D270 Final
41) The most common type of tariff is the ________ tariff. A) export B) import C) transit D) ad valorem
B
53) Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect the Hong Kong government to ________. A) monitor market prices B) control natural resources C) ensure fair competition D) provide innovation incentives
C
7) Assume a government is considering import restrictions on sugar because sugar imports are hurting the domestic industry. Which of the following groups is LEAST likely to speak out on the subject? A) politicians in areas that grow sugar B) employees of sugar companies C) sugar company owners D) sugar consumers
D
12) In a market economy, the patterns of resource allocation are most directly influenced by ________. A) government administrators who monitor the equilibrium of supply and demand B) industry coalitions that strive to improve the efficiency of production and service C) consumer group alliances that negotiate with firms to improve product quality D) consumers who "vote" by their personal decision to buy or not buy products
D
17) Bantam Enterprises, a multi-national enterprise, makes significant efforts to avoid being perceived as socially irresponsible. What is the most likely reason for this? A) Social irresponsibility can lead to labor strikes by international unions. B) Socially irresponsible companies usually have fewer exports and more imports. C) Cultural barriers increase for companies that are socially irresponsible, which hinders expansion into additional countries. D) Social irresponsibility can lead to negative publicity from nongovernmental organizations, which could hurt a company's reputation.
D
18) Which of the following is most typical of a command economy? A) Consumers have choices of many substitutes for any given product. B) Quality of products and services tends to be consistent. C) The prices of goods and services frequently change. D) Many products are usually in short supply.
D
25) Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________. A) total of all consumption and investment that takes place in a national economy B) income generated in one country, regardless of who owns the productive assets C) total of all economic activity in one country less services, such as government administration, health services, and education D) income generated by both total domestic production and the international production activities of national companies
D
37) ________ typically results when demand decreases and supply increases. A) Inflation B) Chronic inflation C) Reflation D) Deflation
D
4) Managers should understand the effect of trade protectionism because ________. A) trade protectionism may limit the number of people permitted to practice a specific profession B) trade protectionism requires the payment of high insurance rates to transport goods internationally C) trade protectionism may prevent companies' enactment of merger and acquisition agreements D) trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers
D
40) What is the main motive for countries' protection of their film/cinema industries? A) to keep prices low for their citizens B) to improve their balance of payments C) to diversify their economies D) to maintain their cultural sovereignty
D
45) Which of the labor issues identified by the Ethical Trading Initiative (ETI) receives the most attention? A) safe and hygienic working conditions B) reasonable living wages C) inhumane treatment D) child labor
D
46) In most cases, which type of government protection assistance is most controversial? A) business development services B) foreign business contacts C) trade expositions D) tariffs
D
46) The Ethical Trading Initiative (ETI)is primarily focused on ________. A) fair trade laws for undeveloped countries B) tiered pricing by pharmaceutical firms C) greenhouse gas emission reduction D) employment practices of MNEs
D
50) A voluntary export restriction (VER) refers to ________. A) an agreement between two countries to reciprocally restrict exports to one another B) requests by governments for companies to limit exports of militarily useful technology C) limits companies' exports to increase domestic supplies D) limits placed on exports by a government of an exporting country at the request of the government of an importing country
D
54) The fact that there are few reciprocal agreements among countries on the licensing of professionals most likely means that ________. A) universities' study abroad programs do not enable students to obtain dual degrees and licenses from more than one country B) more service functions are being handled as not-for-profit C) people immigrate to those countries with the highest standards so as to more easily become licensed anywhere else D) there is an effective limitation on trade in services
D
58) In nearly half the cases in which U.S. firms have requested protection from imports, one or more U.S. companies in the industry opposed the protection. What was the reason for opposing protection? A) They did not want consumers to have to pay higher prices that would result from protection. B) These were foreign-owned companies that saw the opportunity to serve the U.S. market. C) They feared that they would lose foreign export markets because of retaliation. D) They believed that they could compete against global and domestic rivals.
D
6) The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT ________. A) life expectancy B) literacy C) environmental sustainability D) diversity
D
60) Which of the following governmental actions is LEAST likely to increase national debt? A) macroeconomic stimulus plans B) unemployment benefits C) corporate bailouts D) T-bond sales
D
62) People who argue for lifting the U.S. trade embargo with Cuba claim all of the following EXCEPT which one? A) The embargo has not achieved its purpose of changing Cuba's economic and political system B) U.S. companies lose Cuban sales to competitors from other countries. C) Increased exposure to the United States would be a more effective force of change. D) Cuba has largely become a market economy already.
D
7) Which of the following statements is most likely true regarding relationships between MNEs and stakeholders? A) An MNE typically serves all stakeholder groups equally at any given time. B) No individual stakeholder group is powerful enough to cause the demise of an MNE. C) All stakeholders of an MNE have the same short-term and long-term goals and interests. D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.
D
1) According to the text, which of the following has resulted from GE's Ecomagination initiative? A) rising profitability for many GE products B) increasing doubt among GE's foreign partners C) reducing investments by GE due to poor returns D) improving pollution levels near GE plants in China
A
1) The recent global economic crisis has led to which of the following? A) governments seeking to impose more constraints on capitalism B) governments seeking to eliminate constraints on capitalism C) governments seeking to increase the interdependence of developing economies D) governments seeking to eliminate the interdependence of developing economies
A
30) The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country. A) Human Development Index B) Emerging Economic Stability C) Genuine Progress Indicator D) Net National Product
A
5) Since the late 1980s, the growing emergence of freer markets has been powered by the realization that ________. A) economic growth is directly related to economic freedom B) economic growth has a limited effect on the standard of living C) adoption of free market principles contributes to social injustices D) centrally planned economies are best designed to deliver progress
A
51) A guideline for responsible action by a firm in its operations worldwide is a(n) ________. A) code of conduct B) corporate monitoring policy C) education program D) honor code
A
12) According to the teleological approach, individuals base moral decisions on ________. A) personal and social responsibilities B) consequences of an action C) cultural value systems D) opinions of peers
B
21) A manager who refuses to bribe customs officials in a foreign country, even though it is morally acceptable in that country, is most likely to believe in which of the following perspectives on ethics? A) relativism B) normativism C) humanism D) existentialism
B
22) Which of the following countries is the best example of a mixed economic model? A) United States B) France C) United Kingdom D) Australia
B
4) Which of the following is NOT a key stakeholder group that a company must work to satisfy in order to survive in a global environment? A) employees B) competitors C) shareholders D) customers
B
42) Some countries reverse engineer pharmaceutical products ________. A) because they know that generic products are inherently better than branded products B) to lower the cost of certain drugs to the domestic market C) as a way to charge higher prices in domestic markets D) to comply with international patent laws
B
6) Which stakeholder group is most interested in trustworthy behavior by corporate executives and increased corporate taxes? A) shareholders B) society C) employees D) customers
B
24) An advocate of the legal-justification standard would most likely assert that the law ________. A) develops slowly in response to evolving societal dilemmas B) protects business activities that are unethical but not illegal C) contains enforceable rules that apply to everyone D) offers necessary moral flexibility for a society
C
3) Kyle, an international manager for Apex Industries, has been given the task of analyzing the economies of three different emerging countries for the firm's potential expansion. Which of the following questions is LEAST relevant to Kyle's assignment? A) How much freedom will Apex have to run its foreign operations? B) What are the current economic policies related to development? C) What is the likelihood that Apex can fill manufacturing positions with locals? D) What factors in the country drive or hinder economic change?
C
30) What is the primary concern regarding anti-corruption measures in the EU? A) resistance to an official anti-fraud commission B) inability to adopt a corruption definition C) lack of uniform laws across nations D) failure to conduct internal auditing
C
38) The 1997 Kyoto Protocol is best described as an agreement that requires ________. A) all members of the United Nations to reduce their greenhouse gas emissions by 5.2 percent B) the United States and Japan to control greenhouse gas emissions by 8% below 1995 levels C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels D) the signatory countries to reduce greenhouse gas emissions by 80% by 2050
C
58) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following guidelines enforced by Quantum would LEAST likely be supported by the International Labor Organization? A) establishing bridge schools B) monitoring workplace safety C) allowing children ages 10-15 to work a maximum of 4 hours per day D) prohibiting abusive labor conditions
C
61) The U.S. catfish industry successfully petitioned the U.S. government to require that catfish varieties imported from Vietnam be labeled as tra, basa, or pangasius. This is an example of which of the following? A) an embargo B) a tariff C) a nontariff barrier D) a direct price influence
C
10) Which level of moral development involves an individual learning role-conformity from peers, parents, and laws? A) conventional B) principled C) autonomous D) preconventional
A
13) Which of the following most likely complicates ethical behavior for firms that expand overseas? A) local laws and values B) expatriate management C) unstable financial settings D) international codes of conduct
A
18) Ethical dilemmas tend to be ________ for MNE managers than for domestic managers. A) more complicated B) less controversial C) easier to decide D) less common
A
19) A manager practicing relativism would most likely ________. A) adapt to local conditions instead of implementing home-country practices B) enforce home-country laws on host-country employees and suppliers C) refuse to change company policies and procedures to comply with local norms D) apply universal laws to each country despite local customs and traditions
A
25) Which of the following is an example of extraterritoriality? A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws, even though China has no comparable laws B) a U.S. sweatshop operating in Thailand that does not follow U.S. labor laws but allows children to work 60 hours a week C) an MNE manager who, after working in the host country, tries to implement foreign practices in the home-country office D) a British subsidiary operating in Indonesia that maintains the same health and safety standards for its foreign factories that are required in Great Britain, even though the British government does not require it to use those standards
A
29) According to Transparency International, companies from which of the following countries are more likely to pay bribes? A) China B) Japan C) Singapore D) Belgium
A
3) Which of the following statements about GE and its "Green is Green" movement is true? A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States. B) GE has decided to develop new products that are environmentally friendly rather than adopt internal policies to reduce greenhouse gas emissions. C) GE has moved aggressively to reduce greenhouse gas usage internally but has not been able to develop commercially viable "clean" technologies. D) GE considered joining the U.S. Climate Action Partnership but decided the group was too radical in its approach to reducing greenhouse gas emissions.
A
35) A worrisome outcome of chronic inflation is that it tends to ________. A) erode confidence in a country's currency B) give central banking officials excessive flexibility to manage monetary policy C) increase the real income of people, thereby inflating their spending and borrowing levels D) lower consumer demand for foreign goods, which triggers lower prices and eventually lower employment
A
39) Firms that operate in countries that have adopted the Kyoto Protocol are required to either reduce emissions or ________. A) purchase carbon credits from other firms B) file petitions to appeal the requirement C) cease manufacturing operations D) pay fines to the U.N.
A
40) How has the Kyoto Protocol affected U.S. companies operating in Europe? A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe. B) The Kyoto Protocol has not affected U.S. companies with subsidiaries in Europe because the U.S. has not signed the Kyoto Protocol. C) Before U.S. companies can open any more European subsidiaries, the U.S. government must sign the Kyoto Protocol. D) Because the United States is not a party to the Kyoto Protocol, U.S. companies may not operate in European countries that have signed the Kyoto Protocol.
A
43) In addition to protection, tariffs serve to ________. A) generate revenue B) subsidize exports C) subsidize imports D) increase consumption
A
45) What is the primary difficulty associated with dismantling developed countries' agricultural subsidies? A) Rural areas in the United States, the European Union, and Japan are disproportionately represented in their governments. B) Developing countries put pressure on developed countries to maintain the subsidies so that they receive food products at a lower price. C) The subsidies are used to counter the commodity agreements set up mainly by developing countries. D) The subsidies are at the consumer, rather than producer, level, and everyone benefits from the lower prices.
A
52) Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with ________. A) minimal government intervention B) standardized minimum wages C) laws favoring sustainability D) state-run corporations
A
52) Why are offsets considered protectionist measures? A) Exporters must often find markets for goods outside their lines of expertise. B) Exports must be sold at a certain percentage price below the price of domestic producers. C) Companies must submit samples to government authorities before receiving export permission. D) Trading companies must incur additional inventory carrying charges and pay significantly higher tariffs
A
53) Which of the following hypothetical examples would be a restriction on the import of services? A) The U.S. restricts foreign companies from carrying cargo between two U.S. cities. B) Japan restricts North Koreans from visiting Tokyo Disneyland. C) China does not allow the importation of rice from Thailand. D) Canada does not allow Air Canada to buy Brazilian aircraft.
A
54) Which of the following is most important to the effectiveness of an internal code of conduct? A) ensuring that employees understand the code by requiring confirmation in writing B) paying bonuses to suppliers and distributors that agree to the code C) relying on nonprofit NGOs to develop guidelines D) adhering to industry standards and norms
A
57) Companies with ________ would most likely oppose global protectionist measures. A) internationally integrated supply chains B) domestically focused supply chains C) multidomestic production facilities D) product differentiation
A
57) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following would be the best approach for Quantum? A) improving conditions at the subcontract facilities B) developing an external ethics code for foreign partners and letting them worry about compliance. C) requiring local governments to alter their labor policies D) leaving the market and focusing on domestic production
A
59) Which of the following is NOT causing greater complexity in the regulation of trade? A) growth in export tariffs B) services available over the Internet C) heightened concern about product safety D) development of new products that must be classified
A
60) The U.S. catfish industry petitioned the U.S. government for increased taxes on imported Vietnamese fish, claiming that the fish were being sold below the cost of production. The U.S. catfish industry was accusing the Vietnamese fish industry of ________. A) dumping B) using an embargo C) subsidizing D) using offsets
A
9) According to research, which of the following countries is the strongest supporter of free markets? A) China B) India C) France D) Ukraine
A
14) Which of the following is a primary business objective for pursuing ethical behavior? A) avoiding industrial sanctions B) developing competitive advantages C) developing creative advertisements D) discouraging false commitments to the firm
B
2) General Electric has focused on being more "green" in recent years most likely because ________. A) the industry has always looked to GE as a trend setter in green technology B) GE executives believe the firm can strategically align investor and environmental interests C) GE executives realize that the firm can save significant money through the use of solar technology D) the U.S. government has decided to use GE as a test case to see if the adoption of the Kyoto Protocol can actually work for a U.S. firm
B
27) What is the primary argument against extraterritoriality? A) increases opportunities for corporate bribery B) contradicts demands for increased globalization C) requires oversight by nongovernmental organizations D) prohibits firms from expanding into foreign territories
B
28) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions with Cuba is an example of ________. A) utilitarianism B) extraterritoriality C) absolute advantage D) relative advantage
B
32) Which of the following statements describes an inconsistency of the FCPA? A) Facilitation payments are classified as bribery. B) Facilitation payments are excluded from the FCPA's definition of bribery. C) Payments to officials who are not directly responsible for carrying out the law are legal. D) Payments to foreign officials who carry out the law are considered illegal by provisions of the FCPA.
B
33) A 1998 U.S. law that outlaws bribery payments by U.S. firms to foreign government officials is known as the ________. A) Anti-Bribery Act of 2004 B) Foreign Corrupt Practices Act C) Zero Tolerance Initiative D) Sarbanes-Oxley Act
B
36) Which of the following is a voluntary effort by 150 multinational construction and natural-resources companies to end bribery? A) Foreign Corrupt Practices Act B) Partnering Against Corruption Initiative C) OLAF (European Commission Anti-Fraud Office) D) Sarbanes-Oxley Act
B
43) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ________. A) allows rich countries to produce generic versions of patented drugs without having to pay royalties to the patent holder B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs C) requires pharmaceutical companies to provide low-cost vaccines and HIV/AIDS medications to developing countries D) requires tiered pricing for most essential drugs
B
48) Most countries have agreed on how to assess values when their customs agents levy tariffs. Which of the following best expresses this agreement? A) They should use the value of similar goods arriving at about the same time. B) They should use the declared invoice price unless they doubt its authenticity. C) They should assess a value based on local costs to produce a similar product. D) They should assess a value based on the expected final consumer sales price.
B
48) Which of the following best supports the idea that MNEs should remain in countries that allow child labor? A) MNEs have a positive influence on government employment policies in most foreign countries. B) Many MNEs have substantially improved the working conditions of their foreign plants. C) MNEs are required to pay child workers more than local companies. D) Most MNEs employ local managers to handle cultural differences.
B
49) In international trade, what is a quota? A) a guarantee by one country to buy some minimum amount from another B) a quantitative limit on the amount of a product that can be imported or exported C) a countertrade arrangement that establishes the value of imports and exports D) a bilateral agreement calling for mutual access to markets
B
5) Which stakeholder group primarily wants additional sales and increased productivity? A) customers B) shareholders C) society at large D) government
B
50) Which of the following best explains Nike's quick response to criticism of unfair employment practices in developing countries? A) retaining employees B) improving public relations C) addressing product safety concerns D) cutting costs in order to improve profits
B
56) The U.S. automobile industry has attempted to counter import competition in all the following ways EXCEPT ________. A) concentrating on market niches that initially had less import competition B) lobbying for customs deposits so that importers' costs would be raised C) moving some production to lower-cost countries and exporting to the United States D) effecting internal adjustments, such as cost efficiencies and improved quality
B
56) What is the primary reason that Anglo American PLC developed its ART program? A) comply with government standards B) maintain a healthy workforce C) abide by union demands D) reduce employee benefits
B
63) People who argue for keeping the U.S. trade embargo with Cuba claim all of the following EXCEPT which one? A) There is not much economic potential from trade given Cuba's small population and low per capita income. B) Removal of the embargo will cause much more Cuban immigration to the United States. C) If the Cuban economy is weakened just a bit more, the Cuban political-economic system cannot be sustained. D) There will be a backlash among countries supplying such commodities as sugar to the United States if the U.S. buys them from Cuba instead.
B
8) Monique has recently been hired as an accounts supervisor at Ballston Enterprises. She wants to understand Ballston's values and its expectations for employee behavior. Which of the following would most likely provide Monique with this information? A) mission statement B) code of conduct C) vision statement D) employee contract
B
1) Trade protectionism will most likely affect which aspect of a company's operations? A) selecting employees B) investing short-term capital C) acquiring foreign supplies D) relocating personnel overseas
C
10) Successful trade retaliation is most likely achieved ________. A) on agricultural products B) on manufactured products C) by a large trading country D) by a small trading country
C
10) Which of the following is NOT a characteristic of capitalism? A) private ownership of assets B) right to profit from individual effort C) state control of factors of production D) private control of investment
C
15) Which of the following is a primary business objective for pursuing ethical behavior? A) replacing home-country technology with host-country technology B) minimizing federal investigations into corporate finances C) avoiding being perceived as a socially irresponsible firm D) imposing home-country behavior on the host country
C
16) Encouraging ethical behavior for the purpose of developing competitive advantages will most likely result in all of the following for a firm EXCEPT ________. A) strategic accomplishment B) consumer commitment C) industry resolutions D) financial success
C
20) The belief that there are universal standards of behavior that all cultures should follow is called ________. A) humanism B) relativism C) normativism D) naturalism
C
22) Why is the argument that "anything legal is ethical" most likely insufficient? A) Everything that is unethical is also illegal. B) The law is an extremely efficient way to solve ethical dilemmas. C) Laws are frequently based on imprecisely defined moral concepts. D) Laws can never be changed; thus, rules for all possible ethical dilemmas are found in the law.
C
23) Which of the following is a reason for an MNE to base its standards for ethical behavior on a country's laws? A) The law embodies many of a country's moral beliefs but is an inadequate guide for proper conduct. B) The law contains unenforceable rules that are impossible for society to follow. C) The law represents a consensus derived from significant deliberation. D) The law is based on precisely defined moral concepts.
C
35) The OECD Convention against bribery is an example of a(n) ________. A) bilateral agreement developed for the EU B) agreement that targets the demand side of bribery C) agreement that targets the supply side of bribery D) UN Convention dominated by developing countries
C
37) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as ________. A) competitive advantage B) the Kyoto Protocol C) sustainability D) externality
C
44) Which of the following has been the primary reason for the recent growth of India's pharmaceutical industry? A) globalized supply chains B) tiered pricing guidelines C) patent-protection laws D) foreign investors
C
44) Which term refers to a tariff or duty assessed as a percentage of an item's value? A) specific duty B) effective tariff C) ad valorem duty D) compound tariff
C
47) According to the Ethical Trading Initiative (ETI), ________. A) child labor cannot be used unless there are no suitable alternatives B) employment need not be freely chosen in order to be acceptable C) no harsh or inhumane treatment of workers should be allowed D) MNEs are not responsible for establishing codes of conduct
C
51) An import license is ________. A) an agreement whereby one country gives another country permission to use a patent that a company has registered there B) a requirement that exporters take merchandise in lieu of money as payment for their sales C) a requirement that permission be secured from governmental authorities before importation can be undertaken D) a government prohibition of imports from a specific country
C
52) The U.N. Global Compact is best described as a(n) ________. A) corruption mandate B) environmental initiative C) external code of conduct D) international trade guideline
C
53) Which of the following is most important when designing an internal code of conduct? A) requesting U.N. oversight and intervention when necessary B) communicating the code of conduct only to employees C) reporting results to external stakeholders D) forming local polices for each subsidiary
C
55) A physician, who is a citizen of and licensed in Country A, meets the professional licensing requirements of Country B. The physician will most likely ________. A) have to pass a language proficiency exam before being allowed to work in Country B B) not be allowed to work in the not-for-profit sector in Country A or Country B for a set period C) have to get a work permit from Country B's immigration authorities to work in Country B D) have to work in the not-for-profit sector in Country B for a period of time before being permitted to work for a profit-seeking organization
C
55) What is the primary problem associated with Anglo American PLC's ART program? A) unknown side effects to drugs and treatment B) rising costs of medications and procedures C) poor treatment adherence by employees D) lack of sufficient insurance coverage
C
9) All of the following are levels of moral development EXCEPT the ________. A) preconventional level B) autonomous level C) internalized level D) conventional level
C
11) Communism primarily relies on a system of ________. A) private business ownership B) competitive pricing and marketing C) market-generated supply and demand D) government controlled economic activity
D
11) Imports can stimulate exports by ________. A) redistributing the work force B) curtailing domestic competition C) generating more tax revenue D) increasing foreign income
D
11) Which of the following statements is most likely true about the postconventional level of moral development? A) Individuals learn what is moral but not why such behavior is moral. B) Individuals behave morally because they fear negative repercussions. C) Individuals learn how to conform to society's values through observation. D) Individuals behave morally because they believe such actions are right.
D
26) A government that enforces its own laws on foreign subsidiaries of its domestic companies practices ________. A) civil law B) relativism C) externality D) extraterritoriality
D
31) Which of the following is NOT affected by the Foreign Corrupt Practices Act? A) companies registered in the U.S. B) foreign firms operating in U.S. territory C) foreign firms quoted on a U.S. stock exchange D) foreign companies managed by U.S. expatriates
D
34) Which of the following is permitted by the Foreign Corrupt Practices Act? A) a bribe paid by foreign firms operating in U.S. territories B) a bribe paid by U.S. firms operating in a foreign country that permits bribes to be paid C) a payment to a foreign government official to influence a customs official D) a payment to a customs official to clear legitimate merchandise
D
41) Medco Pharmaceuticals charges a market price for heart medication to distributors in Italy and a discounted price for the same medication to distributors in Bangladesh. Medco is most likely using ________. A) discounted pricing B) skimmed pricing C) penetrated pricing D) tiered pricing
D
42) An import tariff may be protective ________. A) only if it is on imports the country produces domestically B) if it serves primarily to restrict entry of hazardous materials C) if it does not generate significant tax revenue for essential industries D) even though the importing country does not produce the product
D
47) Tied aid requires a recipient to ________. A) donate a portion of the funds to the donor country's infrastructure needs B) use the capital in any way as long as donor country approval is granted C) employ local workers in management positions D) spend the funds in the donor country
D
49) Which of the following is NOT a likely reason for companies to act more ethically? A) Consumer boycotts may result from unethical corporate behavior. B) Irresponsible and unethical actions may lead to legal problems for MNEs. C) Unethical or irresponsible behavior can negatively impact employee morale. D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.
D
28) To determine whether the standard of living within a country is rising or falling, economists would most likely use which of the following measures? A) per capita GNI B) GNI growth rate C) purchasing power parity D) degree of human development
B
3) Why should managers have an understanding of trade protectionism? A) Trade protectionism targets factor endowments, thus affecting the best country to locate production. B) Trade protectionism affects a company's ability to sell abroad and ability to compete at home. C) Trade protectionism affects the number of people permitted to practice a specific profession. D) Trade protectionism prevents companies' enactment of merger and acquisition agreements.
B
30) Countries most likely establish export restrictions to ________. A) retaliate against foreign import controls B) raise prices in foreign markets C) encourage substitute products D) reduce domestic production
B
33) ________ is a general, sustained rise in prices measured against a standard level of purchasing power. A) Deflation B) Inflation C) Expansion D) Reflation
B
36) According to the optimum tariff theory, a foreign producer will most likely ________. A) ship highly taxed goods internationally on a per-unit basis B) lower its export prices if the importing country imposes an import tax on its products C) assess a tax on goods shipped internationally based on a percentage of the goods' value D) seek mport tariffs by using the comparable access argument
B
38) A possible drawback to the essential industry argument for import protectionism is ________. A) that such protection hurts the protecting country's balance of payments B) in times of military emergency, almost any product could be considered essential C) other countries find supplies elsewhere D) unemployment increases in the protecting country
B
39) The so-called "misery index" is the sum of a country's ________. A) foreign and national debt B) inflation and unemployment rates C) unemployment level and total debt D) trade deficit and long-term inflation rate
B
4) Managers at Morrison Manufacturing are considering expanding the firm's production overseas and want to ensure that the firm is located in a country with a high degree of economic freedom. Presently, which of the following locations would most likely offer Morrison the highest economic freedom? A) Mexico B) Hong Kong C) Venezuela D) North Korea
B
41) Country X has a significant amount of external debt. Which of the following is the most likely cause? A) The government of Country X borrowed money from local banks. B) The government of Country X borrowed money from other governments. C) The government of Country X spent more than it collected in revenues. D) The government of Country X received short-term credits from selling bonds
B
43) Which of the following is most likely a FALSE statement about income inequality? A) The richest 1% of the world's population claims as much income as the bottom 57%. B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens. C) Among industrialized nations, the U.S. has the largest inequality gap between rich and poor. D) Income inequality between metropolitan and rural areas threatens a country's social stability.
B
49) In a country's balance of payments, the ________ tracks all trade activity in merchandise. A) capital account B) current account C) payment account D) deficit account
B
54) Presently, which of the following countries is best characterized as a pure example of a command economy? A) Russia B) Libya C) China D) Vietnam
B
58) Which of the following ideas calls for assessing a country's performance based on factors such as life expectancy, leisure time, and income equality? A) microeconomics B) happynomics C) macroeconomics D) green economics
B
59) During a time of reflation, the government is most likely to ________. A) lower taxes B) print money C) reduce interest rates D) support infrastructure
B
6) Assume a government places restrictions on a specific product from a specific foreign country. What would be the government's most likely concern about the foreign country's response? A) the foreign producers raising the prices of their exports B) the foreign country restricting its own imports C) the foreign country restricting its exports in that industry D) the foreign producers seeking other markets
B
7) The recent global credit crisis has interrupted the trend of national economies ________. A) rapidly adopting the command market model B) steadily adopting the free market model C) moving from the mixed to the command model D) turning away from the mixed model
B
8) History suggests that if the economic crisis worsens, we are likely to see more people question the ________. A) fall of communism B) legitimacy of capitalism C) practicality of mixed market economies D) correlation between economic freedom and prosperity
B
9) Unemployed workers are most apt to form a pressure group to support ________. A) export restrictions B) import restrictions C) price limitations D) import subsidies
B
31) Export restrictions have a tendency to ________. A) favor domestic consumers B) protect employment in the export-restricted industries C) lower prices in foreign markets D) encourage the development of substitutes in the restricting country
A
12) All of the following are generally true about trade-displaced workers EXCEPT which one? A) They move abroad to take new jobs. B) They earn less in their new jobs than they earned in their old ones. C) They spend their unemployment benefits on living rather than retraining. D) They have difficulty finding new work because of educational deficiencies.
A
15) A problem that can arise in using trade protectionism to develop international competitiveness for a domestic industry is that ________. A) it is difficult to identify industries that have a high probability of reaching competitiveness B) assistance should be given only if entry barriers to new firms are very low C) the protecting countries lose too much revenue from import duties D) a short product life cycle makes the industry quickly noncompetitive
A
15) In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by ________. A) government officials B) private industries C) individual entrepreneurs D) local trade associations
A
2) The term protectionism when applied to international trade refers to ________. A) governmental restrictions and competitive support actions to affect trade flows B) payments to dock workers to prevent pilferage of imported shipments C) border checks to prevent entry of illegal aliens D) methods used to prevent intellectual property theft
A
20) Terms of trade refers to ________. A) the quantity of imports that a given quantity of a country's exports can buy B) specific requirements placed on imports and exports at the port of entry or exit C) requirements agreed upon by two countries to regulate bilateral trade D) an account statement showing a country's annual imports and exports
A
21) Which term refers to restricting imports in order to boost domestic production and consumption of goods that would otherwise be imported? A) import substitution B) terms-of-trade C) most-favored nation D) in-sourcing
A
28) All of the following are reasons a country might institute import restrictions to improve its balance of trade position with other countries EXCEPT to ________. A) maintain essential industries B) reduce imports and encourage exports C) get comparable access for its companies D) bargain away restrictions by other countries
A
29) Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine? A) purchasing power parity B) economic growth rate C) gross domestic income D) gross national product
A
34) There are several reasons for a company to sell products abroad at either below cost or below the price in the home country. Which of the following is one of these reasons? A) encouraging foreign consumers to try new products B) improving the exporting country's terms of trade C) gaining imports that are sold below cost D) following import substitution objectives
A
34) What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist? A) difficulties of identifying a definitive set of predictive economic indicators B) a lack of reliable economic data from most developed economies C) the isolation of most markets from each other D) static nature of the marketplace
A
37) An argument against limiting exports to unfriendly countries is that ________. A) the costs of the sanctions are borne by innocent people rather than by leaders B) markets cannot be regained after the countries become friendly C) one country's essential product is superfluous to another D) the exporting nation's cultural identity is harmed
A
42) Uneven income distribution ________. A) exists in almost every country B) is largely a problem for poorer nations C) primarily affects people in urban settings D) is limited to a small share of the world population
A
46) The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day. A) Base of the Pyramid B) Hierarchy of Needs C) Happy Planet Index D) Gini coefficient
A
5) The government of Country X imposes import restrictions on steel to help the domestic steel industry in depressed areas. What is the most likely result of such restrictions? A) damaging other industries in Country X B) devaluing the currency of Country X C) lowering steel prices in Country X D) triggering boycotts in Country X
A
50) An economic system is the set of structures and processes that ________ in a country. A) guides the allocation of resources and shapes the conduct of business activities B) directs the movement of specific products to specific consumers C) sets the standards of competitive success for companies in the economy D) stipulates the roles and responsibilities of consumers
A
24) The relationship between import substitution policies and export-led development policies is best characterized by which of the following? A) Import-substitution policies are more likely to lead to production of mature products, whereas export-led development policies result in production of growth products. B) The two are hard to distinguish because production under import substitution may eventually be exported. C) Production under import substitution policies, as opposed to export-led development policies, is more likely to be located in urban areas. D) Production under import substitution policies, as opposed to export-led development policies, is likely to be more labor-intensive.
B
13) A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a ________. A) command economy B) market economy C) private economy D) mixed economy
B
14) Which of the following statements most likely undermines the infant-industry argument? A) Total unit costs decrease through economies of scale. B) High tariffs to prevent foreign competition increase government revenues in the protected country. C) Domestic entrepreneurs need assistance to compete in industries with high entry barriers. D) Experience of operating over time triggers higher productivity and global competitiveness.
B
16) In a command economy, ________. A) businesses and consumers are assumed to be the best judges of how resources should be allocated B) the government sets goals and determines the price and quantity of what is produced C) different economic sectors coordinate the activities of the federal government D) each enterprise sets its goals before making reports to the central government
B
17) The industrialization argument for trade protection in developing countries is based on the assumption that ________. A) the protected industry will become competitive over time with economies of scale B) unemployment and underemployment exists in rural areas, so little agricultural output is lost as people move into industrial jobs C) subsidizing production is a better means of protection than limiting imports D) it is better to depend on buying agricultural surpluses from developed countries than to produce these agricultural goods
B
20) Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to ________. A) destabilize poverty rates B) achieve low unemployment C) restrict economic growth D) inequitably distribute wealth
B
27) Country X wants to eliminate its balance of trade deficit while simultaneously keeping prices low for imported essentials. Which of the following methods would most likely achieve these dual objectives? A) devaluing its currency B) enacting selective import restrictions C) using tight monetary policies to deflate price levels D) spurring productivity increases through general tax breaks for industry
B
13) The rationale for the infant-industry argument for trade protection is that ________. A) incubator centers in which business, government, and academia cooperate will develop entrepreneurial companies B) a country should give one firm in an industry a monopoly status so that it will grow large enough to be competitive internationally C) it takes time for an industry to become competitive in world markets, so protection is needed to help this industry pass through the critical period D) lower restrictions should be placed on products coming from countries where a government has a large sphere of political influence
C
14) Market economies are primarily characterized by ________. A) formal cooperation among government, companies, and workers to achieve stable growth B) heavy government spending and high taxation to pay for a range of social services C) minimal governmental participation D) restricted consumer powers
C
17) In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X? A) market economy B) mixed economy C) command economy D) democratic economy
C
19) Developing countries have sometimes adopted policies to shift people out of agriculture and into industry by protecting manufactured production. One of the problems they have encountered is that ________. A) people have been too reluctant to leave rural areas to go to the cities B) food shortages have increased in rural areas because of worker shortages C) demand for social and political services has increased excessively in the cities D) developed countries have retaliated with protection of products from the developing countries
C
21) In the Economic Freedom Index, ________ exhibit high economic freedom whereas ________ exhibit little to no economic freedom. A) mixed economies; market economies B) command economies; market economies C) market economies; command economies D) centrally planned economies; command economies
C
22) Export-led development refers to ________. A) a country's efforts to promote its exports in order to reduce its trade deficits B) a policy to promote domestic production of goods that would otherwise be imported C) a program to promote industries with export potential D) decreases in infrastructure development due to the loss of revenue from export tariffs
C
23) Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________. A) standardized procedures implemented by the state B) high economic growth rates for the long-term C) privatization of many factors of production D) violent political and legal upheaval
C
24) In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________. A) leveraging control of the financial system B) developing national corporations C) supporting the local activities of foreign competitors D) systematically managing trade relations
C
25) Advocates of the comparable access argument for trade protection primarily assert that domestic industries ________. A) will deteriorate in countries that have lower import restrictions than their trading partners B) should be required to implement export-led development policies on foreign competitors C) are entitled to the same access to foreign markets as foreign industries have to their markets D) are forced to lower prices for domestic consumers because of foreign import restrictions
C
27) The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its________. A) net national product (NNP) B) gross national product (GNP) C) gross domestic product (GDP) D) gross national income (GNI)
C
31) The Human Development Index measures the average achievements in a country on three basic dimensions of human development, including ________. A) promotion of cultural values B) quantity of free time C) extent of knowledge D) sustainability
C
32) All of the following are potential problems of using export controls EXCEPT which one? A) There is an incentive for other countries to develop production of their own. B) Domestic producers may have less incentive to increase output. C) Prices go up in the country imposing the controls. D) There is more incentive for smuggling.
C
32) The ________ starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality, population health, livelihood security, equity, free time, and educational attainment. A) Gross National Index B) Net National Product C) Genuine Progress Indicator D) Human Development Index
C
35) Countries sometimes fear that foreign producers are pricing their exports artificially low. This fear is most likely based on the assumption that ________. A) foreign companies will lack the earnings to repay their foreign debt B) insufficient earnings will be available to improve product technology C) foreign producers will charge exorbitant prices after putting competitors out of business D) developing countries will be unable to maintain critical industries needed in times of war
C
36) In most cases, governments ________ in order to regulate inflation. A) lower interest rates B) increase taxes C) raise interest rates D) decrease taxes
C
38) In the U.S., the unemployment rate indicates the ________. A) percentage of the labor force that wants to work full-time but can only find part-time employment B) number of people who have stopped looking for work because full-time jobs are unavailable C) percentage of unemployed workers seeking paid work relative to the total labor force D) number of workers eligible for government services and unemployment benefits
C
39) Defense arguments are sometimes used to prevent exports to unfriendly countries. This runs the risk of the targeted country ________. A) becoming politically destabilized B) removing import restrictions C) finding alternative sources of supply D) banding with other countries to form a cartel
C
40) A government increases its internal debt for all of the following reasons EXCEPT which of the following reasons EXCEPT ________. A) The tax system is so poorly run that the government cannot collect all the revenues it expects. B) Government costs such as security and social programs exceed total tax revenues. C) The government borrows money from international financial institutions. D) State-owned enterprises run large deficits.
C
44) The World Bank reports that approximately ________ percent of the world's population is poor. A) 50 B) 75 C) 80 D) 95
C
47) Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time? A) trade deficit B) Gini coefficient C) balance of payments D) purchasing power parity
C
51) Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering? A) Indonesia B) Chile C) Russia D) Bangladesh
C
56) According to the concept of green economics, measuring a country's economic performance should also take into account ________. A) market share B) population size C) ecological costs D) cost-of-living increases
C
19) In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning. A) state-directed B) market C) command D) mixed
D
8) What is the most likely reason that consumers rarely protest import restrictions that raise the prices they pay for a specific product? A) They reason that if the import restrictions are removed, the foreign producers will raise their prices to those of the domestic producers anyway. B) Many countries prohibit consumers to band together to influence political actions. C) Typically, although the added costs to consumers for a given product are high in aggregate, they are fairly trivial for most individual consumers. D) They reason that if they do something to hurt domestic employment for one product, the displaced workers will then do something that will hurt their own employment.
C
16) Which of the following is a problem with the infant-industry argument for protection? A) Most developed countries increasingly have a larger portion of retirees than youth. B) Consumer groups become very active in protesting the higher prices that result during infancy. C) Other countries retaliate by limiting exports of technology needed by the infant industry producers. D) If the industry does not lower costs sufficiently to be competitive, it becomes a formidable pressure group for continued protection.
D
18) Unlike the infant-industry argument, the industrialization argument for trade protection ________. A) requires independence from other countries B) stresses labor-intensive production methods despite high costs C) emphasizes use of locally available raw materials for manufacturing inputs D) presumes that economic growth will occur even if domestic manufactured prices are not globally competitive
D
2) Which of the following is most likely a true statement about the global economy since the 1980s? A) Socialist governments are intervening more in global exchanges. B) Wealthy countries are exercising total control over emerging markets. C) Developing countries are losing growing shares of their foreign-exchange reserves. D) Emerging economies are adopting the principles and practices of free markets.
D
23) Which of the following best explains why the experience of countries such as Taiwan and South Korea are used to support export-led development policies? A) their low inflation B) their increased FDI C) their industry diversity D) their rapid economic growth
D
26) In computing GNI, the value of a Ford car that is manufactured in Mexico using capital from the United States would ________. A) be added to the GNI of the United States as well as to the GNI and GDP of Mexico B) not be added to the GNI of the United States but would be added to the GNI of Mexico C) only affect the computation of GDP and have no bearing on GNI D) be added to the GNI of the United States but not the GNI of Mexico
D
26) It is sometimes contended that by imposing import controls a country might be able to increase its exports. This contention is premised on ________. A) the country's simultaneous currency depreciation, which decreases the price of its exports B) using the import taxes to institute efficiency measures in potential export industries C) raising domestic prices in one industry so that the excess domestic profits in that industry can compensate for the cost of dumping products from another industry into foreign markets D) getting other countries to maintain or relax their current import restrictions instead of escalating restrictions in a trade war
D
29) Country X is withholding goods from international markets in an attempt to raise prices abroad. Such actions will be most effective for Country X if the nation ________. A) supports the development of substitutions B) provides domestic industries with tax breaks C) receives low-interest loans from foreign banks D) holds a monopoly on the product or resource
D
33) Exporting below cost or below the home country price is called ________. A) countertrade B) an export-led development policy C) a strategic trade policy D) dumping
D
45) The Gini coefficient estimates a country's ________. A) gross national product B) economic development C) political and legal risk D) income inequality
D
48) The two main categories in the balance of payments are the ________. A) merchandise exchange account and the services account B) external debt and the unilateral transfers account C) merchandise trade account and the capital account D) current account and the capital account
D
55) A firm with operations in Denmark can most likely expect all of the following EXCEPT ________. A) high taxes B) significant regulation C) tough job-protection laws D) minimal monetary policies
D
57) Which of the following calls for economic activity that meets present needs without hindering the future needs of society? A) privatization B) state capitalism C) economic freedom D) sustainable development
D
