MGT 450 Midterm
International business would not be relevant to an organization if it only produced and sold its products in one country. True or False?
False
The World Trade Organization (WTO) has given clear definitions for "developed" and "developing" countries. True or False?
False
_____ refers to a situation when a currency's value increases or decreases based on demand and supply. a. Float b. Trade deficit c. Exchange rate d. Reserve currency e. Bank reserve
A. Float
Values are usually acquired early in life and are often: a. Non-rational. b. voluntary. c. rational. d. inborn. e. free from cultural influences.
A. Non-Rational
_____ refers to a main currency that many countries and institutions hold as part of their foreign exchange reserves. a. Reserve currency b. Float c. Trade deficit d. Exchange rate e. Bank reserve
A. Reserve currency
The _____ refers to the land and water trade routes that covered more than 4,000 miles and connected the Mediterranean with Asia. a. Silk Road b. Salt Road c. Amber Road d. Grand Trunk Road e. Siberian Route
A. Silk Road
Gender-related development index (GDI) refers to the index that: a. measures achievement in the same basic capabilities as the HDI does but takes note of inequality in achievement between women and men. b. uses indicators of the most basic dimensions of deprivation, i.e. a short life, lack of basic education, and lack of access to public and private resources. c. evaluates the progress of women in political and economic forums. d. measures the economic value of the total number of hours spent by women in doing household chores. e. measures the number of women per thousand men living in a country at a particular point of time.
A. measures achievement in the same basic capabilities as the HDI does but takes note of inequality in achievement between women and men.
The total size of the economy is a better indicator of the strength of the local economy and the market opportunity for a new consumer product than the income per person. True or False?
False
In the Chapter 3 opening case, entitled Dunkin' Brands, the case also talks about one of its other famous brands. Which of the following was that other brand? a. Tacos b. 31 Favors ice cream c. Dole d. Tropical Smoothie e. Mississippi RoadKill
B. 31 Favors ice cream
The major significance of the _____ was that it was the first formal institution that governed international monetary systems. a. Nixon Shock b. Bretton Woods Agreement c. Smithsonian Agreement d. World Trade Organization e. General Agreement on Tariffs and Trade
B. Bretton Woods Agreement
_____ refers to the shift toward a more interdependent and integrated global economy. a. SWOT b. Globalization c. Entrepreneurship d. Strategic management e. Intrapreneurship
B. Globalization
In the chapter 5 opening case entitled Making Sense of the Economic Chaos in the European Union, the case discusses European Debt crisis that first emerged in which of the following countries? a. Italy b. Greece c. Spain d. Denmark e. Poland
B. Greece
In the United States of America, children strike out on their own at a very early age. They pay for their own housing and education. The American society serves as an example of a(n): a. masculine culture. b. individualistic culture. c. collectivistic culture. d. feminine culture.
B. Individualistic Culture
The strategy to promote exports by imposing restrictions on imports is called: a. capitalism. b. protectionism. c. liberalization. d. mercantilism. e. free trade.
B. Protectionism
Suppose we quote the number of Indian rupees required to purchase 1 U.S. dollar as INR 45 / USD 1. In this case, USD is referred to as: a. currency hedging. b. base currency. c. currency speculation. d. currency arbitrage. e. quoted currency.
B. base currency.
If a European company opts to buy shirts from India with payment due in 60 days, it would be able to access the forward market to enter into a contract to lock in a future price for its payment. This would enable the European firm to protect itself against depreciation of the euro, which would require more euros to buy one Indian rupee. This contract is referred to as a(n): a. option contract. b. forward contract. c. implicit contract. d. voidable contract. e. quasi-contract.
B. forward contract.
Industrialized countries negotiate free trade and investment agreements with other countries, but exempt _____ from the liberalizing demands of the agreement. a. educational spending b. military spending c. infrastructural spending d. spending on social measures e. spending in the health sector
B. military spending
In low-context cultures, a. standing distances between people shrink. b. people tend to be explicit and direct in their communications. c. the physical context of the message carries a great deal of importance. d. body language is as important as the actual words spoken. e. people tend to do one task at a time.
B. people tend to be explicit and direct in their communications.
Suppose a European tourist in the United States uses 1 euro to buy 1.27 U.S. dollars. However, when she leaves the United States, she pays 1.50 U.S. dollars to buy 1 euro. The difference of 0.23 U.S. dollars is the: a. amount refunded to the tourist once she reaches her home country. b. profit that the bank makes for each U.S. dollar bought and sold. c. fee paid to the U.S. government for the stay in the country. d. profit that the U.S. treasury department makes on each U.S. dollar bought and sold. e. profit that the U.S. Home department makes on each U.S. dollar bought and sold.
B. profit that the bank makes for each U.S. dollar bought and sold.
The _____ includes stock exchanges, bond markets, and futures and options markets, among others. a. tertiary market b. secondary market c. forward market d. primary market e. main market
B. secondary market
The value of an SDR consists of the value of four of the IMF's biggest members' currencies, which hold equal weight. True or False?
False
In the Chapter 2 opening case concerning China, the case discusses China's trade activities in what part of the world? a. Antarctica b. Australia c. Africa d. Alabama e. Auburn
C. Africa
. The view that a person's own culture is central and other cultures are measured in relation to it is referred to as: a. consequentialism. b. utilitarianism. c. ethnocentrism. d. collectivism. e. individualism.
C. Ethnocentrism
_____ refers to the price of one currency in terms of a second currency. a. Spot rate b. Trade deficit c. Exchange rate d. Currency strength e. Bank reserve
C. Exchange rate
Trade surplus refers to a situation where the value of imports is greater than the value of exports. True or False?
False
_____ refers to a kind of economic cooperation wherein member countries are free to independently determine trade policies with nonmember nations. a. Free zone b. Export processing zone c. Free trade area d. Free port e. Free trade zone
C. Free trade area
_____ has become an optimal location for labor-intensive industries due to the availability of cheap, large pools of labor. a. The United States of America b. Sweden c. India d. The United Kingdom e. Japan
C. India
Which of the following is true for the International Finance Corporation (IFC)? a. It disburses loans to countries with the purpose of building economies and reducing poverty. b. It provides interest-free loans to countries with sovereign guarantees. c. It facilitates sustainable development by improving investments in the private sector. d. It focuses on improving the foreign direct investment of developing countries. e. It provides a means for dispute resolution between governments and private investors with the end goal of enhancing the flow of capital.
C. It facilitates sustainable development by improving investments in the private sector.
In the Chapter 1 opening case, Google locates its computer-server farms, the technological backbone of its massive Internet services, close to _____ that produce hydroelectric power because it is one of the cheapest sources of electricity. a. solar power stations b. urban centers c. dams d. wind farms e. thermal power stations
C. dams
Trade creation refers to the: a. movement of workers to job markets to gain access to better jobs and wages. b. dilution of the political and economic rights of a country. c. increased number of opportunities for countries to trade with one another by removing barriers to trade and investment. d. tendency of the member countries to trade more with each other than with nonmember nations due to the removal of trade barriers. e. movement of production to cheaper labor markets in member countries
C. increased number of opportunities for countries to trade with one another by removing barriers to trade
Nigeria pulled out of the IMF program in 2002 because: a. the economic and political elite of Nigeria wanted an independent economy unregulated by the whims and fancies of the IMF. b. the developed countries of the world pressed for its ouster on charges of massive violation of human rights by the Nigerian military dictatorship. c. it failed to meet the economic reform requirements, specifically failing to meet spending and exchange rate targets. d. it refused to accord the MFN status to the rest of the members of the IMF as it did to South Africa which was a violation of IMF statutes. MGT 450-02 Midterm Exam with Answers - Fall 2017 6 e. it insisted on additional loans from the IMF even though it was defaulting on the repayment of the earlier loans.
C. it failed to meet the economic reform requirements, specifically failing to meet spending and exchange
The purpose of the International Monetary Fund is to: a. promote foreign direct investment into developing countries by insuring investors against political risk. b. promote sustainable private sector development primarily by financing private sector projects and companies located in the developing world. c. promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation. d. promote economic and social progress in developing countries by helping raise productivity so that their people may live a better and fuller life. e. provide facilities for the conciliation and arbitration of investment disputes between member countries and individual investors
C. promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
The desire of an organization to be a responsible company which is working hard to help those who buy its products to make more responsible choices constitutes the: a. economic mission of the organization. b. product mission of the organization. c. social mission of the organization. d. environmental mission of the organization. e. political mission of the organization.
C. social mission of the organization.
Uncertainty avoidance in a culture refers to: a. whether a culture has a long-term or short-term orientation. b. people's tendency to take care of themselves at the expense of the society. c. the degree of risk a society or culture is willing to accept. d. the degree to which gender roles are crisply defined in a culture. e. the study of physical space and people.
C. the degree of risk a society or culture is willing to accept.
. CIVETS refers to: a. the group of newly emerging economies which proposes to set up a rival economic organization as an answer to the WTO. b. the group of newly emerging economies which has replaced the United States of America as the largest economy in the world. c. the group of newly emerging economies which will replace the BRIC countries of the last decade. d. the group of newly emerging economies which is working towards establishing Asian supremacy in organizations such as the IMF. e. the group of newly emerging economies whose economic growth is driven largely by oil and zero tariff tax havens
C. the group of newly emerging economies which will replace the BRIC countries of the last decade.
The "ask" refers to: a. any form of money in general circulation in a country. b. money of one country denominated in the currency of another country or a group of countries. c. the price at which a bank or a financial services firm is willing to sell that currency. d. the rate at which the market converts one currency into another. e. the price at which a bank or a financial services firm is willing to buy a specific currency.
C. the price at which a bank or a financial services firm is willing to sell that currency.
If an exchange rate between the U.S. dollar and the Chinese renminbi were quoted by a Japanese bank on Japanese soil, then the exchange rate would be termed as a: a. currency futures contract. b. currency swap. c. forward exchange rate. d. currency conversion. e. cross rate.
E. cross rate.
In the opening case in Chapter one concerning Google, the case discusses the company's challenges trying to do business in which of the following g countries: a. Chad b. India c. Russia d. China e. Chile
D. China
Cultures and values are: a. stagnant by nature. b. irrelevant in the world of business. c. hindrances to economic development. d. constantly evolving in nature. e. not influenced by media and technology.
D. Constantly evolving in nature
A Japanese retailer builds a store in India to sell badminton rackets. This would serve as an example of: a. backward vertical FDI. b. brownfield FDI. c. forward vertical FDI. d. horizontal FDI. e. portfolio investment.
D. Horizontal FDI
The _____ is an agreement signed by the governments of the United States, Canada, and Mexico to create a trade bloc in North America to reduce or eliminate tariffs among the member countries and thus facilitate trade. a. G-3 Free Trade Agreement b. Trans-Pacific Strategic Economic Partnership c. Central American Integration System d. North American Free Trade Agreement e. Pacific Accord
D. North American Free Trade Agreement
The _____ is the only institutional body charged with facilitating free and fair trade between member nations. a. World Bank b. International Monetary Fund c. United Nations Economic and Social Council d. World Trade Organization e. General Agreement on Tariffs and Trade
D. World Trade Organization
The SWOT tool helps one to take stock of: a. the marketing expenditure of an organization. b. the strategies that are implemented by an organization. c. an organization's external characteristics only. d. an organization's external and internal characteristics. e. an organization's internal characteristics only.
D. an organization's external and internal characteristics.
Current account deficit refers to: a. the amount of borrowing that a country does from either the private sector or other countries. b. the market value of all final goods and services produced within a country in a given period. c. the accounting record of all monetary transactions between a country and the rest of the world. d. imports being greater than the exports. e. the net inflow of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.
D. imports being greater than the exports.
Maquiladoras refer to the: a. customs duty imposed by the member countries of the North American Free Trade Agreement on the movement of goods and services from nonmember countries. b. customs duty imposed by the European Union on the movement of goods and services from countries which are not the members of this economic body. c. manufacturing units that are located in the border towns of Spain that take imported materials and produce the finished goods for export, primarily to France and Algeria. d. production facilities located in border towns in Mexico that take imported materials and produce the finished goods for export, primarily to Canada or the United States. e. the free trade zones established in Argentina to attract foreign direct investment from companies manufacturing machinery and motor vehicles.
D. production facilities located in border towns in Mexico that take imported materials and produce the finished goods for export, primarily to Canada or the United States.
Offshoring refers to: a. allowing people to work at home. b. firms devising new service combinations to improve service. c. acquisition and distribution of goods. d. providing basic software online for free. e. moving part of a manufacturing or service process to a cheaper destination.
E. moving part of a manufacturing or service process to a cheaper destination.
Triffin Paradox refers to: a. the situation where the imposition of a tariff on imports may reduce the relative internal price of that good. b. the situation where technological progress that increases the efficiency with which a resource is used tends to increase the rate of consumption of that resource. c. the situation where the United States, the most capital-abundant country in the world, exported labor intensive commodities and imported capital-intensive commodities. d. the situation where the more dollars foreign countries held, the less faith they had in the ability of the U.S. government to convert those dollars. e. a situation during recession wherein when everyone tries to save more money, and it leads to a fall in the aggregate demand which in turn lowers total savings in the population.
D. the situation where the more dollars foreign countries held, the less faith they had in the ability of the U.S. government to convert those dollars
One of the primary purposes of the EU was: a. to establish a common financial denomination for the whole world. b. to bar non-European countries from trading with the European countries. c. to transform Europe and Asia into a single political and administrative unit. d. to create a single market for business and workers accompanied by a single currency, the euro. e. to use it as a platform to further Europe's military and political goals.
D. to create a single market for business and workers accompanied by a single currency, the euro.
The critical ways that firms can obtain a sustainable competitive advantage are/is called the _____ for that industry. a. comparative advantages b. factors of production c. service factors d. brand equity e. barriers to entry
E. Barriers to Entry
Which of the following statements is true about MERCOSUR? a. It was established as a regional trade agreement between Peru and Venezuela. b. It is a part of the Caribbean Community and Common Market. c. It is the world's largest trading bloc. d. It was established as an answer to the Andean Community. e. It is a South American trade initiative with clear economic and political goals.
E. It is a South American trade initiative with clear economic and political goals.
Intellectual property refers to: a. the physical infrastructure of an organization. b. the magazines and journals that are subscribed to by an organization. c. the property acquired by an organization in case of a takeover. d. the skilled manpower of an organization. e. anything that a person or entity creates with the mind.
E. anything that a person or entity creates with the mind
Strategic management is concerned with the: a. social performance of an organization. b. environmental performance of an organization. c. economic performance of an organization. d. generation of human capital for an organization. e. overall performance of the organization.
E. overall performance of the organization.
Human development index refers to: a. the value of the GDP divided by the population of the country. b. the value of all the goods and services produced by a country in a single year. c. the value of the GDP adjusted for purchasing power. d. the index that adjusts the exchange rate between countries to ensure that a good is purchased for the same price in the same currency. e. the measurement of a country's average achievements in health, knowledge, and a decent standard of living
E. the measurement of a country's average achievements in health, knowledge, and a decent standard of living
Africa serves as an attractive destination for investors because of its low trade tariffs and the untapped spending power of the African population. True or False?
False
Companies involved in Brownfield foreign direct investment build new facilities right from scratch usually in an area where no previous facilities existed. True or False?
False
Ethics is the same as following culturally accepted norms. True or False?
False
Fixed exchange rates and pegged rates were the two different measures of the exchange rate, which were developed by the United States and the United Kingdom respectively. True or False?
False
Futures contracts are identical to forward contracts. True or False?
False
Global businesses can afford to ignore the political and legal climate in countries in which they currently operate. True or False?
False
Globalization can be defined only in terms of markets but not in terms of production. True or False?
False
In a country, if the per capita GDP adjusted for purchasing power is lower than the nominal per capita GDP, it implies that local consumers can afford more with their incomes. True or False?
False
In chapter 1 opening case, Google and other technology companies are able to do business globally because the laws governing the Internet are the same everywhere. True or False?
False
In the Chapter 3 opening case entitled, Dunkin' Brands, the case discusses the company's disinterest in allowing foreign franchises to create products that reflect local tastes and traditions. True or False?
False
In the Chapter 4 opening case entitled, China vs. India, the case compares the relative progress that the two countries are making in growing and developing their economies and it is clear from the case that India is making much faster progress. True or False?
False
In the Chapter 4 opening case entitled, China vs. India, the case indicates that India's infrastructure is far more developed that China's. True or False?
False
In the Chapter 6 opening case, entitled, McKinsey & Company: Linking the Business World, Governments, and Global Institutions, McKinsey is described as an Global Investment Bank located in an offshore Financial Center. True or False?
False
In the Chapter 7 opening case, entitled, 'Why a Main Street Firm, Walmart, Is Impacted by Foreign Exchange Fluctuations', the case states that Walmart operates in only a very few foreign markets and therefore, managing currency fluctuations is not a major issue for the company. True or False?
False
In the chapter 5 opening case entitled Making Sense of Economic Chaos in the European Union, the case discusses how the European Union began to evolve from after World War I in the hopes that more open trade between the member nations would avoid another major war. True or False?
False
In the chapter 5 opening case entitled Making Sense of Economic Chaos in the European Union, the case discusses the recent vote in the England to exit the European Union. True or False?
False
A company, when it expects to be paid in its own currency, must assess the risk that the buyer may not be able to pay the full amount due to currency fluctuations. True or False?
True
A country may resort to reducing the tax rates on its citizens in order to stimulate its economy. True or False?
True
An organization makes use of the spot rate for making an immediate payment. The organization does not face the risk of the currency increasing or decreasing in value. True or False?
True
Bribery can be considered ethical by some cultures, if it is a part of normal traditional, social practices. True or False?
True
Companies use hedging as a way to protect themselves if there is a time lag between when they bill and receive payment from a customer. True or False?
True
Culture is the beliefs, values, mind-sets, and practices of a group of people. True or False?
True
Dumping occurs when a company exports to a foreign market at a price that is either lower than the domestic prices in that country or less than the cost of production. True or False?
True
Even within a specific culture, individuals have different ideas of what constitutes ethical or unethical behavior. True or False?
True
Foreign direct investment means that a firm is investing assets directly into a foreign country's buildings, equipment, or organizations. True or False?
True
A company's primary purpose for wanting or needing to convert currencies is to pay or receive money for goods or services. True or False?
True
If a country has a large black, or underground, market for transactions, it will not be included in the official GDP. True or False?
True
In the Chapter 2 opening case concerning China, the case indicates that helping the region in question develop more infrastructure such as roads, railroads, airports and ports is a critical part of its strategy for establishing greater influence in that region. True or False?
True
In the Chapter 2 opening case concerning China, the case states that accessing raw materials is a big part of its trade activities in that region. True or False?
True
In the Chapter 3 opening case, entitled Dunkin' Brands, the case discusses the company encouraging the adaptation and creation of local products the suit local tastes. True or False?
True
In the Chapter 4 opening case entitled, China vs India, the case discusses how the two countries are developing their respective economies and infrastructures. True or False?
True
In the Chapter 6 opening case, entitled, McKinsey & Company: Linking the Business World, Governments, and Global Institutions, is described as a Global Management Consulting firm. True or False?
True
In the Chapter 6 opening case, entitled, McKinsey & Company: Linking the Business World, Governments, and Global Institutions, the case states that McKinsey consultant form an enviable global network that extends even to former employees many of whom work in almost 120 countries in virtually all business sectors. True or False?
True
In the Chapter 7 opening case, entitled, 'Why a Main Street Firm, Walmart, Is Impacted by Foreign Exchange Fluctuations', the case states that Walmart operates retail stores, clubs, and grocery stores in many countries and has thousands of local and foreign suppliers. Consequently, currency fluctuations do impact Walmart's global operations and revenues. True or False?
True
In the Chapter 7 opening case, entitled, 'Why a Main Street Firm, Walmart, Is Impacted by Foreign Exchange Fluctuations', two reasons that the company needs foreign exchange are to build new stores, and to expand or refurbish stores in a specific country. True or False?
True
India has become the global hub for outsourcing in the computer-programming industry with its skilled, relatively cheap, and English-speaking professional workforce. True or False?
True
International business relates to any situation where the production or distribution of goods or services crosses country borders. True or False?
True
One of GATT's key provisions stated that if the most-favored-nation clause status was granted by a country to another country, then it was automatically extended to all other member countries. True or False?
True
Political stability is a key part of government efforts to attract foreign investment to their country. True or False?
True
The World Bank is directed to make loans for projects but never to fund a trade deficit. True or False?
True
The economic theory of mercantilism stated that a country's wealth was determined by the amount of its gold and silver holdings. True or False?
True
The global economic crisis of 2008 began with the 2007 collapse of mortgage lending in the United States. True or False?
True
The modern international trade theories explain trade from a firm, rather than a country, perspective. True or False?
True
The original intent of the United Nations is to maintain international peace and security, develop friendly relations between nations, and to foster international cooperation in solving economic, social, humanitarian, and cultural issues. True or False?
True
The study of cross-cultural analysis incorporates the fields of anthropology, sociology, psychology, and communication. True or False?
True
Under the gold standard, countries could not expand their money supply beyond what was allowed by the gold reserves held in their vaults. True or False?
True
Understanding culture is important in determining the success of a business because different cultures have business practices, communication, and management styles that are different from those to which you are accustomed. True or False?
True
