IBI101 FE1

The share of the total FDI stock accounted for by which of the following countries increased markedly from 1980 to 2000? A. United States B. France C. United Kingdom D. Netherlands

B

Which Islamic banking method is the most widely used among the world's Islamic banks, primarily because it is the easiest to implement? A. Mudarib B. Murabaha C. Maysir D. Mudarabah

B

What is the total cumulative value of foreign investments best referred to as? A. Accumulation of foreign shares B. Portfolio investments C. Stock of foreign direct investments D. Stock market investments

C

61. Antidumping duties are often called: A. special circumstance duties. B. positive duties. C. retroactive duties. D. countervailing duties.

D

41. An agreement between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other is referred to as: A. regional economic integration. B. socioeconomic integration. C. political integration. D. economic-political integration.

A

41. _____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital. A. Profitability B. Performance C. Cash flow D. Efficiency

A

43. Tariffs do not benefit: A. consumers. B. domestic producers. C. governments. D. domestic firms.

A

44. A pair of shoes costs ≤30 in Britain. The identical pair costs $45 in the United States. The exchange rate is ≤1 = $1.80. In terms of cost of the shoes: A. the U.S. offers a better deal. B. the deal is the same in both countries. C. Britain offers a better deal. D. the U.S. deal is comparatively worse.

A

44. On January 1, 1993 ______ moved toward a single market with 340 million consumers. A. the European Union B. MERCOSUR C. the Andean community D. NAFTA

A

45. All of the following are true of tariffs except: A. they reduce the revenue for the government. B. they can be levied as a proportion of the value of the imported good. C. they can be levied as a fixed charge for each unit of a good imported. D. they impose significant costs on domestic consumers.

A

45. The value of a product to an average consumer is V; and the average price that the firm can charge a consumer for that product is P. Here, V - P can be termed as: A. consumer surplus per unit. B. producer surplus per unit. C. profit growth. D. profit per unit sold.

A

46. These are the most popular form of regional economic integration, accounting for almost 90% of regional agreements A. Free trade areas B. Customs unions C. Common markets D. Economic unions

A

48. A strategy that focuses on increasing the attractiveness of a product is referred to as a(n): A. differentiation strategy. B. low cost strategy. C. effectiveness strategy. D. efficiency strategy

A

48. In a free trade area: A. barriers to the trade of goods and services among member nations are removed. B. a common currency is adopted C. a single parliament determines political and foreign policy. D. a common external trade policy is adopted.

A

49. According to the policy, subsidies can help a firm achieve a first-mover advantage in an emerging industry. A. strategic trade B. antidumping C. tariff quota D. free trade

A

51. In the United States, the only firms allowed to import cheese are certain trading companies, each of which is allocated the right to import a maximum number of pounds of cheese each year. Identify the trade restriction being imposed by the United States. A. Import quota B. Subsidy C. Ad valorem tariff D. Specific tariff

A

51. The basic strategy paradigm suggests that to maximize its profitability, a firm should do all of the following, except: A. choose, according to strategy, any position on the efficiency frontier as all positions are viable. B. pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice. C. configure its internal operations so that they support the position on the efficiency frontier. D. make sure that the right organization structure is in place to execute the strategy.

A

53. A quota on trade imposed by the exporting country, typically at the request of the importing country's government is referred to as a(n): A. voluntary export restraint. B. specific tariff quota. C. trade reconciliation. D. ad valorem tariff.

A

53. Assuming the 30-day forward exchange rate were $1 = ×130 and the spot exchange rate were $1 = ×120, the dollar is selling at a on the 30-day forward market. A. premium B. margin C. discount D. subsidy

A

54. The marketing and sales functions of a firm can help to create value through all of the following ways, except: A. creating goods and services. B. brand positioning. C. advertising. D. communicating consumer needs to R&D.

A

56. If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen? A. The dollar will appreciate against the yen B. The dollar will depreciate against the yen C. The exchange rates will remain the same D. The yen will appreciate against the dollar

A

57. According to the , in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency. A. law of one price B. principle of consistent pricing C. model of fair pricing D. principle of equitable pricing

A

58. Global expansion allows firms to achieve all of the following, except: A. standardize their product offering, marketing strategy, and business strategy for all national conditions. B. realize location economies by dispersing value creation activities to the optimal location. C. realize cost economies from experience effects generated by serving a larger market from a central location. D. expand the market for their domestic product offerings by selling those products in international markets.

A

58. The specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage. A. Buy America Act B. Anti-Dumping Act C. Helms-Burton Act D. D'Amato Act

A

60. The European Community was established by: A. The Treaty of Rome signed in 1957 B. The Maastricht Treaty signed in 1991 C. The Maastricht Treaty of 1994 D. The Single European Act of 1987

A

63. _____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product. A. Experience curve B. Economies of scale C. Location economies D. Production possibility

A

65. Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body? A. The European Parliament B. The European Commission C. The Council of the European Union D. The Court of Justice

A

66. Economies of scale arise from all of the following sources, except: A. increasing fixed costs by limiting them to small volumes. B. serving domestic and international markets from the same production facilities C. serving global markets. D. bargaining with suppliers to bring down the cost of key inputs.

A

68. All of the following are true of the euro except: A. its notes and coins were first issued on January 1, 1999 B. It required participating countries to give up their own currencies C. countries lost control of monetary policy when it was establish D. it created the second largest currency zone in the world

A

68. Economic problems during the Great Depression were compounded in 1930 when the U.S. Congress passed the , aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products. A. Smoot-Hawley Act B. Anti-Dumping Act C. Helms-Burton Act D. D'Amato Act

A

68. Firms usually respond to pressures for cost reduction by trying to: A. lower the costs of value creation. B. be locally responsive. C. undertaking product differentiation. D. diversifying product lines.

A

69. Which of the following is not a reason for the pressure for greater protectionism that occurred during the 1980s and early 1990s? A. The growing U.S. trade surplus with Japan strained the world trading system. B. Japanese economic success strained the world trading system. C. The persistent trade deficit in the United States strained the world trading system. D. Many countries found ways to get around GATT regulations.

A

70. A currency is said to be freely convertible when: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency.

A

70. _____ exist when the tastes and preferences of consumers in different nations are similar if not identical. A. Universal needs B. Homogenous needs C. Basic needs D. Bundled needs

A

72. According to the 1986 Uruguay Round, the was to be created to implement the GATT agreement. A. World Trade Organization B. International Monetary Fund C. United Nations D. World Bank

A

73. According to Alexander Yeats: A. The trade diversion effects of MERCOSUR outweigh its trade creation effects. B. The faster growing items in intra-MERCOSUR trade were capital-intensive goods produced efficiently in the member countries. C. MERCOSUR countries will be able to compete globally once the group's external trade barriers come down D. Countries with more efficient manufacturing enterprises are getting a level playing field because of MERCOSUR's reduction in trade barriers.

A

73. When a firm has a strategic goal of pursuing a low cost strategy on a worldwide scale, the firm should follow a(n) _____ strategy. A. global standardization B. localization C. international D. customization

A

74. A range of barter-like agreements by which goods and services can be traded for other goods and services is known as: A. countertrade. B. protracted trade. C. intermediate sales. D. countersale.

A

75. Which strategy makes most sense when there are strong pressures for cost reductions and minimal demands for local responsiveness? A. Global standardization strategy B. Transnational strategy C. Localization strategy D. International strategy

A

76. _____ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences. A. Localization B. Transnational C. Global standardization D. International

A

77. The TRIPS regulations established at the 1995 Uruguay Round: A. established regulations on patents and copyrights. B. set a new level of agriculture subsidies. C. organized OECD countries to eliminate tariffs on textiles. D. established new tariff levels on technology.

A

78. Collectively, the _______ member states account for about 55 percent of the world's GNP and 49 percent of world trade. A. APEC B. EU C. NAFTA D. MERCOSU

A

A _____ is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime. A. caste system B. class system C. social system D. culture system

A

According to John Rawls: A. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others. B. freedom of speech and assembly is the single most important component in a justice system. C. equal basic liberty is only possible in a pure market economy. D. inequalities in a justice system are not to be tolerated under any circumstance.

A

Any person or institution that is capable of moral action such as a government or corporation is a(n): A. moral agent. B. utilitarian. C. righteous moralist. D. naive immoralist.

A

Cultural relativism suggests that: A. ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture in which it is operating. B. the only social responsibility of business is to increase profits. C. managers of a firm should not make decisions regarding social investments. D. a multinational's home-country standards of ethics are always appropriate to follow in foreign countries.

A

Facilitating payments are: A. permitted under the amended Foreign Corrupt Practices Act. B. a direct violation of the Foreign Corrupt Practices Act. C. permitted so long as they designed only to gain exclusive preferential treatment. D. used to secure contracts that would otherwise not be secured.

A

Hofstede's dimension of Confucian dynamism: A. captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors. B. focuses on how a society deals with the fact that people are unequal in physical and intellectual capabilities. C. explores the relationship between the individual and his/her fellows. D. looks at the relationship between gender and the ability to accept ambiguous situations.

A

Hofstede's uncertainty avoidance dimension considered: A. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. B. the relationship between gender and work roles. C. how a society deals with the fact that people are unequal in physical and intellectual capabilities. D. the relationship between the individual and his or her fellows.

A

Identify the correct statement about the rights theories. A. Human beings have fundamental rights and privileges that transcend national boundaries. B. The moral worth of actions or practices is determined by their consequences. C. People should be treated as ends never purely as means to the ends of others. D. Minimum levels of morally acceptable behavior should be established.

A

41. The rate at which one currency is converted into another is the: A. replacement percentage. B. resale rate. C. exchange rate. D. interchange ratio.

C

Identify the incorrect statement regarding ethical issues in international business. A. They are often rooted in the fact that political systems, law, economic development, and culture of nations vary significantly. B. Human rights and environmental regulations are some of the common ethical issues. C. Ethical practices of all nations are similar in nature. D. Managers in multinational firms need to be particularly sensitive to differences in business practices because they work across national borders.

A

Internal stakeholders: A. are individuals or groups who work for or own the business. B. do not have any claim on a firm or its activities. C. typically comprise customers, suppliers, lenders, governments, unions, etc. D. are individuals, except employees, board of directors, and stockholders that have some claim on the firm.

A

The _____ dimension of Hofstede's study explores how a society deals with the fact that people are unequal in physical and intellectual capabilities. A. power distance B. individualism vs. collectivism C. uncertainty avoidance D. masculinity vs. femininity

A

The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation. A. tragedy of the commons B. noblesse oblige C. ethical dilemma D. Friedman system

A

The belief in the superiority of one's own culture is known as: A. ethnocentrism. B. egocentrism. C. polycentrism. D. theocentricism.

A

56. Which of the following statements concerning a voluntary export restraint is false? A. It benefits domestic producers by limiting import competition B. In most cases, it benefits consumers C. It raises the domestic price of an imported good D. It is a variant of the import quota

B

Under the veil of ignorance, everyone is imagined to be ignorant of: A. all of his/her particular characteristics. B. fundamental rights and privileges. C. the moral worth of actions or practices. D. the minimum levels of morally acceptable behavior.

A

Which of the following observations about the Foreign Corrupt Practices Act is true? A. The act outlawed the paying of bribes to foreign government officials to gain business. B. There is enough evidence that it put U.S. firms at a competitive disadvantage. C. The act originally allowed for "facilitating payments." D. The Nike case was the impetus for the 1977 passage of this act.

A

uses price and volume data to determine past trends, which are expected to continue into the future. A. Technical analysis B. Fundamental analysis C. The Fisher Effect D. The International Fisher Effect

A

42. The movement toward regional economic integration has been most successful in: A. Latin America. B. North America_ C. Europe. D. Asia_

C

58. According to the law of one price, if the exchange rate between the British pound and the dollar is ≤1 = $1.50, a jacket that retails for $75 in New York should sell for in London. A. ≤40 B. ≤50 C. ≤60 D. ≤75

B

41. Which of the following is not one of the main instruments of trade policy? A. Tariffs B. Credit portfolios C. Local content requirements D. Administrative policies

B

42. Specific tariffs are: A. levied as a proportion of the value of the imported good. B. levied as a fixed charge for each unit of a good imported. C. in the form of manufacturing or production requirements of goods. D. government payment to domestic producers.

B

44. Import tariffs: A. reduce the price of foreign goods. B. reduce the overall efficiency of the world economy. C. create efficient utilization of resources. D. are unambiguously pro-consumer and anti-producer.

B

44. The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because: A. the customer's disposable income is significantly higher than what the market demands. B. the customer captures some of that value in the form of a consumer surplus. C. regulatory mechanisms ensure that the customer is not overcharged for products/services. D. marketers implement psychological pricing tactics to ensure that customers perceive the prices to be low.

B

45. In 1991, Argentina, Brazil, Paraguay, and Uruguay implemented an agreement known as: A. NAFTA B. MERCOSUR C. APEC D. FTAA

B

48. Agricultural subsidies have been criticized for all of the following reasons except: A. they allow inefficient farmers stay in business. B. they discourage countries to overproduce heavily subsidized agricultural products. C. they encourage countries to produce products that could be grown more cheaply elsewhere and imported. D. they reduce international trade in agricultural products.

B

48. The short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates is known as: A. currency arbitrage. B. currency speculation. C. currency supposition. D. short selling.

B

50. This is a direct restriction on the quantity of some good that may be imported into a country. A. Specific tariff B. Import quota C. Subsidy D. Ad valorem tariff

B

50. _____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs. A. Efficiency matrixes B. Diminishing returns C. Cost plus curves D. Strategy convex curves

B

51. If lots of people want euros and euros are in short supply, and a few people want Japanese yen and yen are in plentiful supply, the euro is likely to against the yen. A. depreciate B. appreciate C. devalue D. stabilize

B

53. The Andean Pact is an example of a(n): A. economic union B. customs union C. common market D. political union

B

53. Which of the following is an example of a primary activity in a firm's value chain? A. Information systems B. Research and development C. Logistics D. Human relations

B

55. A(n) _____ involves the free flow of products and factors of production between member countries and the adoption of a common external trade policy, along with a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy. A. free trade area B. economic union C. common market D. customs union

B

55. Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is ×120 = $1, and the New York yen/dollar exchange rate at the same time is ×125 = $1. A dealer makes a profit by buying a currency low and selling it high. The dealer has engaged in a(n): A. currency swap. B. arbitrage. C. backwardation. D. straddle.

B

Which of the following refers to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource? A. Theocratic right B. Property right C. Trade right D. Financial right

B

59. A firm focusing on _____ will benefit by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity. A. organizational advantage B. core competency C. competitive gains D. technical skill sets

B

60. Suppose the price of a Big Mac in New York is $3.00 and the price of a Big Mac in Paris is $3.75 at the prevailing euro/dollar exchange rate, then according to PPP the euro is: A. undervalued by 25 percent against the dollar. B. overvalued by 25 percent against the dollar. C. appreciating relative to the dollar. D. depreciating relative to the dollar.

B

60. Which of the following is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value? A. Export restraint B. Dumping C. Local content requirement D. Ad valorem

B

61. Identify the incorrect statement about the PPP theory. A. It predicts that exchange rates are determined by relative prices. B. It yields accurate predictions in the short run. C. It best predicts exchange rate changes for countries with high rates of inflation. D. It assumes away transportation costs and barriers to trade.

B

61. The European Coal and Steel Community, formed in 1951, was a forerunner of: A. EFTA B. EU C. MERCOSUR D. APEC

B

62. Which of the following is not a main institution in the political structure of the EU? A. The European Parliament B. The European Central Bank C. The European Commision D. Council of the European Union

B

63. The _____ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states. A. European Parliament B. European Commission C. Council of the European Union D. Court of Justice

B

67. Moving down the experience curve: A. increases the cost of a firm's raw material. B. allows a firm to reduce its cost of creating value. C. decreases a firm's profitability. D. increases the R&D expenditure of a firm.

B

67. The argues that forward exchange rates do the best possible job of forecasting future spot rates and therefore investing in forecasting services would be a waste of money. A. inefficient market school B. efficient market school C. Fisher Effect D. international Fisher Effect

B

70. In the 1986 Uruguay Round, GATT members sought to write rules for promoting all of the following except: A. intellectual property protection. B. agricultural subsidies. C. GATT's monitoring and enforcement mechanisms. D. GATT rules to cover trade in services.

B

70. Which of the following is seen as a disadvantage of the euro? A. Higher foreign exchange and hedging costs B. National authorities losing control over monetary policy C. It becomes difficult to compare prices across Europe D. Undermines the development of a pan-European capital market.

B

71. A currency is said to be externally convertible when: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency.

B

71. Until 1995, GATT rules applied to all of the following except: A. manufactured goods. B. services. C. textiles. D. agricultural products.

B

72. MERCOSUR originated as a(n)_____ between Brazil and Argentina in 1988 A. open market B. free trade pact C. customs union D. free trade zone

B

73. After the Uruguay Round of GATT extended global trading rules to cover trade in services, the first two industries targeted for reform by the WTO were: A. textiles and technology. B. telecommunications and financial services. C. automotives and aerospace. D. agriculture and consulting services.

B

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

B

78. Which of the following is a disadvantage of the localization strategy? A. Decrease in the value of the product in the local market B. Duplication of functions C. Inability to accommodate varying tastes and preferences in different markets D. Reduced customization

B

80. Identify the incorrect statement about trade barriers. A. They raise the costs of exporting products to a country. B. They may put a firm at a competitive advantage to indigenous competitors. C. They may limit a firm's ability to serve a country from locations outside of that country. D To conform to local content regulations, a firm may have to locate more production activities in a given . market than it would otherwise.

B

82. Firms that pursue a transnational strategy are trying to simultaneously do all of the following except: A. achieve low costs through location economies. B. standardize their product offering for the global market. C. foster a multidirectional flow of skills between different subsidiaries. D. achieve low costs through economies of scale and learning effects.

B

A central value of Japanese culture is the importance attached to: A. the individual. B. group membership. C. individual achievement. D. personal accomplishments.

B

A group of people who share a common set of values and norms form a: A. culture. B. society. C. country. D. caste.

B

Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A. Righteous moralist B. Cultural relativism C. The justice theory D. The rights theory

B

Grease payments: A. are not the same as facilitating payments or speed money. B. are facilitating payments made to expedite routine government action. C. are payments to gain exclusive preferential treatments. D. can be used to secure contracts that would otherwise not be secured.

B

Hofstede's masculinity vs. femininity dimension examined: A. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. B. the relationship between gender and work roles. C. how a society deals with the fact that people are unequal in physical and intellectual capabilities. D. the relationship between the individual and his or her fellows.

B

Identify the incorrect statement about environmental regulations. A. Environmental regulations are often lacking in developing nations. B. Environmental regulations are similar across developed and developing nations. C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, etc. D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues.

B

Identify the incorrect statement pertaining to foreign multinationals doing business in countries with repressive regimes. A. Inward investment by multinationals can be a force for economic, political, and social progress that ultimately improves the rights of people in repressive regimes. B. No multinational does business with nations that lack the democratic structures and human rights records of developed nations. C. Multinational investment cannot be justified on ethical grounds in some regimes due to their extreme human rights violations. D. Multinationals adopting an ethical stance can, at times, improve human rights in repressive regimes.

B

The righteous moralist suggests that: A. ethics are nothing more than the reflection of culture. B. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. C. the social responsibility of business is to increase profits, so long as the company stays within the rules of law. D. if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

B

The utilitarian approach to business ethics suggests that: A. people should be treated as ends and never purely as means to the ends of others. B. the moral worth of actions or practices is determined by their consequences. C. people have dignity and need to be treated as such. D. human beings have fundamental rights and privileges that transcend national cultures.

B

Three values central to the Confucian system of ethics have very important economic implications. Which of the following is not one among them? A. Loyalty B. Rule-based law C. Reciprocal obligations D. Honesty in dealings with others

B

To guard against abuse of employment practices in other nations, multinationals should do all of the following except: A. establish minimal acceptable standards that safeguard the basic rights and dignity of employees. B. adhere to working conditions of the host country if they are clearly inferior to those in a multinational's home nation . C. audit foreign subsidiaries and subcontractors on a regular basis to make sure established standards are met. D. take action to correct unacceptable behavior.

B

Which of the following enables managers to walk away from a decision that is profitable, but unethical? A. Noblesse oblige B. Moral courage C. The difference principle D. The Friedman doctrine

B

Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations? A. The righteous moral system B. Sullivan principles C. Noblesse oblige D. Cultural relativism

B

are exchange rates governing some specific future date foreign exchange transactions. A. Spot exchange rates B. Forward exchange rates C. Future exchange rates D. Currency swaps

B

states that for any two countries, the spot exchange rate should change in an equal amount but in the opposite direction to the difference in nominal interest rates between the two countries. A. The Fisher Effect B. The International Fisher Effect C. The efficient market theory D. The inefficient market theory

B

suggests that a government should use subsidies to support promising firms that are active in newly emerging industries. A. The infant industry argument B. Strategic trade policy C. Retaliation policy D. The national security argument

B

64. This act allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution. A. The Buy America Act B. The Anti-Dumping Act C. The Helms-Burton Act D. The D'Amato Act

C

43. Identify the incorrect statement pertaining to the European Union. A. In 1993, it formally removed many bathers to doing business across borders within the EU B. Its member states have launched a single currency, the elm°. C. It was joined by two countries Switzerland and Norway, in 2007. D. It has expanded to 27 countries in 2007.

C

45. An exchange rate of €1 = $1.30 indicates that: A. $1 is worth 1.30 euros. B. one could sell 1.30 euros for $1. C. one euro buys $1.30. D. there are 1.30 euros for every dollar.

C

46. A consumer surplus can be best described as: A. what the consumer has "left-over" after a purchase. B. how much extra a consumer has to pay for a product. C. value for the money. D. the premium charged for a quality product.

C

46. The helps us to compare the relative prices of goods and services in different countries. A. interest rate B. customs rate C. exchange rate D. tariff rate

C

47. Michael Porter has argued that _____ and _____ are two basic strategies for creating value and attaining a competitive advantage in an industry. A. differentiation; price competition B. economies of scale; diversification. C. low cost; differentiation D. efficiency; promotion

C

47. Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated? A. Economic union, common market, customs union, free trade area, and full political union. B. Common market, economic union, full political union, free trade area, and customs union. C. Free trade area, customs union, common market, economic union, and full political union D. Full political union, free trade area, common market, customs union, and economic union.

C

49. One function of the foreign exchange market is to provide some insurance against the risks that arise from changes in exchange rates, commonly referred to as: A. foreign market hazard. B. global jeopardy. C. foreign exchange risk. D. commerce uncertainty.

C

49. The _____ shows all of the different positions a firm can adopt with regard to adding value to the product and low cost assuming the firm's internal operations are configured efficiently to support a particular position. A. strategic choice curve B. strategy convex C. efficiency frontier D. experience curve

C

50. The most enduring free trade area in the world is the: A. Asia Pacific Economic Cooperation B. MERCOSUR C. European Free Trade Association D. North American Free Trade Association

C

50. When two parties agree to exchange currency and execute the deal immediately, the transaction is a: A. point-in-time exchange. B. temporal exchange. C. spot exchange. D. forward exchange.

C

51. Which of the following statements best defines a common market? A. All barriers to trade of goods and services among member countries are removed and each country maintains its own policy toward nonmember countries. B. It involves the free flow of products and factors of production between member countries and adoption of individual external trade policies C. It has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members D. It eliminates trade between member countries and adopts a common external trade policy.

C

54. Identify the incorrect statement about a common market A. It has no barriers to trade between member countries B. It includes a common external trade policy C. It establishes a central political apparatus coordinating the economic, social, and foreign policy of the member states. D. It allows factors of production to move freely between members

C

55. Foreign producers typically agree to voluntary export restrictions because: A. their manufacturing capacity is limited. B. they can divert their exports to other countries and charge more for their products. C. they fear far more damaging punitive tariffs or import quotas might follow if they do not. D. they are required to by the World Trade Organization.

C

55. Which of the following is an example of a support activity in a firm's value chain? A. R&D B. Customer service C. Human resources D. Marketing and sales

C

56. _____ activities of the value chain provide inputs that allow the primary activities to occur. A. Complementary B. Basic C. Support D. Core

C

57. The _____ function creates value by ensuring the company has the right mix of people to perform activities effectively. A. information systems B. company infrastructure C. human resources D. logistics

C

57. These are requirements that some specific fraction of a good be produced domestically. A. Import quotas B. Voluntary export restraints C. Local content requirements D. Antidumping duties

C

58. ___ occurs when high-cost domestic producers are replaced low-cost domestic producers within the free trade area. A. A free trade zone B. Trade diversion C. Trade creation D. Trade interpretation

C

59. Administrative trade policies are: A. requirements that some specific fraction of a good be produced domestically. B. quotas on trade imposed by the exporting country. C. bureaucratic rules designed to make it difficult for imports to enter a country. D. designed to punish foreign firms that engage in dumping.

C

60. Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as: A. factor economies. B. production economies. C. location economies. D. value creation economies.

C

62. It has been observed that a product's production costs decline by some quantity about each time, cumulative output: A. increases by twenty five percent. B. quadruples. C. doubles. D. triples

C

62. involves dominant enterprises setting different prices in different markets to reflect varying demand conditions. A. Conditional pricing B. Dual pricing C. Price discrimination D. Foreign market pricing

C

64. The______ represents the interests of member states and is clearly the ultimate controlling authority within the EU. A. European Parliament B. European Commission C. European Council D. Court of Justice

C

65. According to the argument, governments should temporarily support new industries until they have grown strong enough to meet international competition. A. retaliatory action B. human rights C. infant industry D. anti-dumping

C

65. Learning effects: A. tend to be less significant when a technologically complex task is repeated. B. will be less significant in an assembly process involving 1,000 complex steps than in one of only 100 simple steps. C. typically disappear after a while, in spite of the complexity of the task. D. are more significant after two or three years of the introduction of a new process.

C

66. Identify the incorrect statement pertaining to the EU's Court of Justice A. It is comprised of one judge from each country B. It is the supreme appeals court for EU law C. Its judges are required to act as representatives of national interests D. A member country can bring other members to the court for failing to meet EU treaty obligations

C

66. When traders move as a herd in the same direction at the same time such as what occurred when George Soros betted against the British pound in 1992, a(n) occurs. A. efficient market B. inefficient market C. bandwagon effect D. Fisher Effect

C

67. The EU's Common Agricultural Policy is an example of a tax policy designed to benefit: A. consumers. B. taxpayers. C. special-interest politics. D. free trade in developed countries.

C

67. The ___ , adopted by the member nations of the European Community in 1987, committed member countries to work toward the establishment of a single market by December 31, 1992 A. Maastricht Treaty B. Treaty of Rome C. Single European Act D. Delores Commission

C

69. In December 1991, EC members signed this treaty that committed them to adopting a common currency by January 1, 1999. A. The Treaty of Rome B. The Delores Commission C. The Maastricht Treaty D. The Single European Act

C

71. Which of the following is less likely to add to the pressure for a firm to be locally responsive? A. National differences in consumer tastes and preferences B. Differences in infrastructure and traditional practices C. Switching costs for consumers D. Host-government demands

C

72. A firm will face intense pressure for cost: A. when competitors are based in low-cost locations. B. where there is persistent excess capacity. C. where industries produce commodity-type products. D. where consumers have low switching costs.

C

72. When a currency is nonconvertible: A. the country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. B. only nonresidents may convert it into a foreign currency without any limitations. C. neither residents nor nonresidents are allowed to convert it into a foreign currency. D. only residents may convert it internally into a foreign currency.

C

74. In early 2006, six CARICOM members abd the United States established the_____, which was modeled on the EU's single market. A. Central American Common Market B. Central America Free Trade Agreement C. Caribbean Single Market and Economy. D. North American Free Trade Area

C

74. The "millennium round" ended in 1999 with: A. a successful record on agricultural products. B. a new agenda for the next round focusing on financial services. C. no agreement on the reduction of barriers to cross-border trade and investment. D. a decision to avoid FDI.

C

76. Which of the following is not true of ASEAN? A. Cambodia, Laos, Myanmar, and singapore are among its members. B. Its basic objective is to foster freer trade between member countries and to achieve cooperation in their industrial policies. C. It has been highly successful in achieving cooperation in its industrial policies. D. It is punishing for free trade agreement with China, Japan, and South Korea.

C

77. Which strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets? A. Global standardization strategy B. Transnational strategy C. Localization strategy D. International strategy

C

78. TRIPS regulations oblige WTO members to all of the following except: A. grant and enforce patents lasting at least 20 years. B. grant and enforce copyrights lasting 50 years. C. comply with the rules within five years in the case of rich countries. D. comply with the rules within 10 years in the case of the poorest countries.

C

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

C

79. A(n) involves attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate and paying foreign currency payables before they are due when a currency is expected to appreciate. A. follower strategy B. interim strategy C. lead strategy D. lag strategy

C

79. For international business, regional economic integration such as the EU: A. Raise the cost of doing business in the region. B. Eliminates differences in culture, allowing companies to standardize marketing activities. C. Opens markets that had formerly been protected. D. Standardizes competitive practics, enabling companies to realize substantial cost economies

C

80. A(n) _____ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low. A. global standardization B. international C. localization D. transnational

C

83. A firm facing low pressures for cost reductions and low pressures for local responsiveness, is most likely to follow a(n) _____ strategy. A. global standardization B. localization C. international D. transnational

C

84. For firms that are selling a product that serves universal needs, and that do not face significant competition, a(n) _____ strategy makes sense. A. localization B. transnational C. international D. global standardization

C

According to the Friedman doctrine: A. ethics are nothing more than the reflection of culture. B. a multinational's home-country standards of ethics are inappropriate to follow in foreign countries. C. businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. D. if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

C

According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people. A. naive immoralist B. Friedman doctrine C. utilitarian D. Kantian

C

Ethical dilemmas exist because of all of the following reasons except: A. many real-world decisions are complex and difficult to frame. B. decisions may involve first, second, and third-order consequences that are hard to quantify. C. doing the right thing, or knowing what the right thing might be, is often far too easy. D. they are situations in which none of the available alternatives seem ethically acceptable.

C

External stakeholders: A. are individuals or groups who own the business. B. include all employees, the board of directors, and stockholders. C. typically comprise customers, suppliers, lenders, etc. D. are individuals or groups who work for the business.

C

Managers of international business can do all of the following to make sure ethical issues are considered in business decisions except: A. favor hiring and promoting people with a well-grounded sense of personal ethics. B. build an organizational culture that places a high value on ethical behavior. C. make sure that leaders within the business do not articulate the rhetoric of ethical behavior. D. develop moral courage.

C

Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the: A. inequality principle. B. equity principle. C. difference principle. D. indifference principle.

C

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes: A. speed payments to secure contracts that would otherwise not be secured. B. grease payments to gain exclusive preferential treatment . C. facilitating payments made to expedite routine government action. D. payments to government officials for special privileges.

C

The Kantian approach to ethics suggests that: A. human beings have fundamental rights and privileges that transcend national boundaries. B. the moral worth of actions or practices is determined by their consequences. C. people should be treated as ends and never purely as means to the ends of others. D. ethics are nothing more than the reflection of culture.

C

The United Nations' Universal Declaration of Human Rights, related to employment, upholds all of the following except: A. just and favorable work conditions. B. equal pay for equal work. C. prohibition of trade unions. D. protection against unemployment.

C

Which of the following refers to the values and norms that the employees of an organization share? A. Vision statement B. Cultural relativism C. Organization culture D. Power orientation

C

_____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder. A. Veil of ignorance B. Difference principle C. Moral imagination D. Noblesse oblige

C

draws on economic theory to construct sophisticated econometric models for predicting exchange rate movements. A. Efficient market theory B. Inefficient market theory C. Fundamental analysis D. Technical analysis

C

is the impact of currency exchange rates changes on the reported financial statements of a company. A. Economic exposure B. Financial exposure C. Translation exposure D. Transaction exposure

C

42. The percentage increase in net profits over time measures: A. capital return. B. profitability. C. net profits. D. profit growth

D

42. The risks that arise from volatile changes in exchange rates are commonly referred to as: A. interest rate risks. B. basis risks. C. operational risks. D. foreign exchange risks.

D

43. The foreign exchange market serves two main functions. These are: A. collect duties on imported products and convert the currency of one country into the currency of another. B. insure companies against foreign exchange risk and set interest rates charged to foreign investors. C. collect duties on imported products and set interest rates charged to foreign investors. D. convert the currency of one country into the currency of another and provide some insurance against foreign exchange risk.

D

43. Which of the following statements is not true? A. The way to increase the profitability of a firm is to create more value. B . The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products. C. The more value customers place on a firm's products, the higher the price the firm is able to charge for those products. D. The price a firm charges for a good or service is typically more than the value the customer places on that good or service

D

46. By lowering production costs, help domestic producers compete against foreign imports. A. tariffs B. duties C. quotas D. subsidies

D

47. International businesses use foreign exchange markets for all of the following reasons except: A. to receive payments from foreign investments that may be in foreign currencies. B. to pay a foreign company for its products or services in its country's currency. C. to invest for short terms in money markets when they have spare cash. D. to cover themselves from all risks involved in currency speculation.

D

47. Which of the following observations about subsidies is false? A. Government subsidies must be paid for, typically by taxing individuals and corporations. B. They mainly benefit domestic producers, whose international competitiveness is increased. C. Whether they generate national benefits that exceed their national costs is debatable. D. They help foreign producers gain a competitive advantage over domestic producers.

D

48. At the Doha Round of the WTO in late 2001, A. the WTO was established. B. GATT was extended to include services. C. world trade volume increased. D. an agenda was established to phase out subsidies to agricultural producers.

D

49. In a(n)____, no discriminatory tariffs, quotas, subsidies, or administrative impediments are allowed to distort trade between member nations; however, each country is allowed to determine its own trade policies with regard to nonmembers. A. common market B. economic union C. political union D. free trade area

D

52. A common hybrid of a quota and a tariff is known as a(n): A. quota rent. B. voluntary export restraint. C. ad valorem tariff. D. tariff rate quota.

D

52. Which of the following statements best defines a customs union? A. All barriers to trade of goods and services among member countries are removed and each country maintains its own policy toward nonmember countries. B. It involves the free flow of products and factors of production between member countries and adoption of individual external trade policies C. It has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members D. It eliminates trade between member countries and adopts a common external trade policy.

D

52. _____ activities are basically concerned with creating the product, marketing and delivering the product to buyers, and providing support and after-sales service. A. Support B. Subordinate C. Ancillary D. Primary

D

54. A quota rent is: A. a quota on trade imposed by the exporting country. B. levied as a fixed charge for each unit of a good imported. C. levied as a proportion of the value of the imported good. D. the extra profit producers make when supply is artificially limited by an import quota.

D

54. The simultaneous purchase and sale of a given amount of foreign exchange for two different value dates is referred to as a: A. fiscal barter. B. liquid trade. C. currency exchange. D. currency swap.

D

56. A political benefits of economic integration is that: A. It enables participants to achieve gains from the free flow of trade B. it enables participants to achieve gains from the free flow of investment C. it allow countries to specialize in the production of goods and services that they can produce most efficiently. D. linking neighboring economies creates incentives for cooperation between the neighboring states and reduces the potential for violent conflict.

D

57. All of the following are reasons why economic integration has never been easy to achieve or sustain except: A. even though it aids the majority, it has its costs. B. a nation as a whole may benefit significantly, but certain groups may lose. C. There are concerns over loss of national soverignty D. Linking neighboring economies makes them increasingly dependent on each other

D

59. The suggests that given relatively efficient markets, the price of a "basket of goods" should be roughly equivalent in each country. A. theory of efficient markets B. law of one price C. theory of price inflation D. PPP theory

D

59. Trade diversion occurs when: A. low-cost producers within the free trade replace high-cost domestic producers. B. lower-cost suppliers replace higher-cost external suppliers within the free trade area C. higher-cost external suppliers replace lower-cost domestic producers within the free trade area. D. higher-cost suppliers replace lower-cost external suppliers within the free trade area.

D

61. When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create: A. a differentiated organization. B. a location economy curve. C. economies of scale. D. a global web of value creation activities.

D

62. The U.S. government using the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws is an example of government intervention based on: A. human rights protection. B. national security. C. consumer protection. D. retaliation.

D

63. If a government grants preferential trade terms to a country it wants to build strong relations with, the government is employing a policy: A. of retaliation. B. of human rights protection. C. to protect national security. D. to further foreign policy objectives.

D

63. The states that a country's "nominal" interest rate is the sum of the required "real" rate of interest and the expected rate of inflation over the period for which the funds are to be lent. A. PPP theory B. efficient market theory C. inefficient market theory D. Fisher Effect

D

64. Economic theory suggests that when inflation is expected to be high: A. interest rates will be low. B. exchange rates will be high. C. the International Fisher Effect does not hold. D. interest rates will be high.

D

64. When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through: A. location economies. B. value creation effects. C. experience curve effects. D. learning effects.

D

69. Responding to pressure for _____ requires that a firm differentiate its product offering and marketing strategy from country to country. A. cost reductions B. experience effects C. lowering the costs of value creation D. being locally responsive

D

71. Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of: a. the EU B. NAFTA C. APEC D. the Andean Pact

D

74. Which of the following is not associated with firms following the global standardization strategy? A. Low pressures for local responsiveness B. Use cost advantage to support aggressive pricing in world markets C. High pressures for cost reductions D. Customize product offering and marketing strategy to local conditions

D

75. All of the following are seen as stumbling blocks towards the establishment of the Free Trade Area of he Americas exeption A. Brazil and Argentina want the United State to reduce its subsidies to U.S agricultural producers B. The United State wants its southern neighbors to agree to tougher enforcement of intellectual property rights C. Brazil and Argentina want the United State to scrap tariffs on agricultural imports D. The United States want its southern neighbors to increase manufacturing tariffs

D

75. Countries might be forced to use countertrade when a currency is: A. freely convertible. B. externally convertible. C. internally convertible. D. nonconvertible.

D

75. Which of the following is not a reason why WTO is being criticized by those opposing free trade? A. Its trade laws allow imports from low-wage countries and result in a loss of jobs in high-wage countries. B. Its rules outlawing the ability of nations to stop imports from countries where working conditions are hazardous. C. The adverse impact that some of its rulings have had on environmental policies. D. Its lack of ability to force any member nation to take an action to which it is opposed.

D

76. The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values is known as: A. economic exposure. B. financial exposure. C. translation exposure. D. transaction exposure.

D

77. Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)? A. It was founded in 2001 B. It currently has 57 member states C. United States and japan are not members of this body D. Collectively, the member states account for much of the growth in the world economy

D

79. A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a _____ strategy. A. localization B. global standardization C. international D. transnational

D

79. are the highest rate that can be charged, which is often, but not always, the rate that is charged. A. Ad valorem tariff rates B. Tariff rents C. Specific tariff rates D. Bound tariff rates

D

80. A(n) 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. follower strategy B. interim strategy C. lead strategy D. lag strategy

D

80. Which of the following is not a threat that emerges for international business as a result of regional economic integration? A. The business environment within each grouping becomes morecompetetive B. There is a risk of being shut out of the single market by the creation of a "trade fortress" C. It limits the ability of firms to pursue the corporate strategy of their choice. D. The cost of doing business in a single market may fall.

D

81. A firm that is pursuing a(n) _____ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects, and trying to differentiate its product offering across geographic markets. A. global customization B. international C. localization D. transnational

D

85. Which of the following is true of the international strategy? A. Product development tends to be highly decentralized. B. Manufacturing and marketing are typically located in the headquarters location. C. Extensive production customization is common. D. The strategy is not viable in the long-run.

D

A Japanese executive's ritual of presenting a business card to a foreign business executive is an example of: A. mores. B. values. C. attitudes. D. folkways.

D

A _____ grants the inventor of a new product or process exclusive rights for a defined period of time to the manufacture, use, or sale of that invention. A. copyright B. trademark C. contract D. patent

D

A condition where people tend to perceive themselves in terms of their class background and this shapes their relationships with members of other classes is known as: A. economic classification. B. social mobility. C. class mobility. D. class consciousness.

D

According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law. A. the naive immoralist B. the righteous moralist C. cultural relativism D. the Friedman doctrine

D

According to the naive immoralist: A. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. B. the social responsibility of business is to increase profits, so long as the company stays within the rules of law. C. ethics are nothing more than the reflection of a culture. D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also not follow ethical norms there.

D

Antitrust laws in most countires are designed to: A. encourage business practices designed to monopolize a market. B. discourage private ownership. C. restrict privatization. D. outlaw monopolies.

D

Article 1 of the United Nations' Universal Declaration of Human Rights states: "All human beings are born free and equal in dignity and rights." This best echoes: A. cultural relativism. B. Friedman doctrine. C. the righteous moralist approach. D. Kantian ethics.

D

Establishing _____ involves a business' resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. A. a veil of ignorance B. a difference principle C. moral imagination D. moral intent

D

Justice theories of business ethics focus on: A. the moral worth of actions or practices. B. minimum levels of morally acceptable behavior. C. fundamental rights and privileges that transcend national boundaries. D. the attainment of a just distribution of economic goods and services.

D

The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as: A. business ethics. B. noblesse oblige. C. ethical dilemma. D. social responsibility.

D

The idea that universal notions of morality transcend different cultures is implicitly rejected by: A. the righteous moralist. B. the naive immoralist. C. the Friedman doctrine. D. cultural relativism.

D

The individualism vs. collectivism dimension of Hofstede's study explored: A. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. B. the relationship between gender and work roles. C. how a society deals with the fact that people are unequal in physical and intellectual capabilities. D. the relationship between the individual and his/her fellows.

D

The most global markets currently are markets for: A. services. B. consumer goods. C. consumer durables. D. industrial goods.

D

Which of the following statements about the use of spoken language is false? A. The nature of a language structures the way we perceive the world. B. The language of a society can direct the attention of its members to certain features of the world rather than others. C. Countries with more than one language often have more than one culture. D. Most people prefer to converse in English rather than their own language.

D

Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises? A. Sullivan's principles B. Ethical dilemma C. Tragedy of the commons D. Noblesse oblige

D

is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation or when a country's economic prospects are shaky in other respects. A. The bandwagon effect B. The Fisher Effect C. The International Fisher Effect D. Capital flight

D

In a pure command economy: A. all productive activities are owned by the state. B. all productive activities are privately owned. C. the goods and services that a country produces are not planned by anyone. D. production is determined by the interaction of supply and demand.

A

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved is BEST known as a: A. contract. B. business letter. C. memorandum. D. civil code.

A

A state where political power is monopolized by a party, group, or individual that governs according to religious principles is best described as following: A. theocratic totalitarianism. B. tribal totalitarianism. C. right-wing totalitarianism. D. communist totalitarianism.

A

A theocratic law system is: A. one in which the law is based on religious teachings. B. based on tradition, precedent, and custom. C. based on a detailed set of laws organized into codes. D. the body of law that governs contract enforcement.

A

According to Islam, those who hold property are regarded as: A. trustees. B. owners. C. tenants. D. speculators.

A

During the 1960s and 1970s, class divisions in _____ raised the cost of doing business there, relative to other European countries. A. Great Britain B. Switzerland C. Norway D. Germany

A

Ethical systems are: A. a set of moral principles, or values, that are used to guide and shape behavior. B. shared beliefs and rituals that are concerned with the realm of the sacred. C. routine conventions of everyday life. D. social rules that govern peoples' actions toward each other.

A

Identify the incorrect statement pertaining to a country's political economy. A. It is independent of the culture of a nation. B. It is a combination of interdependent political, economic, and legal systems. C. Its various systems interact and influence each other. D. Its interacting systems affect the level of economic well-being.

A

Identify the incorrect statement regarding individualism. A. It advocates for a socialist political system B. It promotes free market economics C. It creates a pro-business environment D. It translates into an advocacy for democratic political systems

A

Identify the incorrect statement regarding the former Communist nations of Europe and Asia. A. The economies of most of the former Communist states are very strong and developed. B. Many of the former Communist nations of Europe and Asia share a commitment to free market economies. C. As a result of disturbing signs of growing unrest and totalitarian tendencies, the risks involved in doing business in these countries is very high. D. For about half a century these countries were essentially closed to Western international business.

A

Individualism can best be described by which of the following statements? A. It as a philosophy suggests that an individual should have freedom over his/her economic and political pursuits. B. It is a political system in which government control over all factors of production is in entirety. C. It is a political system that stresses the primacy of collective goals over individual goals. D. It is a form of government in which one person or political party exercises absolute control over all spheres of human life.

A

Mores are: A. the norms that are seen as central to the functioning of a society and its social life. B. the routine conventions of everyday life. C. abstract ideas about what a group believes to be right, good, and desirable. D. the social rules and guidelines that prescribe appropriate behavior in particular situations.

A

Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by encouraging all of the following except: A. privatizing state-owned enterprises. B. regulating markets. C. increasing competition. D. welcoming investment by foreign businesses.

A

Social rules and guidelines that prescribe appropriate behavior in particular situations are best described as: A. norms. B. values. C. culture. D. society.

A

The HDI is based on all of the following measures except: A. political freedom. B. life expectancy at birth. C. educational attainment. D. whether average incomes are sufficient to meet the basic needs of life.

A

The _____ was created in 1944 by 44 nations that met in Breton Woods, New Hampshire to promote economic development. A. World Bank B. International Trade Center C. World Trade Organization D. United Nations

A

The emergence of class consciousness in Great Britain can be attributed to: A. the relative lack of class mobility. B. a high degree of social mobility. C. an extreme emphasis on individualism. D. most of the population perceiving itself to be middle class.

A

The growing integration of the world economy is: A. increasing the intensity of competition in a wide range of manufacturing and service industries. B. decreasing the intensity of competition in manufacturing industries, and increasing the intensity of competition in services. C. increasing the intensity of competition in manufacturing industries, and decreasing the intensity of competition in services. D. narrowing the scope of competition in a wide range of service, commodity, and manufacturing industries.

A

The institution, created in 1944 at Bretton Woods, responsible for maintaining order in the international monetary system is the A. IMF. B. WTO. C. UN. D. UNESCO.

A

This is an Islamic banking method where banks lend money to a business, and rather than charging that business interest on the loan, they take a share in the profits that are derived from the investment. A. Mudarabah B. Murabaha C. Maysir D. Mudarib

A

Totalitarianism: A. is a form of government in which one person or political party exercises absolute control over all spheres of human life. B. refers to a political system in which government is by the people, exercised either directly or through elected representatives. C. is based on a belief that citizens should be directly involved in decision making. D. is based on the idea that the welfare of society is best served by letting people pursue their own economic self-interests.

A

Which of the following does not help create an economic system that is favorable to international business? A. Decreased privatization B. Widespread deregulation C. Open markets D. Falling trade and investment barriers

A

Which of the following is not an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe? A. Reduced transportation costs. B. Government regulations. C. Issues associated with economic and political risk. D. Barriers to foreign direct investment.

A

Which of the following is not characteristic of globalization? A. National economies are turning into independent economic systems. B. Material culture is starting to look similar the world over. C. Perceived distance is shrinking due to advances in transportation and telecommunications. D. Barriers to cross-border trade and investment are declining.

A

Which of the following is not true regarding culture? A. Culture is static B. Culture is evolving C. It is a system of values and norms that are shared among a group of people D. It involves the knowledge and beliefs of people

A

Which of these statements pertaining to cross-border FDI flows is true? A. The growth of FDI resumed in 2004 and continued through 2006. B. A surge in FDI from 1995 to 1997 was followed by a slump from 1998 to 2000. C. Among developing nations, the largest recipient of FDI has been Russia. D. The dramatic increase in FDI reflects the decreasing internationalization of business corporations.

A

_____ are the routine conventions of everyday life. A. Folkways B. Mores C. Rites D. Beliefs

A

_____ occur(s) when a firm exports goods or services to consumers in another country. A. International trade B. Foreign direct investment C. Inward investment D. Merger and acquisitions

A

The benefits of doing business in a country are a function of all of the following except: A. the size of the market. B. its past growth. C. its present wealth. D. its future growth prospects.

B

The common law system: A. lacks the flexibility that other systems have. B. is based on tradition, precedent, and custom. C. gives judges the power only to apply the law. D. is based on a detailed set of laws organized into codes.

B

The TRIPS agreement was designed to: A. exclude China from all intellectual property agreements. B. oversee a much stricter enforcement of intellectual property regulations. C. lobby for more lax intellectual property rights for poor countries. D. support traded software and recorded property among developed markets.

B

A study by the OECD, whose members include the 20 richest economies in the world, noted all of the following except: A. the gap between the poorest and richest segments of society in some OECD countries widened. B. in almost all countries real income levels rose over the 20-year period studied. C. falling unemployment rates brought gains to low-wage workers and fairly broad-based wage growth. D. the gap between rich and poor had narrowed in all OECD countries.

B

All of the following are reasons that would account for the spread of democracy except: A. totalitarian regimes failing to deliver economic progress to the vast bulk of their populations. B. the unchallenged pressure of entrepreneurs and other business leaders for less accountable and closed governments. C. the economic advances of the past quarter century leading to the emergence of increasingly prosperous middle and working classes pushing for democratic reforms. D. new information and communication technologies reducing the state's ability to control access to uncensored information.

B

An act, as simple as shaking hands when meeting new people is an example of: A. values. B. symbolic behavior. C. mores. D. social stratification.

B

Critics of globalization maintain that the apparent decline in real wage rates of unskilled workers A. owes far more to a technology-induced shift within advanced economies toward jobs that require significant education and skills. B. is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers. C. has been impacted most by technological change. D. can be checked by increasing society's investment in education to reduce the supply of unskilled workers.

B

Firms based in _____ accounted for 17.5 percent of the stock of foreign direct investment in 2011, up from only 1.1 percent in 1980. A. Asia B. developing countries C. United Kingdom D. NAFTA region

B

Identify the incorrect statement pertaining to innovation and entrepreneurship. A. They are the engines of growth B. They require state ownership of all means of production C. They require a market economy D. They require strong property rights

B

Identify the incorrect statement pertaining to intellectual property rights. A. Its violation cost personal computer software firms revenues equal to $48 billion in 2007. B. The protection of intellectual property rights is more or less the same in all countries. C. The enforcement of its regulations has often been lax. D. Its violation has been very bad in China, where the piracy rate in 2007 ran at 82 percent.

B

In China, class divisions: A. have historically been of no importance. B. were strengthened during the high point of Communist rule. C. increased even during reforms of the late 1970s and early 1980s. D. were weakened because of a rigid system of household registration.

B

In a pure market economy: A. all productive activities are owned by the state. B. all productive activities are privately owned. C. the government plans the goods and services that a country produces. D. resources are allocated for "the good of society."

B

Which of the following observations is correct? A. None of the economic principles established in the Koran are pro-free enterprise. B. The Koran speaks approvingly of free enterprise. C. The Koran speaks disapprovingly of earning legitimate profit through trade and commerce. D. Protection of the right to private property is not embedded within Islam.

B

Which of the following provides exclusive legal rights to authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit? A. Patents B. Copyrights C. Trademarks D. Licenses

B

Which of the following statements regarding cross-border trade and investment is not true? A. "Protection" from foreign competitors has been, at times, demanded by the United States. B. Forecasts indicate a return to the restrictive trade policies of the 1920s and 30s. C. If trade barriers decline no further they will put a brake upon the globalization of both markets and production. D. It is not clear whether the political majority in the industrialized world favors further reductions in trade barriers.

B

Which system of government generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism? A. Tribal totalitarianism B. Right-wing totalitarianism C. Left wing totalitarianism D. Theocratic totalitarianism

B

_____ is consistent with the notion that an individual's right to do something may be restricted because it runs counter to "the good of society" or "the common good." A. Entrepreneurship B. Collectivism C. Free enterprise D. Capitalism

B

_____ is/are best defined as shared assumptions about how things ought to be. A. Norms B. Values C. Society D. Culture

B

A _____ system is based on a very detailed set of laws organized into codes. A. democratic law B. theocratic law C. civil law D. common law

C

A class system: A. is the same as a caste system. B. is a rigid form of social stratification that does not permit social mobility. C. allows an individual to change his/her position via personal achievements. D. is more rigid than the caste system.

C

According to sociologists, which of the following branches of Christianity has the most important economic implications? A. Catholic B. Orthodox C. Protestant D. Mormon

C

Design and names by which merchants or manufacturers designate and differentiate their products are known as: A. patents. B. copyrights. C. trademarks. D. licenses.

C

Emphasis on individualism results in all of the following disadvantages except: A. managers tend to develop good general skills but lack the company-specific experience. B. difficulty in building teams within an organization to perform collective tasks. C. executives are not exposed to different ways of doing business. D. difficulty to achieve cooperation both within a company and between companies.

C

Globalization has _____ the opportunities for a firm to expand its revenues by selling around the world and _____ its costs by producing in nations where key inputs are cheap. A. reduced, reduced B. increased, increased C. increased, reduced D. reduced, increased

C

Identify the incorrect statement concerning globalization. A. It has been blamed for unemployment in developed nations, environmental degradation and the Americanization of popular culture. B. It has created new threats for businesses accustomed to dominating their domestic markets. C. It is transforming industries and is highly welcomed by those who believed their jobs were protected from foreign competition. D. According to most economists it is a very beneficial process where gains outweigh the losses by a wide margin.

C

Identify the incorrect statement pertaining to the World Wide Web. A. It makes it much easier for buyers and sellers to find each other. B. Viewed globally, it is emerging as an equalizer. C. It rolls back all of the constraints of location, scale, and time zones. D. It allows businesses to expand their global presence at a lower cost than ever before.

C

In the 1970s, many Japanese firms invested in North America and Europe A. to avoid a highly competitive domestic market. B. to exploit high domestic tariff barriers. C. as a hedge against unfavorable currency movements. D. to take advantage of low labor costs.

C

It has been argued that the success of Japanese enterprises in the global economy has been based partly on all of the following except: A. the diffusion of self-managing work teams. B. the close cooperation among different functions within Japanese companies. C. the high degree of managerial mobility between companies. D. the cooperation between a company and its suppliers on issues such as design, quality control, and inventory reduction.

C

Religion may be defined as: A. routine conventions of everyday life. B. social rules that govern peoples' actions toward each other. C. shared beliefs and rituals that are concerned with the realm of the sacred. D. a set of moral principles, or values, that are used to guide and shape behavior.

C

Safety standards to which a product must adhere are set by: A. safety certifications. B. the government standards department. C. product safety laws. D. product liability laws.

C

Since 1980, the world's containership fleet has more than _____, reflecting in part the growing volume of international trade. A. doubled B. tripled C. quadrupled D. quintupled

C

The _____ was established to remove barriers to the free flow of goods, services, and capital between nations. A. UN B. IMF C. GATT D. IDA

C

The reduction in the average tariff rates on manufactured products since 1950 implies all of the following except that A. firms are dispersing parts of their production process to global locations to drive down production costs and increase product quality. B. the economies of the world's nation states are becoming more intertwined. C. nations are becoming increasingly independent of each other for important goods and services. D. the world has become significantly wealthier since 1950.

C

The social organization of Western society tends to emphasize on: A. a group orientation. B. the family. C. individual achievement. D. work groups.

C

These strata are typically defined on the basis of characteristics such as family background, occupation, and income. A. Demographic strata B. Economic strata C. Social strata D. Cultural strata

C

This refers to a political system in which government is by the people, exercised either directly or through elected representatives. A. Totalitarianism B. Authoritarianism C. Democracy D. Dictatorship

C

When a company "exports jobs" overseas, the company is: A. helping domestic workers by pushing up wage rates. B. increasing the demand of qualified domestic workers. C. taking advantage of lower wages in foreign markets. D. deceiving the supporters of globalization.

C

Which of the following refers to the extent to which individuals can move out of the strata into which they are born? A. Caste stratification B. Class system C. Social mobility D. Individual potential

C

Which of the following statement pertaining to changes in the global economy of the 21st century is not true? A. Barriers to the free flow of goods, services, and capital have been coming down. B. Volume of cross-border trade and investment has been growing more rapidly than global output. C. National economies are becoming more independent and moving away from the global economic system. D. As economies advance, more nations are joining the ranks of the developed world.

C

Which of the following statements about socialism is false? A. Modern socialists' intellectual roots can be traced to Karl Marx. B. Elements of socialist thought can be traced to Plato. C. Socialist ideology is split into two camps—communists and individualists. D. Socialism advocates for state ownership of the means of production.

C

Which of the following statements about the legal systems of countries is false? A. They can affect the attractiveness of a country as an investment site or market. B. They are influenced by the prevailing political system of the country. C. They are almost the same for all countries. D. They are of immense importance to international business.

C

Which of the following statements about the trade-related aspects of intellectual property rights agreement is false? A. It was designed to oversee enforcement of much stricter intellectual property regulations, beginning in 1995. B. It obliged WTO members to grant and enforce patents lasting at least 20 years and copyrights lasting 50 years. C. It directed rich countries to comply with its rules of intellectual property protection within five years. D. It provided the very poorest countries 10 years to comply with its rules of intellectual property protection.

C

_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. A. A product law B. Trade certification C. Deregulation D. A liability law

C

Identify the United Nations body that establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations. A. IMF B. GATT C. WTO D. CIGS

D

According to Max Weber: A. principles embedded in Hinduism encourage high levels of entrepreneurial activity. B. Hindu values emphasize that individuals should be judged by their material achievements. C. pursuit of material well-being makes the attainment of nirvana easier. D. devout Hindus would be less likely to engage in entrepreneurial activity than devout Protestants.

D

According to World Bank numbers, A. developing nations currently account for more than 60 percent of world economic activity. B. rich nations currently account for more than 70 percent of world economic activity. C. today's rich nations may account for 55 percent of world economic activity by 2020. D. today's developing nations may account for more than 60 percent of world economic activity by 2020.

D

If the critics of globalization are correct, all of the following things must be shown except: A. the share of national income received by labor, as opposed to the share received by the owners of capital should have declined in advanced nations. B. even though labor's share of the economic pie may have declined, living standards need not deteriorate if the size of the total pie has increased sufficiently to offset the decline in labor's share. C. the decline in labor's share of national income must be due to moving production to low-wage countries, as opposed to improving production technology and productivity. D. economic growth in developed nations has offset the fall in unskilled workers' share of national income, raising their living standards.

D

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. market B. private C. command D. mixed

D

In all of the following scenarios, the costs of doing business in a country tend to be greater, except where: A. political payoffs are required to gain market access. B. supporting infrastructure is lacking. C. adhering to local laws and regulations is costly. D. there is a highly developed infrastructural support.

D

Interdependent political, economic, and legal systems of a country make up its: A. administrative agenda. B. socioeconomic fabric. C. economic environment. D. political economy.

D

Technological innovations have facilitated all of the following except: A. globalization of production. B. globalization of markets. C. creation of electronic global marketplaces. D. creation of absolutely homogeneous consumer markets.

D

The ______ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states. A. International Development Association B. World Bank C. International Court of justice D. World Trade Organization

D

The system of values and norms that are shared among a group of people and that when taken together constitute a design for living best defines: A. society. B. value systems. C. principles. D. culture.

D

This is a less rigid form of social stratification in which social mobility is possible. A. Social system B. Caste system C. Cultural system D. Class system

D

Which of the following countries has been the largest recipient of foreign direct investment and received about $70 billion a year in inflows in 2005 and 2006? A. Brazil B. Russia C. India D. China

D

Which of the following observations concerning Latin American countries is true? A. Complete restrictions on direct investment by foreign firms. B. Characterized by low growth, high debt, and hyperinflation. C. Debt and inflation are up compared to previous decades. D. Substantial opportunities exist, but are accompanied by substantial risks.

D

Which of the following statements about political systems and their interrelated dimensions is false? A. Systems that emphasize collectivism tend toward totalitarianism. B. Systems that place a high value on individualism tend to be democratic. C. Democratic societies can emphasize a mix of collectivism and individualism. D. It is impossible to have totalitarian societies that are not collectivist.

D

Which of the following statements about values and norms of a culture is not true? A. The values and norms of a society do not emerge fully formed B. They are the evolutionary product of a number of factors C. They are influenced by religion D. They do not influence social structure

D

_____ are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like. A. Values B. Beliefs C. Mores D. Folkways

D