WCOB 3003H Exam 1 practice questions

The theories of international trade claim that promoting free trade is generally in the best interests of:

A country, although it may not always be in the best interest of an individual firm

Porter contends that government:

Can influence each of the four components of the diamond positively or negatively

Which of the following factors contributed to the Great Depression of the 1930s?

Countries progressively raised trade barriers against each other - The "beggar thy neighbor" retaliatory trade policies involved countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.

Which of the following is true regarding culture?

Culture is not static

_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate.

Deregulation

Because of its individualistic mindset, Japanese culture is more supportive of entrepreneurial activities than American culture.

False

Economic freedom necessarily equates with political freedom.

False

Hofstede's concept of power distance focused on the extent to which different cultures socialized their members into tolerating uncertainty.

False

The government of a country takes over the airport security industries following a major terrorist attack, to improve airport security. This is an example of privatization.

False

Which of the following is a risk associated with globalization?

Global financial contagion

_____ per person figures can be misleading because they don't consider differences in the cost of living.

Gross national income (GNI)

A capital intensive country exports products that are capital intensive. Which theory is this an example of?

Heckscher-Ohlin

The _____ theory argues that the pattern of international trade is determined by differences in factor endowments.

Heckscher-Ohlin

Which of the following is a measure that is developed by the United Nations to measure the quality of life in different nations?

Human Development Index

If foreigners suddenly reduced their investments in the United States, what would happen?

The foreigners would sell U.S. dollars for another currency.

Which of the following is a major limitation of the simple Ricardian model of comparative advantage?

The model ignores the principle of diminishing marginal returns

For privatization to work, it must also be accompanied by a more general deregulation and opening of the economy.

True

Guanxi is an important mechanism for building long-term business relationships and getting business done in China.

True

Hofstede's research has been criticized because it was culturally bound.

True

In mixed economies, in certain sectors the state sets prices, owns businesses, limits private enterprise, restricts investment by foreigners, and restricts international trade.

True

Individualism has led to a high degree of managerial mobility between companies resulting in managers who have good general skills but lack company-specific experience.

True

The long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth of consumers in that market, and the likely future wealth of consumers.

True

Transformation from centrally planned command economies to market-based economies can be attributed to the fact that command and mixed economies failed to deliver the sustained economic performance achieved by countries adopting market-based systems.

True

Upon meeting a foreign business executive, a Japanese executive will hold his business card in both hands and bow while presenting the card to the foreigner. This is an example of ritual behavior.

True

When communism collapsed, many of the communist countries lacked the legal structure required to protect property rights because all the property was earlier held by the state.

True

Paul Samuelson's critique argues that:

When a rich country enters into a free trade agreement with a poor country, only the poor country benefits from the relationship

The principle of mercantilism views trade as a(n) _____ game

Zero-sum

According to political scientist Samuel Huntington, the rise of Islamic fundamentalism is a response to the:

alienation produced by modernization.

Opponents of globalization argue that falling trade barriers

allow firms to move manufacturing activities to countries with lower wage rates

Between 1960 and 2013, the U.S. share of world exports of goods and services:

although in decline, has remained in first place with China a close second.

The overall attractiveness of a country as a potential market or investment site for an international business depends on:

balancing the benefits, costs, and risks associated with doing business in that country.

By identifying and investing early in a potential future economic star, international firms can _____ and gain experience in that country's business practices.

build brand loyalty

A _____ system is based on a very detailed set of laws organized into codes.

civil law

A political system that prioritizes the needs of the society over individual freedoms is called _____.

collectivism

Globalization has enabled organizations to reduce their costs of production by

creating manufacturing units in developing countries

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 _____.

culture

The connection between _____ and _____ has important implications for the choice of countries in which to locate production facilities and do business.

culture; competitive advantage

Peoples' right to protest on issues of accountability in public expenditure would be possible in a _____ political set-up.

democratic

One visible indicator of _____ tends to be a country's inflation rate.

economic mismanagement

Wal-Mart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors. This allows Wal-Mart to offer greater discounts to its customers. In this case, Wal-Mart benefits from _____.

economies of scale

Anecdotal comparisons suggest that the assertion that nations that invest more in _____ will have higher growth rates is true.

education

In countries where the value of _____ identification is considered to be primary, managers and workers are discouraged from moving from company to company.

group

One of the reasons for the spread of democracy is the emergence of _____ who have pushed for democratic reforms.

increasingly prosperous middle and working classes

The social organization of Western society tends to emphasize on:

individual achievement

David Ricardo's theory of comparative advantage explains

international trade in terms of international differences in labor productivity

Totalitarianism

is a form of government in which one person or political party exercises absolute control over all spheres of human life.

An international business

is any firm that exports or imports - A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses. All a firm has to do is export or import products from other countries. Differences among countries require that an international business vary its practices country by country. An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system

A civil law system tends to be less adversarial than a common law system because the:

judges' decisions are based on detailed legal codes.

In some countries, the official GNI per capita measured at PPP data does not reflect the actual the total annual income because:

large amounts of economic activity may be in the form of barter agreements.

An economy in which the interaction of supply and demand determines the quantity in which goods and services are produced is called a _____.

market economy

If China continues to move toward greater free market reforms they:

may move from third-world to industrial superpower status.

Globalization critics argue that the decline in unskilled wage rates is due to the

migration of low-wage manufacturing jobs offshore - Globalization critics argue that the decline in unskilled wage rates is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers

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.

mixed

The volume of world trade in merchandise growing faster than world GDP implies that:

more firms are dispersing their production processes to global locations.

Social rules and guidelines that prescribe appropriate behavior in particular situations are best described as _____.

norms

In Russia, in the chaotic period following the collapse of communism, an outdated legal system, coupled with a weak police force and judicial system, allowed the Russian Mafia to demand "protection money" from business owners. Any business owner who rebelled had to face violent retribution. This violation of property rights exemplifies _____.

private action

In several Western democracies, the poor performance of state-owned enterprises, because of protection from competition and guaranteed government financial support, led to _____.

privatization

The _____ argues that a large proportion of the world's new products had been developed by U.S. firms.

product life-cycle theory

In a pure market economy:

production is determined by the interaction of supply and demand.

_____ is the collective term for the legal rights relating to the use to which a resource is put and over the use made of any income that may be derived from that resource.

property rights

Free trade

refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country

The rise of mini-multinationals means that:

small businesses are becoming increasingly involved in international trade and investment.

According to Ricardo's theory of comparative advantage, countries should:

specialize in the production of those goods that it produces most efficiently

New trade theory

stresses that in some cases countries specialize in the production and export of particular products because the world market can support only a limited number of firms

Mercantilism

supports the idea that countries should export more than what they import

An act, as simple as shaking hands when meeting new people is an example of _____.

symbolic behavior

The relative decline of the United States in the share of world output and world exports reflects:

the growth in the economic development of the world economy.

Mores

the norms that are seen as central to the functioning of a society and its social life.

Since the late 1980s, there has been a spread of democracy. This is because:

the socialist model failed to deliver economic progress to the vast bulk of their populations.

The stock of foreign direct investment refers to

the total cumulative value of foreign investments

Some _____ have fostered a market economy and strong property rights protection and have experienced rapid economic growth.

totalitarian regimes

One concern frequently voiced by those opposed to globalization is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe

true

The World Bank has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments.

true

According to Islam, those who hold property are regarded as _____.

trustees

The theory of comparative advantage suggests that trade is a _____ game in which all countries that participate realize economic gains

Positive-sum

Which of the following areas of international trade is regulated by the Foreign Corrupt Practices Act?

Preventing bribery and unethical acts in the conduct of international business.

In response to increased demand, what is a monopolist likely to do?

Restrict output and let prices rise.

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?

Right-wing totalitarianism

_____ argued that countries should specialize in the production of goods for which they have an absolute advantage

Adam Smith

Which of the following expresses one of the reasons why managing an international business is different from managing a purely domestic business?

An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system - Managing an international business is different from managing a purely domestic business for at least four reasons: (1) countries are different, (2) the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business, (3) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system, and (4) international transactions involve converting money into different currencies.

_____ are unit cost reductions associated with a large scale of output.

Economies of Scale

The variety of goods that a country can produce is limited by the size of the market in industries where _____ are important.

Economies of scale

The Heckscher - Ohlin theory predicts that countries will:

Export those goods that make intensive use of factors that are locally abundant

Consequence of globalization

Increasing outsourcing of services

Which of the following philosophies can be traced back to the ancient Greek philosopher Aristotle?

Individualism

Which of the following statements about individualism is true?

Individualism advocates for a democratic political system.

A U.S. investment firm, Fin-Smart, set up a customer service call center in India to take advantage of the lower labor costs. This is called ____.

International outsourcing

Which of the following is a major benefit of engaging in free trade?

It gives the countries access to products that they cannot produce

Which of the following is true about the International Monetary Fund?

It is seen as the lender of last resort to nation-states whose economies are in turmoil.

Modern socialism has been popularized largely through the work of _____.

Karl Marx

Which of the following sociologists made a connection between Protestant ethics and "the spirit of capitalism"?

Max Weber

New trade theory suggests that nations:

May benefit from trade even when they do not differ in resource endowments or technologies

Which of the following statements about values and norms of a culture is true?

The values and norms of a society influence social structure.

Which of the following statements pertaining to changes in the global economy of the 21st century is true?

The world is moving toward an economic system that is more favorable for international business

_____ refers to a state where political power is monopolized by a party, group, or individual that governs according to religious principles.

Theocratic totalitarianism

Which of the following statements about the legal systems of countries is true?

They can affect the attractiveness of a country as an investment site or market.

Which of the following is an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe?

Transportation costs

A caste system is a closed system of stratification in which social position is determined by the family into which the person is born.

True

A country's economic system and property rights regime are reasonably good predictors of economic prospects.

True

According to Hofstede, the concept of Confucian dynamism captures attitudes toward time, persistence, protection of face, and respect for tradition.

True

According to Max Weber, Protestantism encouraged capitalism's development by emphasizing the importance of wealth creation and frugality.

True

Both Hindus and Buddhists stress the afterlife and spiritual achievement rather than involvement in this world.

True