Davis D270 Final
46) The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day. A) Base of the Pyramid B) Hierarchy of Needs C) Happy Planet Index D) Gini coefficient
A) Base of the Pyramid
29) According to Transparency International, companies from which of the following countries are more likely to pay bribes? A) China B) Japan C) Singapore D) Belgium
A) China
9) According to research, which of the following countries is the strongest supporter of free markets? A) China B) India C) France D) Ukraine
A) China
2) Why should managers in international business understand international trade theories? A) Countries' trade policies, based on trade theories, influence which products companies might export to given countries. B) The understanding helps managers decide whether their companies should follow laissez-faire management practices. C) The theories help managers decide whether to use large-scale versus small-scale technologies for serving their export markets. D) The comprehension is useful when deciding whether to transfer managers abroad to manage foreign operations.
A) Countries' trade policies, based on trade theories, influence which products companies might export to given countries.
44) Which of the following statements most likely undermines the arguments for a strategic trade policy? A) Entrepreneurs, rather than governments, should take business risks. B) Developed countries have production lead time over developing countries. C) If big companies can figure out what products to develop, so can governments. D) Governments have limited resources, so industries with greater growth potential should be targeted.
A) Entrepreneurs, rather than governments, should take business risks.
3) Which of the following statements about GE and its "Green is Green" movement is true? A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States. B) GE has decided to develop new products that are environmentally friendly rather than adopt internal policies to reduce greenhouse gas emissions. C) GE has moved aggressively to reduce greenhouse gas usage internally but has not been able to develop commercially viable "clean" technologies. D) GE considered joining the U.S. Climate Action Partnership but decided the group was too radical in its approach to reducing greenhouse gas emissions.
A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States.
30) The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country. A) Human Development Index B) Emerging Economic Stability C) Genuine Progress Indicator D) Net National Product
A) Human Development Index
47) All the following are reasons for the lower international mobility of people than capital EXCEPT which one? A) The differences in economic return between countries are lower for people than for capital. B) It is more expensive to move people than capital. C) People may have to learn another language and adapt to a different culture. D) International capital transfers have less cumbersome legal restrictions than international movements of people.
A) The differences in economic return between countries are lower for people than for capital.
40) How has the Kyoto Protocol affected U.S. companies operating in Europe? A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe. B) The Kyoto Protocol has not affected U.S. companies with subsidiaries in Europe because the U.S. has not signed the Kyoto Protocol. C) Before U.S. companies can open any more European subsidiaries, the U.S. government must sign the Kyoto Protocol. D) Because the United States is not a party to the Kyoto Protocol, U.S. companies may not operate in European countries that have signed the Kyoto Protocol.
A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe.
57) Research shows that urbanization leads to higher productivity. Which of the following is the LEAST likely reason for this? A) Urbanization establishes an inflow of immigrants who will work for less money. B) In urban areas, firms can more easily find people with the exact skills they need. C) Urbanization allows for economies in moving supplies and finished products. D) In urban areas, knowledge flows more easily from one company to another and from one industry to another.
A) Urbanization establishes an inflow of immigrants who will work for less money.
25) Which of the following is an example of extraterritoriality? A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws, even though China has no comparable laws B) a U.S. sweatshop operating in Thailand that does not follow U.S. labor laws but allows children to work 60 hours a week C) an MNE manager who, after working in the host country, tries to implement foreign practices in the home-country office D) a British subsidiary operating in Indonesia that maintains the same health and safety standards for its foreign factories that are required in Great Britain, even though the British government does not require it to use those standards
A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws, even though China has no comparable laws
50) Brain drain is a term that describes ________. A) a country's loss of educated, productive people B) a nation's shift from an emerging market to a developed economy C) the exportation of high-technology products in exchange for low-technology products D) the unauthorized use of patents, copyrights, and technology by the counterfeiting industry
A) a country's loss of educated, productive people
19) A manager practicing relativism would most likely ________. A) adapt to local conditions instead of implementing home-country practices B) enforce home-country laws on host-country employees and suppliers C) refuse to change company policies and procedures to comply with local norms D) apply universal laws to each country despite local customs and traditions
A) adapt to local conditions instead of implementing home-country practices
28) One way that developed countries specialize in order to gain acquired advantages is by ________. A) allocating research efforts more heavily in specific sectors B) emphasizing production in natural resource endowments C) restricting imports to those in the service sector D) subsidizing the transport of exports
A) allocating research efforts more heavily in specific sectors
31) According to the product life cycle theory, production and sales are primarily domestic in the introductory stage because ________. A) businesses need quick market feedback B) tariff reductions remain under negotiation C) international transport costs are too high D) international patents have not been approved
A) businesses need quick market feedback
51) A guideline for responsible action by a firm in its operations worldwide is a(n) ________. A) code of conduct B) corporate monitoring policy C) education program D) honor code
A) code of conduct
10) Which level of moral development involves an individual learning role-conformity from peers, parents, and laws? A) conventional B) principled C) autonomous D) preconventional
A) conventional
60) All of the following factors most likely led to Costa Rica's attraction of high-tech FDI EXCEPT the country's ________. A) demand for high-tech products B) literacy rate C) quality of life D) political stability
A) demand for high-tech products
34) What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist? A) difficulties of identifying a definitive set of predictive economic indicators B) a lack of reliable economic data from most developed economies C) the isolation of most markets from each other D) static nature of the marketplace
A) difficulties of identifying a definitive set of predictive economic indicators
5) Since the late 1980s, the growing emergence of freer markets has been powered by the realization that ________. A) economic growth is directly related to economic freedom B) economic growth has a limited effect on the standard of living C) adoption of free market principles contributes to social injustices D) centrally planned economies are best designed to deliver progress
A) economic growth is directly related to economic freedom
54) Which of the following is most important to the effectiveness of an internal code of conduct? A) ensuring that employees understand the code by requiring confirmation in writing B) paying bonuses to suppliers and distributors that agree to the code C) relying on nonprofit NGOs to develop guidelines D) adhering to industry standards and norms
A) ensuring that employees understand the code by requiring confirmation in writing
35) A worrisome outcome of chronic inflation is that it tends to ________. A) erode confidence in a country's currency B) give central banking officials excessive flexibility to manage monetary policy C) increase the real income of people, thereby inflating their spending and borrowing levels D) lower consumer demand for foreign goods, which triggers lower prices and eventually lower employment
A) erode confidence in a country's currency
42) Uneven income distribution ________. A) exists in almost every country B) is largely a problem for poorer nations C) primarily affects people in urban settings D) is limited to a small share of the world population
A) exists in almost every country
24) The trade theory that says countries should concentrate production on those products using their most abundant production factors is the ________. A) factor proportions theory B) theory of comparative advantage C) theory of absolute advantage D) theory of nontradable goods
A) factor proportions theory
15) In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by ________. A) government officials B) private industries C) individual entrepreneurs D) local trade associations
A) government officials
1) The recent global economic crisis has led to which of the following? A) governments seeking to impose more constraints on capitalism B) governments seeking to eliminate constraints on capitalism C) governments seeking to increase the interdependence of developing economies D) governments seeking to eliminate the interdependence of developing economies
A) governments seeking to impose more constraints on capitalism
50) An economic system is the set of structures and processes that ________ in a country. A) guides the allocation of resources and shapes the conduct of business activities B) directs the movement of specific products to specific consumers C) sets the standards of competitive success for companies in the economy D) stipulates the roles and responsibilities of consumers
A) guides the allocation of resources and shapes the conduct of business activities
57) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following would be the best approach for Quantum? A) improving conditions at the subcontract facilities B) developing an external ethics code for foreign partners and letting them worry about compliance. C) requiring local governments to alter their labor policies D) leaving the market and focusing on domestic production
A) improving conditions at the subcontract facilities
13) Which of the following most likely complicates ethical behavior for firms that expand overseas? A) local laws and values B) expatriate management C) unstable financial settings D) international codes of conduct
A) local laws and values
5) The trade theory that says a country should export more than it imports is known as ________. A) mercantilism B) absolute advantage C) comparative advantage D) import substitution
A) mercantilism
52) Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with ________. A) minimal government intervention B) standardized minimum wages C) laws favoring sustainability D) state-run corporations
A) minimal government intervention
18) Ethical dilemmas tend to be ________ for MNE managers than for domestic managers. A) more complicated B) less controversial C) easier to decide D) less common
A) more complicated
20) Nontradable goods are best defined as ________. A) products and services for which exporting costs are excessive B) factors of production that exceed safety regulations C) goods used for national defense D) products that comprise a portion of the inputs for finished products
A) products and services for which exporting costs are excessive
39) Firms that operate in countries that have adopted the Kyoto Protocol are required to either reduce emissions or ________. A) purchase carbon credits from other firms B) file petitions to appeal the requirement C) cease manufacturing operations D) pay fines to the U.N.
A) purchase carbon credits from other firms
29) Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine? A) purchasing power parity B) economic growth rate C) gross domestic income D) gross national product
A) purchasing power parity
1) According to the text, which of the following has resulted from GE's Ecomagination initiative? A) rising profitability for many GE products B) increasing doubt among GE's foreign partners C) reducing investments by GE due to poor returns D) improving pollution levels near GE plants in China
A) rising profitability for many GE products
12) Assume the following conditions: In the United States it takes 5 units of resources to produce a ton of potatoes and 10 to produce a ton of coal. In Canada it takes 6 units of resources to produce a ton of potatoes and 9 to produce a ton of coal. According to the theory of absolute advantage, ________. A) the United States should export potatoes to Canada and import coal from Canada B) the United States should export coal to Canada and import potatoes from Canada C) the United States should import both potatoes and coal from Canada, while concentrating on production of more valuable goods D) there would be no basis for trade
A) the United States should export potatoes to Canada and import coal from Canada
15) According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________. A) the country will forego producing its less efficient output in order to produce its more efficient output B) workers become more efficient through specialization C) economies of scale will reduce cost D) there will be more incentive to develop cost-saving technologies
A) the country will forego producing its less efficient output in order to produce its more efficient output
32) Which of the following statements describes an inconsistency of the FCPA? A) Facilitation payments are classified as bribery. B) Facilitation payments are excluded from the FCPA's definition of bribery. C) Payments to officials who are not directly responsible for carrying out the law are legal. D) Payments to foreign officials who carry out the law are considered illegal by provisions of the FCPA.
B) Facilitation payments are excluded from the FCPA's definition of bribery.
33) A 1998 U.S. law that outlaws bribery payments by U.S. firms to foreign government officials is known as the ________. A) Anti-Bribery Act of 2004 B) Foreign Corrupt Practices Act C) Zero Tolerance Initiative D) Sarbanes-Oxley Act
B) Foreign Corrupt Practices Act
22) Which of the following countries is the best example of a mixed economic model? A) United States B) France C) United Kingdom D) Australia
B) France
2) General Electric has focused on being more "green" in recent years most likely because ________. A) the industry has always looked to GE as a trend setter in green technology B) GE executives believe the firm can strategically align investor and environmental interests C) GE executives realize that the firm can save significant money through the use of solar technology D) the U.S. government has decided to use GE as a test case to see if the adoption of the Kyoto Protocol can actually work for a U.S. firm
B) GE executives believe the firm can strategically align investor and environmental interests
28) To determine whether the standard of living within a country is rising or falling, economists would most likely use which of the following measures? A) per capita GNI B) GNI growth rate C) purchasing power parity D) degree of human development
B) GNI growth rate
43) Which of the following is most likely a FALSE statement about income inequality? A) The richest 1% of the world's population claims as much income as the bottom 57%. B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens. C) Among industrialized nations, the U.S. has the largest inequality gap between rich and poor. D) Income inequality between metropolitan and rural areas threatens a country's social stability.
B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens.
4) Managers at Morrison Manufacturing are considering expanding the firm's production overseas and want to ensure that the firm is located in a country with a high degree of economic freedom. Presently, which of the following locations would most likely offer Morrison the highest economic freedom? A) Mexico B) Hong Kong C) Venezuela D) North Korea
B) Hong Kong
33) ________ is a general, sustained rise in prices measured against a standard level of purchasing power. A) Deflation B) Inflation C) Expansion D) Reflation
B) Inflation
17) Which of the following assumptions was made in the original theories of absolute and comparative advantage? A) Specialized labor seeks efficiency. B) Labor resources are fully employed. C) Countries pursue objectives other than economic efficiency. D) Production networks enable countries to concentrate on particular functions.
B) Labor resources are fully employed.
54) Presently, which of the following countries is best characterized as a pure example of a command economy? A) Russia B) Libya C) China D) Vietnam
B) Libya
48) Which of the following best supports the idea that MNEs should remain in countries that allow child labor? A) MNEs have a positive influence on government employment policies in most foreign countries. B) Many MNEs have substantially improved the working conditions of their foreign plants. C) MNEs are required to pay child workers more than local companies. D) Most MNEs employ local managers to handle cultural differences.
B) Many MNEs have substantially improved the working conditions of their foreign plants.
33) According to the PLC theory, what is the most likely reason that companies manufacture products in locations with high labor rates during the introductory stage of a product's life cycle? A) Doing so allows use of long production runs using capital-intensive methods. B) Many consumers are willing to pay high costs for the newest products. C) Transportation costs are reduced by focusing on markets in developed countries. D) Import restrictions prevent production in countries other than the ones making product innovations.
B) Many consumers are willing to pay high costs for the newest products.
51) Which of the following is the LEAST likely result of outward migration? A) Emigrants remit capital used to start businesses in their home countries. B) Nations receive more foreign aid. C) Nations lose highly educated and productive workers. D) Countries receive remittances from emigrants.
B) Nations receive more foreign aid.
36) Which of the following is a voluntary effort by 150 multinational construction and natural-resources companies to end bribery? A) Foreign Corrupt Practices Act B) Partnering Against Corruption Initiative C) OLAF (European Commission Anti-Fraud Office) D) Sarbanes-Oxley Act
B) Partnering Against Corruption Initiative
41) Country X has a significant amount of external debt. Which of the following is the most likely cause? A) The government of Country X borrowed money from local banks. B) The government of Country X borrowed money from other governments. C) The government of Country X spent more than it collected in revenues. D) The government of Country X received short-term credits from selling bonds.
B) The government of Country X borrowed money from other governments.
35) Which of the hypothetical new products, if successful, would most likely diffuse its production and sales according to the product life cycle theory? A) a Ferrari sports car selling for $200,000 to a niche, upper-end market B) a Sony television that receives global transmissions without a satellite dish or cable connection, introduced at a high price but targeted eventually for sale to a mass market C) a new Diet Coca-Cola soft drink flavored with cranberries D) a Kyocera plastic chip carrier, which is expected to be quickly obsolete because of innovations
B) a Sony television that receives global transmissions without a satellite dish or cable connection, introduced at a high price but targeted eventually for sale to a mass market
8) Neomercantilism describes the approach of countries that try to run a favorable balance of trade to ________. A) build up gold reserves B) achieve a social or political objective C) lower their rates of inflation D) buy raw materials more cheaply
B) achieve a social or political objective
20) Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to ________. A) destabilize poverty rates B) achieve low unemployment C) restrict economic growth D) inequitably distribute wealth
B) achieve low unemployment
27) Most world trade takes place ________. A) between developed countries and developing countries B) among developed countries C) among developing countries D) between raw material exporters and manufacturing exporters
B) among developed countries
8) Monique has recently been hired as an accounts supervisor at Ballston Enterprises. She wants to understand Ballston's values and its expectations for employee behavior. Which of the following would most likely provide Monique with this information? A) mission statement B) code of conduct C) vision statement D) employee contract
B) code of conduct
4) Which of the following is NOT a key stakeholder group that a company must work to satisfy in order to survive in a global environment? A) employees B) competitors C) shareholders D) customers
B) competitors
12) According to the teleological approach, individuals base moral decisions on ________. A) personal and social responsibilities B) consequences of an action C) cultural value systems D) opinions of peers
B) consequences of an action
27) What is the primary argument against extraterritoriality? A) increases opportunities for corporate bribery B) contradicts demands for increased globalization C) requires oversight by nongovernmental organizations D) prohibits firms from expanding into foreign territories
B) contradicts demands for increased globalization
49) In a country's balance of payments, the ________ tracks all trade activity in merchandise. A) capital account B) current account C) payment account D) deficit account
B) current account
21) Countries with varied climates and varied natural resources generally ________ than countries with less varied climates and natural resources. A) have lower per capita incomes B) depend less heavily on trade C) have more ethnic subgroups D) have higher endowments of capital relative to labor
B) depend less heavily on trade
14) Which of the following is a primary business objective for pursuing ethical behavior? A) avoiding industrial sanctions B) developing competitive advantages C) developing creative advertisements D) discouraging false commitments to the firm
B) developing competitive advantages
28) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions with Cuba is an example of ________. A) utilitarianism B) extraterritoriality C) absolute advantage D) relative advantage
B) extraterritoriality
58) Which of the following ideas calls for assessing a country's performance based on factors such as life expectancy, leisure time, and income equality? A) microeconomics B) happynomics C) macroeconomics D) green economics
B) happynomics
25) El Salvador has a population density of about 620 people per square mile and neighboring Honduras a population density of about 115 people per square mile. According to the factor proportions theory of trade, one would expect El Salvador's exports to Honduras to ________. A) have a lower labor-to-land ratio than its imports from Honduras B) have a higher labor-to-land ratio than its imports from Honduras C) embody more capital per square mile than its imports from Honduras D) embody more capital per worker than its imports from Honduras
B) have a higher labor-to-land ratio than its imports from Honduras
45) Between now and 2050, countries undergoing a simultaneous population reduction and an increased percentage of retirees in the population most likely will need more ________. A) imports B) immigrants C) domestic products D) favorable balances of trade
B) immigrants
50) Which of the following best explains Nike's quick response to criticism of unfair employment practices in developing countries? A) retaining employees B) improving public relations C) addressing product safety concerns D) cutting costs in order to improve profits
B) improving public relations
39) The so-called "misery index" is the sum of a country's ________. A) foreign and national debt B) inflation and unemployment rates C) unemployment level and total debt D) trade deficit and long-term inflation rate
B) inflation and unemployment rates
32) According to the PLC theory, at an early stage of a product's life cycle the product is likely to be made in a more ________ method than in its later stages. A) capital-intensive B) labor-intensive C) land-intensive D) low-cost
B) labor-intensive
8) History suggests that if the economic crisis worsens, we are likely to see more people question the ________. A) fall of communism B) legitimacy of capitalism C) practicality of mixed market economies D) correlation between economic freedom and prosperity
B) legitimacy of capitalism
41) Costa Rica applied the concepts of the diamond of national advantage theory to help transform its economy by ________. A) building domestic demand for its products and services B) looking globally to develop favorable conditions C) following import substitution policies D) concentrating on nontradable goods
B) looking globally to develop favorable conditions
56) What is the primary reason that Anglo American PLC developed its ART program? A) comply with government standards B) maintain a healthy workforce C) abide by union demands D) reduce employee benefits
B) maintain a healthy workforce
13) A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a ________. A) command economy B) market economy C) private economy D) mixed economy
B) market economy
21) A manager who refuses to bribe customs officials in a foreign country, even though it is morally acceptable in that country, is most likely to believe in which of the following perspectives on ethics? A) relativism B) normativism C) humanism D) existentialism
B) normativism
43) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ________. A) allows rich countries to produce generic versions of patented drugs without having to pay royalties to the patent holder B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs C) requires pharmaceutical companies to provide low-cost vaccines and HIV/AIDS medications to developing countries D) requires tiered pricing for most essential drugs
B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs
59) During a time of reflation, the government is most likely to ________. A) lower taxes B) print money C) reduce interest rates D) support infrastructure
B) print money
5) Which stakeholder group primarily wants additional sales and increased productivity? A) customers B) shareholders C) society at large D) government
B) shareholders
6) Which stakeholder group is most interested in trustworthy behavior by corporate executives and increased corporate taxes? A) shareholders B) society C) employees D) customers
B) society
7) The recent global credit crisis has interrupted the trend of national economies ________. A) rapidly adopting the command market model B) steadily adopting the free market model C) moving from the mixed to the command model D) turning away from the mixed model
B) steadily adopting the free market model
54) The inability of a company to gain foreign production factors to use in its domestic operations most likely ________. A) entices the company to export its own production factors B) stimulates the company to adopt efficient substitute methods of production C) stimulates foreign companies to invest in that domestic market D) causes the company's products to move more rapidly through their life cycles
B) stimulates the company to adopt efficient substitute methods of production
38) All of the following are features of the diamond of national advantage theory EXCEPT ________. A) firm strategy, structure, and rivalry B) strategic trade policy regulations C) related and supporting industries D) demand conditions
B) strategic trade policy regulations
16) Assume the following conditions: In the United States it takes 4 units of resources to produce a ton of potatoes and 5 to produce a ton of coal. In Canada it takes 6 units of resources to produce a ton of potatoes and 10 to produce a ton of coal. According to the theory of comparative advantage, ________. A) there would be no basis for trade B) the United States should import potatoes from Canada and export coal to Canada C) the United States should export both potatoes and coal to Canada D) the United States should export potatoes to Canada and import coal from Canada
B) the United States should import potatoes from Canada and export coal to Canada
16) In a command economy, ________. A) businesses and consumers are assumed to be the best judges of how resources should be allocated B) the government sets goals and determines the price and quantity of what is produced C) different economic sectors coordinate the activities of the federal government D) each enterprise sets its goals before making reports to the central government
B) the government sets goals and determines the price and quantity of what is produced
42) Some countries reverse engineer pharmaceutical products ________. A) because they know that generic products are inherently better than branded products B) to lower the cost of certain drugs to the domestic market C) as a way to charge higher prices in domestic markets D) to comply with international patent laws
B) to lower the cost of certain drugs to the domestic market
9) According to Adam Smith's theory of absolute advantage, specialization allows countries to increase their efficiency for each of the following reasons EXCEPT ________. A) labor could become more skilled by repeating the same tasks B) transportation costs could be lowered by producing closer to markets C) labor would not lose time in switching from the production of one kind of product to another D) higher production would provide incentives for the development of more effective working methods
B) transportation costs could be lowered by producing closer to markets
3) Because all countries face the questions of what, how much, and with whom they should import and export, international business managers should most likely ________. A) identify their governments' trade policies to determine if an invisible hand directs these decisions B) understand the theories used to answer these questions because policies affect business operations C) establish operations in small countries where they can exert more political influence D) produce only nontradable goods that are less affected by government policies
B) understand the theories used to answer these questions because policies affect business operations
44) The World Bank reports that approximately ________ percent of the world's population is poor. A) 50 B) 75 C) 80 D) 95
C) 80
29) Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft? A) Buyers procure similar products for replacement parts. B) Transportation costs and cultural differences limit exporters. C) Companies differentiate products to appeal to different consumers. D) Bilateral trading agreements require this interchange for a number of products.
C) Companies differentiate products to appeal to different consumers.
1) Which of the following is NOT a reason that international trade theory is useful for managers to understand? A) Countries use trade theories to help them decide how to improve their competitive positions, such as improving the quantity and quality of production factors. B) Countries' trade policies affect whether imports are allowed to compete against domestic production, thus affecting where companies need to produce to serve given markets. C) Countries use laissez-faire policies to intervene in the free movement of international trade, thus affecting where companies can produce most efficiently. D) Countries wrestle with the questions and set policies on what, with whom, and how much they should import and export, thus affecting companies' abilities to produce given products efficiently and sell them into given markets.
C) Countries use laissez-faire policies to intervene in the free movement of international trade, thus affecting where companies can produce most efficiently.
32) The ________ starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality, population health, livelihood security, equity, free time, and educational attainment. A) Gross National Index B) Net National Product C) Genuine Progress Indicator D) Human Development Index
C) Genuine Progress Indicator
55) All of the following are reasons that foreign investment may stimulate exports from the home (donor) country EXCEPT which of the following? A) The investor often sends home-country components to its facilities abroad. B) The investor often sends home-country equipment to its facilities abroad. C) Home-country aid usually goes where the investments are made. D) The foreign facility is adept at selling the investors' home country products.
C) Home-country aid usually goes where the investments are made.
22) Why is the argument that "anything legal is ethical" most likely insufficient? A) Everything that is unethical is also illegal. B) The law is an extremely efficient way to solve ethical dilemmas. C) Laws are frequently based on imprecisely defined moral concepts. D) Laws can never be changed; thus, rules for all possible ethical dilemmas are found in the law.
C) Laws are frequently based on imprecisely defined moral concepts.
51) Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering? A) Indonesia B) Chile C) Russia D) Bangladesh
C) Russia
40) A government increases its internal debt for all of the following reasons EXCEPT which of the following reasons EXCEPT ________. A) The tax system is so poorly run that the government cannot collect all the revenues it expects. B) Government costs such as security and social programs exceed total tax revenues. C) The government borrows money from international financial institutions. D) State-owned enterprises run large deficits.
C) The government borrows money from international financial institutions.
23) Which of the following is a reason for an MNE to base its standards for ethical behavior on a country's laws? A) The law embodies many of a country's moral beliefs but is an inadequate guide for proper conduct. B) The law contains unenforceable rules that are impossible for society to follow. C) The law represents a consensus derived from significant deliberation. D) The law is based on precisely defined moral concepts.
C) The law represents a consensus derived from significant deliberation.
3) Kyle, an international manager for Apex Industries, has been given the task of analyzing the economies of three different emerging countries for the firm's potential expansion. Which of the following questions is LEAST relevant to Kyle's assignment? A) How much freedom will Apex have to run its foreign operations? B) What are the current economic policies related to development? C) What is the likelihood that Apex can fill manufacturing positions with locals? D) What factors in the country drive or hinder economic change?
C) What is the likelihood that Apex can fill manufacturing positions with locals?
39) The diamond of national advantage would be best used to answer which of the following questions? A) How do developed countries prevent the trade of blood diamonds? B) How can developing countries create a significant trade surplus? C) Why do specialized competitive advantages differ among countries? D) Why do most innovative products originate in developed countries?
C) Why do specialized competitive advantages differ among countries?
48) All of the following are examples of international labor mobility EXCEPT ________. A) a manager assigned by an MNE to work short-term abroad B) a refugee who takes up employment in another country C) a college student on a study abroad program D) an illegal immigrant working in another country
C) a college student on a study abroad program
11) As a leading exporter of luxury automobiles, Germany has built a strong reputation in engineering. Germany's trade most likely relies on a(n) ________. A) outward immigration restriction B) natural advantage C) acquired advantage D) neomercantilist policy
C) acquired advantage
35) The OECD Convention against bribery is an example of a(n) ________. A) bilateral agreement developed for the EU B) agreement that targets the demand side of bribery C) agreement that targets the supply side of bribery D) UN Convention dominated by developing countries
C) agreement that targets the supply side of bribery
58) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following guidelines enforced by Quantum would LEAST likely be supported by the International Labor Organization? A) establishing bridge schools B) monitoring workplace safety C) allowing children ages 10-15 to work a maximum of 4 hours per day D) prohibiting abusive labor conditions
C) allowing children ages 10-15 to work a maximum of 4 hours per day
15) Which of the following is a primary business objective for pursuing ethical behavior? A) replacing home-country technology with host-country technology B) minimizing federal investigations into corporate finances C) avoiding being perceived as a socially irresponsible firm D) imposing home-country behavior on the host country
C) avoiding being perceived as a socially irresponsible firm
47) Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time? A) trade deficit B) Gini coefficient C) balance of payments D) purchasing power parity
C) balance of payments
17) In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X? A) market economy B) mixed economy C) command economy D) democratic economy
C) command economy
24) An advocate of the legal-justification standard would most likely assert that the law ________. A) develops slowly in response to evolving societal dilemmas B) protects business activities that are unethical but not illegal C) contains enforceable rules that apply to everyone D) offers necessary moral flexibility for a society
C) contains enforceable rules that apply to everyone
34) According to the PLC theory, developing countries have their best production advantage in which stage of the product life cycle? A) growth B) maturity C) decline D) introduction
C) decline
56) According to the concept of green economics, measuring a country's economic performance should also take into account ________. A) market share B) population size C) ecological costs D) cost-of-living increases
C) ecological costs
53) Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect the Hong Kong government to ________. A) monitor market prices B) control natural resources C) ensure fair competition D) provide innovation incentives
C) ensure fair competition
14) The comparative advantage theory holds that a country will gain from trade ________. A) when it exports products for which it has an acquired advantage and imports products for which another country has a natural advantage B) if it exports goods it can produce more efficiently than other countries and imports goods other countries can produce more efficiently than it can C) even though it can produce all goods more efficiently than other countries D) if it exports products using its abundant production factors in exchange for products for which it has scarce production factors
C) even though it can produce all goods more efficiently than other countries
31) The Human Development Index measures the average achievements in a country on three basic dimensions of human development, including ________. A) promotion of cultural values B) quantity of free time C) extent of knowledge D) sustainability
C) extent of knowledge
52) The U.N. Global Compact is best described as a(n) ________. A) corruption mandate B) environmental initiative C) external code of conduct D) international trade guideline
C) external code of conduct
27) The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its________. A) net national product (NNP) B) gross national product (GNP) C) gross domestic product (GDP) D) gross national income (GNI)
C) gross domestic product (GDP)
22) Countries with large land areas are generally less dependent on trade than countries with small land areas because of ________. A) highly restricted economic scales B) self-sufficiency with natural resources C) higher transportation costs related to foreign trade D) the development of unique products that have a limited demand
C) higher transportation costs related to foreign trade
16) Encouraging ethical behavior for the purpose of developing competitive advantages will most likely result in all of the following for a firm EXCEPT ________. A) strategic accomplishment B) consumer commitment C) industry resolutions D) financial success
C) industry resolutions
9) All of the following are levels of moral development EXCEPT the ________. A) preconventional level B) autonomous level C) internalized level D) conventional level
C) internalized level
37) Contrary to the product life cycle theory, there has been an increased tendency for companies to ________. A) sell products only in their home markets throughout the cycle B) produce and sell products in countries where counterfeiting is low C) introduce new products simultaneously in domestic and foreign markets D) sell new products in developing countries before expanding into developed countries
C) introduce new products simultaneously in domestic and foreign markets
26) Tests to substantiate the factor proportions theory have had mixed results most likely because ________. A) labor migration quickly outdates any studies B) most countries have a favorable balance of trade C) labor skills and education are not homogeneous D) large and small countries have different trade policies
C) labor skills and education are not homogeneous
30) What is the primary concern regarding anti-corruption measures in the EU? A) resistance to an official anti-fraud commission B) inability to adopt a corruption definition C) lack of uniform laws across nations D) failure to conduct internal auditing
C) lack of uniform laws across nations
6) Under mercantilism, governments sought to influence trade by ________. A) establishing bilateral trading agreements with other countries B) limiting exports C) limiting imports and subsidizing exports D) encouraging the development of manufacturing in their colonies
C) limiting imports and subsidizing exports
21) In the Economic Freedom Index, ________ exhibit high economic freedom whereas ________ exhibit little to no economic freedom. A) mixed economies; market economies B) command economies; market economies C) market economies; command economies D) centrally planned economies; command economies
C) market economies; command economies
14) Market economies are primarily characterized by ________. A) formal cooperation among government, companies, and workers to achieve stable growth B) heavy government spending and high taxation to pay for a range of social services C) minimal governmental participation D) restricted consumer powers
C) minimal governmental participation
47) According to the Ethical Trading Initiative (ETI), ________. A) child labor cannot be used unless there are no suitable alternatives B) employment need not be freely chosen in order to be acceptable C) no harsh or inhumane treatment of workers should be allowed D) MNEs are not responsible for establishing codes of conduct
C) no harsh or inhumane treatment of workers should be allowed
20) The belief that there are universal standards of behavior that all cultures should follow is called ________. A) humanism B) relativism C) normativism D) naturalism
C) normativism
44) Which of the following has been the primary reason for the recent growth of India's pharmaceutical industry? A) globalized supply chains B) tiered pricing guidelines C) patent-protection laws D) foreign investors
C) patent-protection laws
38) In the U.S., the unemployment rate indicates the ________. A) percentage of the labor force that wants to work full-time but can only find part-time employment B) number of people who have stopped looking for work because full-time jobs are unavailable C) percentage of unemployed workers seeking paid work relative to the total labor force D) number of workers eligible for government services and unemployment benefits
C) percentage of unemployed workers seeking paid work relative to the total labor force
55) What is the primary problem associated with Anglo American PLC's ART program? A) unknown side effects to drugs and treatment B) rising costs of medications and procedures C) poor treatment adherence by employees D) lack of sufficient insurance coverage
C) poor treatment adherence by employees
23) Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________. A) standardized procedures implemented by the state B) high economic growth rates for the long-term C) privatization of many factors of production D) violent political and legal upheaval
C) privatization of many factors of production
36) In most cases, governments ________ in order to regulate inflation. A) lower interest rates B) increase taxes C) raise interest rates D) decrease taxes
C) raise interest rates
53) Which of the following is most important when designing an internal code of conduct? A) requesting U.N. oversight and intervention when necessary B) communicating the code of conduct only to employees C) reporting results to external stakeholders D) forming local polices for each subsidiary
C) reporting results to external stakeholders
18) The free trade theories of specialization primarily assume that ________. A) specialization leads to unemployment, but production gains compensate for job losses B) resources can move internationally from the production of one good to another C) resources can move domestically from the production of one good to another D) countries have objectives other than economic efficiency
C) resources can move domestically from the production of one good to another
56) Analysts conclude that the finite supply of natural resources will most likely ________. A) cause a higher proportion of world trade to occur among developed countries B) cause a higher proportion of world trade to occur among developing countries C) serve as an advantage for developing countries in their sales to developed countries D) create a greater portion of world trade in the form of services
C) serve as an advantage for developing countries in their sales to developed countries
10) Which of the following is NOT a characteristic of capitalism? A) private ownership of assets B) right to profit from individual effort C) state control of factors of production D) private control of investment
C) state control of factors of production
24) In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________. A) leveraging control of the financial system B) developing national corporations C) supporting the local activities of foreign competitors D) systematically managing trade relations
C) supporting the local activities of foreign competitors
37) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as ________. A) competitive advantage B) the Kyoto Protocol C) sustainability D) externality
C) sustainability
43) A governmental strategic trade (industrial) policy is one that ________. A) lessens dependence on foreign military goods B) seeks reciprocal free trade agreements between developed and developing countries C) targets the resources needed to support industries that seem to fit best with the country's advantages D) limits imports to encourage domestic production of what would otherwise be imported
C) targets the resources needed to support industries that seem to fit best with the country's advantages
38) The 1997 Kyoto Protocol is best described as an agreement that requires ________. A) all members of the United Nations to reduce their greenhouse gas emissions by 5.2 percent B) the United States and Japan to control greenhouse gas emissions by 8% below 1995 levels C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels D) the signatory countries to reduce greenhouse gas emissions by 80% by 2050
C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels
40) According to the diamond of national advantage theory, the domestic existence of all four conditions best explains ________. A) the essence of an industry's development B) the position of a product in its life cycle C) where globally competitive firms develop and sustain themselves D) why countries rely on abundant factor endowments
C) where globally competitive firms develop and sustain themselves
52) Country X brings in a large number of unskilled immigrants to meet its labor needs. Which of the following is the LEAST likely to occur in Country X as a result? A) Country X will develop a long-term class of "have-nots" if the children of immigrants remain unskilled. B) Country X will need more unskilled people in the future if immigrant children become skilled. C) The continual supply of unskilled labor will delay the development of labor saving technology in Country X. D) Country X will experience a significant transfer of knowledge and a resulting rise in start-up businesses.
D) Country X will experience a significant transfer of knowledge and a resulting rise in start-up businesses.
37) ________ typically results when demand decreases and supply increases. A) Inflation B) Chronic inflation C) Reflation D) Deflation
D) Deflation
2) Which of the following is most likely a true statement about the global economy since the 1980s? A) Socialist governments are intervening more in global exchanges. B) Wealthy countries are exercising total control over emerging markets. C) Developing countries are losing growing shares of their foreign-exchange reserves. D) Emerging economies are adopting the principles and practices of free markets.
D) Emerging economies are adopting the principles and practices of free markets.
42) Which of the following best supports a nation's decision to implement a strategic trade (industrial) policy? A) The policies have usually resulted in big payoffs. B) Governments, rather than entrepreneurs, should take the risks of developing new industries. C) Consumer needs would otherwise not be met. D) Government actions should target industries that are believed to give the country its best export advantages.
D) Government actions should target industries that are believed to give the country its best export advantages.
11) Which of the following statements is most likely true about the post-conventional level of moral development? A) Individuals learn what is moral but not why such behavior is moral. B) Individuals behave morally because they fear negative repercussions. C) Individuals learn how to conform to society's values through observation. D) Individuals behave morally because they believe such actions are right.
D) Individuals behave morally because they believe such actions are right.
18) Which of the following is most typical of a command economy? A) Consumers have choices of many substitutes for any given product. B) Quality of products and services tends to be consistent. C) The prices of goods and services frequently change. D) Many products are usually in short supply.
D) Many products are usually in short supply.
17) Bantam Enterprises, a multi-national enterprise, makes significant efforts to avoid being perceived as socially irresponsible. What is the most likely reason for this? A) Social irresponsibility can lead to labor strikes by international unions. B) Socially irresponsible companies usually have fewer exports and more imports. C) Cultural barriers increase for companies that are socially irresponsible, which hinders expansion into additional countries. D) Social irresponsibility can lead to negative publicity from nongovernmental organizations, which could hurt a company's reputation.
D) Social irresponsibility can lead to negative publicity from nongovernmental organizations, which could hurt a company's reputation.
60) Which of the following governmental actions is LEAST likely to increase national debt? A) macroeconomic stimulus plans B) unemployment benefits C) corporate bailouts D) T-bond sales
D) T-bond sales
49) Which of the following is NOT a likely reason for companies to act more ethically? A) Consumer boycotts may result from unethical corporate behavior. B) Irresponsible and unethical actions may lead to legal problems for MNEs. C) Unethical or irresponsible behavior can negatively impact employee morale. D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.
D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.
30) Which of the following statements is most likely FALSE? A) Developing countries trade mainly with developed countries. B) Developed countries trade mainly with other developed countries. C) Cultural similarity among countries enhances their trade with each other. D) The greater the geographic distance between countries the greater the trade.
D) The greater the geographic distance between countries the greater the trade.
7) Which of the following statements is most likely true regarding relationships between MNEs and stakeholders? A) An MNE typically serves all stakeholder groups equally at any given time. B) No individual stakeholder group is powerful enough to cause the demise of an MNE. C) All stakeholders of an MNE have the same short-term and long-term goals and interests. D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.
D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.
4) All countries face the questions of what, how much, and with whom they should import and export. How they answer these questions primarily affects whether ________. A) nontradable goods become tradable B) products go through a lengthy life cycle C) companies adhere to laissez-faire export policies D) a company's present production location will be competitive
D) a company's present production location will be competitive
34) Which of the following is permitted by the Foreign Corrupt Practices Act? A) a bribe paid by foreign firms operating in U.S. territories B) a bribe paid by U.S. firms operating in a foreign country that permits bribes to be paid C) a payment to a foreign government official to influence a customs official D) a payment to a customs official to clear legitimate merchandise
D) a payment to a customs official to clear legitimate merchandise
59) Costa Rica's recent economic transformation to depend more on high-tech manufacturing is largely due to its adoption of ________ trade policy. A) an import substitution B) a comparative advantage C) a factor proportions D) a strategic
D) a strategic
26) In computing GNI, the value of a Ford car that is manufactured in Mexico using capital from the United States would ________. A) be added to the GNI of the United States as well as to the GNI and GDP of Mexico B) not be added to the GNI of the United States but would be added to the GNI of Mexico C) only affect the computation of GDP and have no bearing on GNI D) be added to the GNI of the United States but not the GNI of Mexico
D) be added to the GNI of the United States but not the GNI of Mexico
10) Which of the following is most likely a basis for a Jamaican natural advantage in international trade? A) product technology developed by a Jamaican company B) high literacy rates among Jamaican citizens C) the use of English as the primary language D) beautiful beaches and climate
D) beautiful beaches and climate
45) Which of the labor issues identified by the Ethical Trading Initiative (ETI) receives the most attention? A) safe and hygienic working conditions B) reasonable living wages C) inhumane treatment D) child labor
D) child labor
36) All of the following are types of products that are usually exceptions to what is predicted by the product life cycle theory EXCEPT ________. A) trendy clothing B) luxury items C) differentiated products D) consumer durables
D) consumer durables
12) In a market economy, the patterns of resource allocation are most directly influenced by ________. A) government administrators who monitor the equilibrium of supply and demand B) industry coalitions that strive to improve the efficiency of production and service C) consumer group alliances that negotiate with firms to improve product quality D) consumers who "vote" by their personal decision to buy or not buy products
D) consumers who "vote" by their personal decision to buy or not buy products
48) The two main categories in the balance of payments are the ________. A) merchandise exchange account and the services account B) external debt and the unilateral transfers account C) merchandise trade account and the capital account D) current account and the capital account
D) current account and the capital account
23) Eight of the top 10 exporting and importing countries are countries with ________. A) cheap labor forces B) small land masses C) natural advantages D) developed economies
D) developed economies
6) The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT ________. A) life expectancy B) literacy C) environmental sustainability D) diversity
D) diversity
46) The Ethical Trading Initiative (ETI)is primarily focused on ________. A) fair trade laws for undeveloped countries B) tiered pricing by pharmaceutical firms C) greenhouse gas emission reduction D) employment practices of MNEs
D) employment practices of MNEs
26) A government that enforces its own laws on foreign subsidiaries of its domestic companies practices ________. A) civil law B) relativism C) externality D) extraterritoriality
D) extraterritoriality
31) Which of the following is NOT affected by the Foreign Corrupt Practices Act? A) companies registered in the U.S. B) foreign firms operating in U.S. territory C) foreign firms quoted on a U.S. stock exchange D) foreign companies managed by U.S. expatriates
D) foreign companies managed by U.S. expatriates
11) Communism primarily relies on a system of ________. A) private business ownership B) competitive pricing and marketing C) market-generated supply and demand D) government controlled economic activity
D) government controlled economic activity
7) Which of the following undesirable results will most likely occur for a country running a favorable balance of trade? A) higher unemployment B) higher domestic interest rates C) fewer funds to invest abroad D) granting credit that may be risky
D) granting credit that may be risky
49) Labor and capital mobility are intertwined because ________. A) illegal workers sometimes pay large sums to people who smuggle them into another country B) people cannot emigrate to another country unless they bring capital with them C) companies receive tax benefits for hiring immigrants D) immigrants bring an investment in human capital with them
D) immigrants bring an investment in human capital with them
25) Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________. A) total of all consumption and investment that takes place in a national economy B) income generated in one country, regardless of who owns the productive assets C) total of all economic activity in one country less services, such as government administration, health services, and education D) income generated by both total domestic production and the international production activities of national companies
D) income generated by both total domestic production and the international production activities of national companies
45) The Gini coefficient estimates a country's ________. A) gross national product B) economic development C) political and legal risk D) income inequality
D) income inequality
55) A firm with operations in Denmark can most likely expect all of the following EXCEPT ________. A) high taxes B) significant regulation C) tough job-protection laws D) minimal monetary policies
D) minimal monetary policies
19) In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning. A) state-directed B) market C) command D) mixed
D) mixed
19) The free trade theories of specialization primarily assume that ________. A) domestic resources are unable to move from the production of one good to another B) countries have objectives other than economic efficiency C) specialization triggers unemployment D) resources are immobile internationally
D) resources are immobile internationally
46) The most internationally mobile factor of production is ________. A) labor B) management C) long-term capital D) short-term capital
D) short-term capital
13) Comparative advantage differs from absolute advantage in that the former ________, whereas the latter ________. A) holds that countries should specialize their production; does not B) holds that trade should be kept as nearly in balance as possible; says countries should seek a favorable balance of trade C) bases trade on natural advantages; bases trade on acquired advantage D) states that there is a basis of trade even if one country can produce everything more efficiently than another country; does not deal with this issue
D) states that there is a basis of trade even if one country can produce everything more efficiently than another country; does not deal with this issue
57) Which of the following calls for economic activity that meets present needs without hindering the future needs of society? A) privatization B) state capitalism C) economic freedom D) sustainable development
D) sustainable development
58) The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________. A) depend more on production of nontradable goods and services B) encourage urbanization in emerging countries that lack infrastructure C) establish facilities in dispersed locations to hinder domestic competition D) take advantage of wage and skill differences among countries
D) take advantage of wage and skill differences among countries
53) In this example, assume that both trade and production factors are internationally mobile. Using domestic labor, the labor cost per silicon chip is $.10 in Japan and $.20 in the United States. Using domestic capital, the capital cost per chip is $.10 in Japan and $.05 in the United States. Chip transportation in either direction is $.10. Japanese labor is willing to work in the United States for $.15 per chip including the workers' transport cost. U.S. capital will go to Japan at a cost of $.08 per chip including transaction costs. Which silicon chips will the United States buy? A) those made in Japan with Japanese labor and capital B) those made in the United States with U.S. labor and capital C) those made in Japan with Japanese labor and U.S. capital D) those made in the United States with Japanese labor and U.S. capital
D) those made in the United States with Japanese labor and U.S. capital
41) Medco Pharmaceuticals charges a market price for heart medication to distributors in Italy and a discounted price for the same medication to distributors in Bangladesh. Medco is most likely using ________. A) discounted pricing B) skimmed pricing C) penetrated pricing D) tiered pricing
D) tiered pricing