follows the per se concept, wherein actions are illegal whether they have done harm.

Miscellaneous foreign laws can cause difficulties for the uninformed businessperson because A. these laws may not be obvious or in accord with laws at home. B. they are ambiguous enough that they can be applied to the foreigner at almost any time. C. they may violate them and be arrested, yet ignorance of the law is an acceptable defense. D. they are aimed to take advantage of the foreigner's ignorance, a trade barrier.

A. these laws may not be obvious or in accord with laws at home.

Some nontariff barriers are difficult to discourage because A. they are non-quantitative and consist of government subsidies and standards. B. their development has been supported by local politicians. C. they build on nationalism and patriotism. D. their development has been unsupervised.

A. they are non-quantitative and consist of government subsidies and standards.

Punitive damages are found A. throughout legal systems based on common law. B. only in the U.S. C. in the U.S., EU, and Asia. D. in both secular and religious-based legal systems.

A. throughout legal systems based on common law.

Nationalization and privatization are A. similar trends B. opposing trends C. both risks faced by privately held firms D. both risks not encountered in capitalist democracies

B. Opposing trends

In the Global Debate, voluntary American dolphin-safe tuna labeling is objected to on what grounds? A. Dolphin and tuna are not the same species. B. The labeling is seen as a nontariff barrier for unlabeled, imported tuna. C. Mexican tuna cannot be labeled by U.S. regulation. D. Labeling requires additional expenditure in the fishing process.

B. The labeling is seen as a nontariff barrier for unlabeled, imported tuna.

Running afoul of miscellaneous laws in a foreign country is A. an error easily forgiven by foreign police. B. a serious error, so the local law should be known. C. not a major issue, as the embassy can work out your release. D. not a serious issue because both your country and your company stand behind you.

B. a serious error, so the local law should be known.

The U.S. antitrust law contains both civil and criminal penalties, A. neither of which can be applied outside the U.S. B. and the criminal penalties apply to foreign companies even if the conspiracy took place outside the U.S. C. but their application to foreign companies is limited to actions that have taken place within the U.S. D. and they can be administered by foreign courts.

B. and the criminal penalties apply to foreign companies even if the conspiracy took place outside the U.S.

U.S. antitrust law is applied A. to all U.S. firms doing business in the U.S. B. as widely as possible, whether or not the alleged corruption took place inside the U.S. and whether or not the business is American. C. to U.S.-owned firms with assets in the U.S. D. to all firms with assets in the U.S.

B. as widely as possible, whether or not the alleged corruption took place inside the U.S. and whether or not the business is American.

Trade barriers create costs that are paid ultimately by the A. government erecting the barrier. B. consumer. C. country exporting the goods. D. exporter.

B. consumer.

Barriers to trade A. are a political issue, but don't affect the cost of imports except marginally. B. cost consumers billions of dollars per year. C. save jobs in unprotected industries at $231,289 per job per year. D. None of these responses completes the phrase accurately.

B. cost consumers billions of dollars per year.

Social dumping occurs when an exporting country A. imposes an ecport tax on domestic business that export, to compensate for the opportunity cost in the domestic market. B. creates unfair competition based on lower costs because the exporting country provides little social support systems to the worker. C. targets market that consist of specific vulnerable groups in the importing country. D. exports goods that are not sellable in the domestic environment due to hazard and safety issues.

B. creates unfair competition based on lower costs because the exporting country provides little social support system to the worker.

Social dumping occurs when an exporting country a. imposes an export tax on domestic business that export, to compensate for the opportunity cost to the domestic market. b. creates unfair competition based on lower costs because the exporting country provides little social support system to the worker c. targets markets that consist of specific vulnerable groups int he importing country. d. exports goods that are not sellable in the domestic environment due to hazards and safety issues

B. creates unfair competition based on lower costs because the exporting country provides little social support systems to the worker.

The Alien Tort Statute allows foreigners to A. sue in the U.S. courts for residency in the U.S. B. file claims in U.S. courts for violations of international law that may have occurred beyond the U.S. borders. C. file claims in U.S. courts for alleged violations of foreign laws. D. file claims against other foreign nationals for violation of U.S. EEOC law.

B. file claims in U.S. courts for violations of international law that may have occurred beyond the U.S. borders.

What is appealing about the gold standard is A. everyone loves gold. B. its simplicity. C. its transportability. D. its carrying costs.

B. its simplicity.

Foreign exchange markets are A. large, liquid, and not very competitive. B. located in major trading capitals and have a virtual presence. C. accessible only to finance specialists. D. located in central banks.

B. located in major trading capitals and have a virtual presence.

Non-quantitative nontariff barriers A. are not counted as nontariff barriers. B. often involve government participation in trade, especially in customs and other administrative procedures. C. often involve ownership. D. are virtual barriers.

B. often involve government participation in trade, especially in customs and other administrative procedures

Antitrust law is intended to A. challenge successful businesses to allow proper levels of competition. B. prevent large concentrations of economic power, such as monopolies. C. create a more trusting business environment. D. allow socialism to flourish.

B. prevent large concentrations of economic power, such as monopolies.

Arbitration is often preferred when the contract stipulates U.S. law and one of the litigants is foreign because it is A. easier to influence an arbiter than a judge. B. quicker, cheaper, and more private than the U.S. court system. C. more discreet, although more costly than the court system. D. less bureaucratic than the court system of any country.

B. quicker, cheaper, and more private than the U.S. court system.

The primary motivation of tariffs is to A. raise government revenue at the cost of importers. B. raise the price of imports, to protect domestic goods. C. punish countries over political issues. D. encourage foreign consumption.

B. raise the price of imports, to protect domestic goods.

The SDR is A. a special deposit for corporate reimbursement. B. special drawing rights, an international reserve asset. C. a special deficit refund, made to compensate for currency devaluation. D. a paper credit issued by the Bank for International Settlements.

B. special drawing rights, an international reserve asset.

Antitrust laws differ among countries, and complying with them is often difficult for the firm, so A. international firms have had to increase their legal staffs to ensure compliance. B. the U.S. government is pushing for a world organization to clear antitrust issues. C. firms have moved toward fewer mergers and more regionalized organizations. D. firms expect to be in antitrust litigation and act accordingly.

B. the U.S. government is pushing for a world organization to clear antitrust issues

Many U.S. laws affect activities of international firms, and A. their impacts have been coordinated. B. there is no coordination or consolidation of them. C. as long as the action is outside of the territorial U.S., these laws won't apply. D. in the case of conflict in laws, the international business is allowed to choose which path to follow.

B. there is no coordination or consolidation of them.

Financial forces such as inflation and taxation are considered uncontrollable because A. there is nothing a manager can do to adjust to them, so the recommended approach is to ignore them. B. they are external forces beyond the influence of the firm, around which a manager can manage. C. they are external to the firm and their influence is to be avoided. D. they are unpredictable.

B. they are external forces beyond the influence of the firm, around which a manager can manage.

If an international manager runs afoul of a miscellaneous law while working abroad, calling the embassy A. will ensure that the charges are dropped. B. to let them know of the situation may be a good idea, but usually the embassy cannot help much. C. will lead to meetings that will arrange for everything needed for dropped charges. D. to have them explain the various legal rights you have as a foreigner to the foreign government judicial official is a reasonable approach.

B. to let them know of the situation may be a good idea, but usually the embassy cannot help much.

Usually, to assume that foreign law A. will be similar to U.S. law is reasonable. B. will differ from U.S. law and must be understood is a reasonable approach. C. won't matter because you and your trading partner will agree to arbitrate is reasonable. D. will be biased against the foreigner is reasonable.

B. will differ from U.S. law and must be understood is a reasonable approach.

Standardization of law A. would challenge international business because IB would lose protection. B. would make IB work more smoothly because uniform, predictable laws would result. C. has not been progressing due to nationalism and patriotism. D. does not take into account cultural aspects of legal regulations.

B. would make IB work more smoothly because uniform, predictable laws would result.

The U.S. has been concerned about dumping and a. yet only enact anti-dumping measures in 2006 b. enacted anti-dumping measures for its exporting companies as early as 1856. c. became one of the first countries to prohibit dumping into its own market, in 1916 d. illustrated this with the Boston Tea Party in 1773

C. became one of the first countries to prohibit dumping into its own market, in 1916.

The main sources of international law are A. the UN International Court of Justice. B. the U.S. Supreme Court and the EU Court of Justice. C. bilateral and multilateral treaties, along with customary law. D. nonexistent at this point.

C. bilateral and multilateral treaties, along with customary law.

Sir Isaac Newton put England on the gold standard when he A. declared, as master of the English mint, that he would sell gold for 1 lb., 1 shilling, 1 pence, under the law of one price. B. set a market price for gold, the British pound and the U.S. dollar. C. established a fixed equivalency between gold and the British currency. D. brought the matter to Queen Anne, who declared Britain would follow the gold standard.

C. established a fixed equivalency between gold and the British currency.

Where litigation in international disputes should occur is A. usually evident from the documentation available. B. at times unclear, in which case, the UN International Court of Justice will make a jurisdictional ruling. C. often complex, so contracts should include choice of law and choice of forum clauses. D. dictated by where the problem arose; a problem arising in India is adjudicated in India.

C. often complex, so contracts should include choice of law and choice of forum clauses.

dumping includes A. the foreign exporter's selling better products into the market than those manufactured in the home country. B. black market sales to avoid prohibited substances, such as weapons, alcohol, and pornography. C. selling goods priced lower in a foreign market than in the home market to build market share. D. expanding fast-food franchise operations in foreign markets.

C. selling goods priced lower in a foreign market than in the home market to build market share.

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System or A. the floating rate system. B. the India Accord system. C. the gold exchange standard. D. the French rate system.

C. the gold exchange standard.

In 1717, Sir Isaac Newton took Britain from the silver standard (pounds sterling) to A. floating exchange rates. B. fixed exchange rates, using silver. C. the gold standard, with fixed rates. D. pegged rates.

C. the gold standard, with fixed rates.

Countries put limitations on the convertibility of their currency when they are concerned that A. there is too much domestic spending. B. foreigners will hold control of their monetary policy. C. their foreign reserves could be depleted. D. there is not enough domestic spending.

C. their foreign reserves could be depleted.

With Privatization, all of these may occur except A. Assets are transferred from the public sector to the private sector. B. Government control of business management may be increased. C. State activities are moved into private management through contracts. D. Business loses its right to hire new employees.

D. Business loses its right to hire new employees.

The present floating exchange rate system was A. designed by the IMF and implemented flawlessly in 1973. B. established by the major trading nations in 19721 after Nixon closed the gold window. C. implemented in tandem with a reintroduction of the gold standard. D. established after several trials in which central bankers set rates incorrectly and speculators corrected them in the markets, and formalized after the fact in the IMF's Jamaica Agreement.

D. established after several trials in which central bankers set rates incorrectly and speculators corrected them in the markets, and formalized after the fact in the IMF's Jamaica Agreement.

The existence of the rule of law in a foreign market suggests that A. lawyers will be necessary in any substantive business transaction. B. personal relationships will be less effective than in a country governed outside the rule of law system. C. legal rulings will be the basis of any dispute resolution. D. foreign investors can assume that their interests will be protected.

D. foreign investors can assume that their interests will be protected.

Where litigation should occur in a dispute on an international transaction A. has to do with the location of the problem. B. is clear to both the defendant and plaintiff. C. is determined by where the transaction took place. D. is often a complex issue to untangle.

D. is often a complex issue to untangle.

Tax law A. is exempt from extraterritoriality. B. is highly standardized, making tax payments mostly an accounting operation. C. is mostly local and needs to be followed. D. is often applied globally.

D. is often applied globally

An example of environmental dumping is not found in the a. maquiladora plants of Mexico, located near the US border and operating at lower environmental standards that would be required in the US b. nuclear waste shipments to developing nations c. garbage shipments from NEW Jersey to developing nations. d. recycling and processing of Virginia garbage to yield fuel and fertilizer.

D. recycling and processing of Virginia garbage to yield fuel and fertilizer.

The imposition of standards is a way to establish nontariff barriers, and the following are examples of the imposition of standards, except for: A. Japan's refusal to import light mayonnaise containing potassium sorbate. B. Canada's categorization of orange juice with added calcium as a drug, subject to special requirements. C. the prohibition of imported drugs at the consumer level in the U.S. D. tariffs on certain barbiturate imports into the U.S.

D. tariffs on certain barbiturate imports into the U.S.

Punitive damages in product liability cases can be awarded in A. Japan. B. Japan and the EU. C. the UK. D. the U.S.

D. the U.S.

A nontariff barrier is illustrated by all but A. the French requirement in 1982 that all Japanese VCRs be inspected in Poitiers, far from the port and up a windy mountain road. B. the widespread Japanese belief that American rice can cause cancer. C. the European attitude toward genetically modified crops. D. the preference of some Indonesians for betel nut.

D. the preference of some Indonesians for betel nut.

dumping is a. selling a product abroad for less than its production cost or cost in the home market. b.selling product abroad tax-free and with an extended warrantee. c. exporting a product to a third country without correct documentation. d. selling a product at its domestic market value

a. selling a product abroad for less than its production cost or cost in the home market.

In Japan, product liability requires that A. the plaintiff prove design or manufacture negligence. B. the plaintiff meet with the defendant to reach an agreement and present it to the judge. C. harm be done with foreknowledge. D. in high-tech cases, the plaintiff establish a pattern of malfeasance.

the plaintiff prove design or manufacture negligence.