Global Environment of Business Chapter 5-7, 9-10 Exam Prep

Question Number 5) How many jobs were created when Lenovo opened its North Carolina factory?

115

Which one of the following is a system that allocates financial resources in the form of debt and equity according to their most efficient​ uses?

A capital market

​____________ advocates that nations should accumulate financial​ wealth, usually in the form of​ gold, by encouraging exports and discouraging imports.

Mercantilism

According to the​ textbook, the number of​ cross-border investment activities and their rising values over time underlie​ long-term growth in foreign direct investment. Which form of investments is the majority of these​ activities?

Mergers and acquisitions

Question Number 4) According to the video, cell phone manufacturer _____ just announced that its new cell phone will be made in _____.

Motorola; Texas

Which one of the following statements BEST expresses a pillar of ​ mercantilism?

Nations should increase their wealth by increasing their exports and minimizing their imports.

Which one of the following trade theories indicates that government may play a role in assisting its home companies and that government involvement has always been widely accepted in undertakings such as space exploration for national security​ reasons?

New trade

Question Number 10) Lenovo's decision to bring computer manufacturing back to the United States is in sharp contrast with which of the following decades-old trend?

Offshoring

For which one of the following political motives do governments intervene in trade to ban certain​ defense-related goods from export to other​ nations?

Preserve national security

Consider the typical stuffed animal made in​ China, whose components are almost all imported to China. The stuffed​ animal's eyes are molded in Japan. Its outfit is imported from France. The​ polyester-fiber stuffing comes from either Germany or the United States. And the​ pile-fabric fur is produced in Korea. Only final assembly of these components occurs in China. This is an example of which management issue as it relates to foreign direct​ investment?

Production costs

Consumers often end up paying more for products because of a lack of competition. Which one of the following is a type of government intervention that leads to this​ problem?

Protection of infant industries

Which one of the following is considered government​ subsidy?

Providing tax breaks and product price support

Which one of the following is a restriction on the amount​ (measured in units or​ weight) of a good that can enter or leave a country during a certain period of​ time?

Quota

Question Number 7) Lenovo has headquarters in Beijing, China, and ________.

Raleigh, North Carolina

Which one of the following describes administrative​ delays?

Regulatory controls or bureaucratic rules designed to impede the flow of imports into a country

Which one of the following of​ Porter's diamond components supports the concept that companies that belong to a​ nation's internationally competitive industries do not exist in​ isolation, rather, supporting industries spring up to provide the inputs required by the​ industry?

Related and supporting industries

Which one of the following is considered host country performance​ demand?

Require that certain technologies be transferred to local business

Question Number 9) Which of the following is a form of government intervention in international trade?

Restriction on international investment Option 2 of 5b Tariff Option 3 of 5c Quota Correct selected option 4 of 5d Option 5 of 5e Subsidies All of the answers listed are correct

Question Number 8) According to the video, which of the following was a major factor in Lenovo's recent decision to bring jobs from China and other countries back to the United States?

Shipping and global wage costs associated with production

Question Number 9) Which of the following was a motive behind Lenovo's decision to bringing jobs back to North Carolina?

Shipping costs that can be reduced with a U.S. factory

Question Number 2) What was the stock market and commodities market's reaction to news of an increased debt ceiling according to Ellen Braitman?

Stocks and commodities prices both went up.

Mercantilism advocates that governments should actively intervene in international trade to maintain a trade surplus. Which of the following tools have mercantilist nations used to support this​ policy?

Subsidize​ export, ban​ import, and impose tariff charges and quotas.

​________ says that a company will begin by exporting its product and later undertake foreign direct investment. The theory also says​ that, for a number of​ reasons, a​ country's export eventually becomes its import.

The product life cycle theory

Which of the following statements BEST describes the new trade​ theory?

There are gains to be made from specialization and increasing economies of scale.

Question Number 8) Which of the following is TRUE regarding subsidies and financial incentives to domestic firms?

They hamper the expansion efforts of foreign firms.

Question Number 5) Which of the following statement is TRUE regarding Deng Xiaoping's reforms?

They introduced capitalistic characteristics into China's centrally planned policies.

Question Number 1) According to the video, Apple chief executive officer _____ promised _____ to make Mac computers in the United States.

Tim Cook; $100 million

According to your​ textbook, which of the following is one of the reasons that a large number of Korean manufacturers invested in production facilities in​ Tijuana, Mexico, just south of​ Mexico's border with​ California?

To avoid import tariffs

You are a manager of a U.S. firm that plans on exporting a product that is designated as a dual use product and you need to have a U.S. government approval before export can take place. What is the political motive behind this​ intervention?

To preserve national security

Which one of the following fulfills the purpose of a national capital​ market?

To provide a mechanism to invest money efficiently

There has been a persistent pattern of merchandise trade among nations. Trade between which economies of the world represents the highest level of total world merchandise​ trade?

Trade between the​ world's high-income economies

The practice of mercantilism rested on three essential pillars. Which of the following sets identify these three​ pillars?

Trade​ surpluses, government​ intervention, and colonialism

In​ 1980, the closing of U.S.​ carmakers' production facilities in the United States was creating a volatile​ anti-Japan sentiment among the population and the U.S. Congress. Fearing punitive​ legislation, the Japanese government and its carmakers decided to limit its automobile exports to the United States. This an example of​ _______________.

Voluntary export restraint​ (VER)

The creation of the​ ________ was perhaps the greatest achievement of the 1986 Uruguay Round.

World Trade Organization

Question Number 4) According to the video, the German economic model since the end of WWII is known as _________.

a social market economy

Question Number 10) According to the video, the Chinese economic model since the 1980s is commonly referred to as _________ with Chinese characteristics.

a socialist market economy

Tariffs that are called specific tariffs are levied based on​ ________.

a specific fee for each unit​ (measured by​ number, weight,​ etc.) of an imported product

As many countries abandoned central planning and​ socialist-style economics, the pace of privatization​ ________ worldwide.

accelerated

​A(n) ________ is levied as a percentage of the stated price of an imported product.

ad valorem tariff

A greenfield investment is the best choice when​ ________.

adequate facilities in the local market​ aren't available

The General Agreement on Trade in Services​ (GATS) created during the Uruguay Round identifies four different forms that international trade in services can take. Which of the following is NOT one of those​ forms?

Agriculture subsidy

Which one of the following is an advantage of merger and​ acquisitions?

An acquisition generally provides the investor with an existing​ plant, equipment, and personnel.

One simple form of countertrade is​ ________, in which goods are exchanged for others of equal value.

barter

Question Number 6) Lenovo's move marks a twist on the global outsourcing debate because the company is _______.

bringing some PC production back to the United States

The practice of insuring against potential losses that result from adverse changes in exchange rates is called​ ________.

currency hedging

Import of goods and​ services, income receipts on assets​ abroad, and income payments on foreign assets inside the country are tallied under the​ ________.

current account

Western European plastic producers considered retaliating against Asian competitors whose prices were substantially lower in European markets than at home. The practice of selling at​ below-home prices is an example of​ ____________.

dumping

Firms from​ ________ markets are accounting for an ever greater share of global merger and acquisition activity.

emerging

When Mercedes opened its first international car plant in Tuscaloosa​ County, Alabama,​ automobile-parts suppliers also moved to the area from Germany—bringing with them additional investment in the millions of dollars. This is an example of​ _____________.

following clients

​Acer, headquartered in Singapore but founded in​ Taiwan, manufactures personal computers and computer components. Just 20 years after it opened for​ business, Acer had spawned 10 subsidiaries worldwide and had become the dominant industry player in many emerging markets. This is an example of​ ____________.

foreign direct investment

To exchange currency in international​ transactions, companies rely on the​ ________, where currencies are bought and sold.

foreign exchange market

Question Number 2) According to the video, a major factor in Lenovo's decision to bring jobs from China and other countries back to the United States was _____.

growing factory wages around the world

According to Adam​ Smith, a nation should concentrate on producing the goods in which it​ ________.

has an absolute advantage in producing the product

When a U.S.​ company's subsidiary abroad remits profits back to the parent in the United​ States, it is recorded as​ ________.

income receipts

The international capital market consists of the​ ________, ________, and​ ________.

international​ bond, international​ equity, Eurocurrency markets

When a certain portion of the end product must consist of domestically produced goods or that a certain portion of the final cost of a product must come from domestic​ sources, this is the result of​ _________.

local content requirements

The ability of the theory of the product life cycle to accurately depict the trade flow of nations is being challenged. This is due to the fact that​ ________.

more companies are operating in international markets from their inception

​A(n) ________ is a country or territory whose financial sector features very few regulations and​ few, if​ any, taxes.

offshore financial center

An export tariff is levied mostly by the government of a country that is exporting​ ________.

products that consist mostly of​ low-priced natural resources

Which one of the following represents the core of the national competitive advantage​ theory?

A​ nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.

If an exchange rate quotes the number of Japanese yen needed to buy one U.S. dollar​ (¥/$), the yen is the​ ________ and the dollar is the ​________.

quoted​ currency, base currency

Which one of the following is a national accounting system that records all receipts coming into the nation and all payments to entities in other​ countries?

Balance of payments

growing factory wages around the world

California

Trade in services accounts for around 22 percent of total world trade. Although the importance of trade in services is growing for many​ nations, it tends to be relatively more important for the​ world's ___________ countries.

richest

The difference between the comparative advantage theory and the factor proportions theory is that the factor proportions theory​ ________.

states that a country specializes in producing and exporting goods using the factors of production that are most abundant and thus cheapest—not the goods in which it is most productive

Equity normally takes the form of​ ________, or shares of ownership in a​ company's assets.

stock

The forces of​ ________ determine currency​ prices, and transactions are conducted through a process of bid and ask quotes.

supply and demand

Question Number 1) According to the video, in reality there is no such thing as _______.

unimpeded free trade

The U.S. dollar is​ a(n) ________, a currency used to convert funds between two other currencies.

vehicle currency

Governments often promote exports by helping companies finance their export activities. Which U.S. financing entity finances the export activities of companies in the United States and offers insurance on foreign accounts​ receivable?

​Ex-Im Bank

The main problem with mercantilism is that it views trade as​ a(n) ________.

​zero-sum game

According to the U.S.​ ________, foreign direct investment​ (FDI) occurs when the physical assets or at least 10 percent of the stock in a company abroad is purchased to gain a measure of management control.

Commerce Department

Country X specializes in the production of corn more efficiently than any other nation and buys rice which it produces less efficiently than corn from Country​ Z, despite the fact that Country Z produces rice less efficiently than Country X. Which one of the following international trade theories agrees with Country​ X's decision to buy rice from Country​ Z?

Comparative advantage

Which one of the following trade conditions occurs when a country is unable to produce a good more efficiently than other​ nations, but produces the good more efficiently than it does any other​ good?

Comparative advantage

The international product life cycle theory follows the path of a good through its life cycle in order to determine where it will be produced. Which one of the following BEST defines the standardized product​ stage?

Competition pressures companies to lower prices in order to maintain sales levels.

According to the infant industry​ argument, a​ country's emerging industries need protection from international competition during their development phase until they become sufficiently competitive internationally. Which one of the following represents a major consequence to this​ argument?

Complacency toward innovation

Which one of the following is an additional tariff placed on an imported product that a nation believes is receiving an unfair​ subsidy?

Countervailing duty

Which one of the following is TRUE with regard to the factor proportions​ theory?

Countries produce and export goods which require resources that are abundant and import goods that require resources in short supply.

A cologne or perfume producer might want to bottle its fragrance in France and give it a French name. This type of image appeal can be strong enough to encourage foreign direct investment. What is this an example​ of?

Customer knowledge

Which​ agencies/departments/organizations in most countries record the destination of​ exports, the source of​ imports, and the physical quantities and values of goods crossing their​ borders?

Customs

Question Number 2) China's tight grip on the economy has been loosening since the 1980s as a result of ________.

Deng Xiaoping's reforms

A government may impose an import quota to protect its domestic producers by placing a limit on the amount of goods allowed to enter the country. Who are the winners of imposing such​ quotas?

Domestic producers

What method of trade restriction is the U.S. using with​ Cuba?

Embargo

Which one of the following is a purpose of the international capital​ market?

Expanding the money supply

International product life cycle theory says that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle. Which of the following BEST defines the maturing product​ stage?

Exports begin to account for an increasingly greater share of total product sales.

When a​ company's specialized knowledge is embodied in its​ employees, which one of the following options would you recommend the company to take to exploit a market​ opportunity?

Foreign direct investment

Which one of the following is the purchase of physical assets or a significant amount of the ownership​ (stock) of a company in another country in order to gain a measure of management​ control?

Foreign direct investment

Question Number 1) What was a potentially negative outcome if the debt ceiling wasn't raised?

Foreign direct investment from countries like China and Japan may stop.

Question Number 6) Which of the following is the term that features the unrestricted flow of product, services, and capital across national borders?

Free trade

Which one of the following is the pattern of imports and exports that occurs in the absence of trade​ barriers?

Free trade

Question Number 3) Which of the following statements is TRUE of free trade?

Free trade is believed to help increase living standards.

The United States has banned all trade and investment with Cuba since 1962. This is an example of which type of government political​ intervention?

Gaining influence

Question Number 7) Which of the following is NOT a factor in how Germany has boosted its exports?

Germany has increased tariffs on import.

Poland is a source of skilled and inexpensive​ labor; it is an appealing location for automobile manufacturers. But the country had little in the way of advanced​ automobile-production facilities when General Motors considered investing there. What type of investment options did GM decide to take to exploit this market​ opportunity?

Greenfield investment

Which one of the following BEST describes building a new subsidiary abroad from the ground​ up?

Greenfield investment

Which one of the following is limited in its power to explain why companies choose foreign direct investment over other forms of market​ entry?

International product life cycle theory

Which one of the following statements BEST explains the benefits of international trade to​ nations?

International trade is an important engine for job creation.

An oil company is seeking a market opportunity in the Middle East. Which one of the following options is a compelling reason for the company to favor foreign direct investment over other​ options?

Location advantage

Which one of the following theories stipulates tight control when the​ firm's concern is controlling the​ company's activities?

Market imperfections​ (internalization)