MBA 270 - VanVo Midterm 1
What are the various reasons for economic stagnation in many of the world's poorest countries?
(1) Totalitarian governments (2) economic policies that destroyed wealth (3) endemic corruption (4) scant protection for property rights (5) prolonged civil war
What were the results of the Uruguay Round? What are the implications of these results for international business?
(1) reduced trade barriers (2) extended GATT to cover services as well as manufactured goods (3) provided enhanced protection for patents, trademarks, and copyrights (4) established the World Trade Organization to police the international trading system.
What is globalization? Explain, with examples, how global companies can facilitate the creation of a global market.
(1) shift toward a more integrated and interdependent world economy (2) Merging of Markets into a global market Example: Sony selling the same basic PlayStation 4 console worldwide
What are some of the challenges faced by managers of an international business?
(1) where to site production (to minimize costs and to maximize value) (2) ethical lower labor and environmental standards (3) coordinate global production activities (4) which foreign markets to enter/avoid
How is managing an international business different from managing a purely domestic business?
(1)countries are different (2) problems are more complex (3) work within government intervention (4) converting money into different currencies.
Why are supranational organizations, such as the World Trade Organization and the United Nations, criticized?
- unelected bureaucrats now impose policies on the democratically elected governments of nation-states, thereby undermining the sovereignty of those states and limiting the nation's ability to control its own destiny.
What are the four P's?
1. People/Product 2. Value/Price 3. Self Worth/Promotion 4. Self Standing/Placement
85. What are Maslow's Hierarchy of Needs?
1. Self Actualization 2. Self Esteem 3. Love and Belongingness 4. Safety and Security 5. Physiological Needs
84. What are the four quadrants of the SYMLOG?
1:PF 2:NF 3:NB 4:PB
79. Which of the following statements supports the claim that the gap between the rich and poor nations of the world has gotten wider because of globalization? A. There are many countries that suffer from totalitarian governments. B. A quarter of the countries with a GDP per capita of less than $1,000 in 1960 had growth rates of less than zero from 1960 to 1995. C. There is a rapidly growing population in many developing nations. D. Unelected bureaucrats limit a nation's ability to control its own destiny. E. Endemic corruption has long been a problem in the national governments of developing nations.
A quarter of the countries with a GDP per capita of less than $1,000 in 1960 had growth rates of less than zero from 1960 to 1995
28. Automobile companies promote different car models in different countries depending on a range of factors such as demographics, local taste, local fuel costs, income levels, traffic congestion, and cultural values. This most likely demonstrates that A. significant differences still exist among national markets. B. cultural diversity has been replaced by global uniformity. C. the global market is less complex than national markets. D. only multinational giants can benefit from the globalization of markets. E. the social norms in a country do not affect purchase decisions of consumers.
A. significant differences still exist among national markets.
A - F/P - F
Academic - Family/Professional - Finance
Discuss the arguments for and against globalization regarding jobs and income.
Against falling barriers: - international trade destroy manufacturing jobs in wealthy advanced economies - allow firms to move manufacturing activities to countries where wage rates are much lower For falling barriers: -free trade will result in countries specializing in the production of those goods and services that they can produce most efficiently, while importing goods and services that they cannot produce as efficiently.
66. Which of the following statements is a general implication of globalization? A. Globalization is inevitable. B. From a purely economic perspective, globalization is all good. C. Globalization has no negative impacts on the economies of the developed world. D. Globalization has reduced the risks associated with global financial contagion. E. As a result of globalization, a severe crisis in one region of the world can affect the entire globe.
As a result of globalization, a severe crisis in one region of the world can affect the entire globe
76. Econometric studies show a hump-shaped relationship between income levels and pollution levels. Which of these statements reflects that relationship? A. As an economy grows and income levels rise, initially pollution levels also rise. B. Decreasing income levels lead to an increase in pollution levels. C. As an economy grows, pollution levels show a constant increase. D. Economies that are in turmoil reflect pollution levels that are diminishing. E. Income levels do not have any correlation with pollution levels.
As an economy grows, pollution levels show a constant increase
36. A decade ago the government of Weinsland decided to liberalize the country's economy. As a result, today the country is experiencing rapid economic advancement and societal changes that are favorable for international business. Which of the following changes is most likely to occur in Weinsland? A. The country will exhibit more need for social and material support structures built on collectives. B. As the country gets richer, there will be a shift in the society from "traditional" to "secular rational" values. C. As the country gets richer, there will be a shift in the society from "well-being" to "survival" values. D. The people in the country will give more importance to collectivism than to individualism. E. The country, to further facilitate globalization, will commit to authoritarian ideologies.
As the country gets richer, there will be a shift in the society from "traditional" to "secular rational" values
74. The North American Free Trade Agreement (NAFTA) was formed in 1994 among A. Canada, Mexico, and the United States. B. the United States, Brazil, and Argentina. C. Canada, Argentina, and Mexico. D. Colombia, Venezuela, and Brazil. E. Uruguay, Colombia, and Costa Rica.
Canada, Mexico, and the United States
83. Ryan is the executive general manager of a U.S.-based multinational corporation. Veronica is a manager in a similar position, but works for an American company that operates only in the U.S. and does not engage in international business. In this context, which of the following business functions will be most typically exclusive to Ryan? A. Marketing a product or service B. Maintaining healthy relations with the U.S. government C. Developing a business strategy D. Adhering to labor and environmental standards E. Choosing an appropriate mode for entering a particular foreign country
Choosing an appropriate mode for entering a particular foreign country
Briefly discuss the ways in which technological change has affected globalization
Communication speed dramatic increase: satellite, optical fiber, wireless technologies, and the Internet.interpret large data: microprocessor Transportation: Aircrafts and containerization
Elaborate on why globalization is not inevitable.
Countries could pull back from their commitment to liberal economic ideologies if their experience doesn't match their expectation.
65. Which of the following statements reflects the nature of the global economy of the twenty-first century? A. National economies are becoming less integrated into a single and interdependent economic system. B. The number of nations joining the ranks of the developed world has reduced. C. Countries have extensively adopted liberal economic policies. D. There are fewer instances of state-owned businesses privatized and markets being opened to more competition. E. The world is currently moving toward an economic system that is more unfavorable for international business.
Countries have extensively adopted liberal economic policies
26. Which of the following has been reduced as a result of globalization? A. Volume of goods and services B. Foreign exchange transactions C. Environment and labor laws D. Differences in material culture E. Regulation of markets
Differences in material cultures
3. Today, outsourcing efforts are confined to manufacturing activities.
FALSE Early outsourcing efforts were primarily confined to manufacturing activities. Increasingly, however, companies are taking advantage of modern communications technology, particularly the Internet, to outsource service activities to low-cost producers in other nations.
5. In a pure 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 all dictated by the interaction of demand and supply.
FALSE In a pure 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 all planned by the government.
4. One of the tenets of collectivism is that the welfare of society is best served by letting people pursue their own economic self-interest.
FALSE In collectivist societies, an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society" or to "the common good." However, individualism holds that the welfare of society is best served by letting people pursue their own economic self-interest, as opposed to some collective body (such as government) dictating what is in society's best interest.
2. As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries.
FALSE Significant differences still exist among national markets along many relevant dimensions, including consumer tastes and preferences, distribution channels, culturally embedded value systems, business systems, and legal regulations. These differences frequently require companies to customize marketing strategies, product features, and operating practices to best match conditions in a particular country.
23. The location-specific advantages argument associated with John Dunning helps explain why firms prefer FDI to licensing or to exporting.
FALSE The implications of the theories of FDI for business practice are straightforward. First, the location-specific advantages argument associated with John Dunning does help explain the direction of FDI. However, the location-specific advantages argument does not explain why firms prefer FDI to licensing or to exporting.
8. In both China and India, the shift toward a command-based economic system has produced large gains despite weak property rights and endemic corruption.
FALSE Both China and India have achieved high growth rates despite relatively weak property rights regimes and high levels of corruption. In both countries, the shift toward a market-based economic system has produced large gains despite weak property rights and endemic corruption.
25. As a result of globalization, international businesses can avoid the haggle of currency exchanges during cross-border transactions.
FALSE Cross-border transactions require that money be converted from the firm's home currency into a foreign currency and vice versa. Because currency exchange rates vary in response to changing economic conditions, managers in an international business must develop policies for dealing with exchange rate movements.
9. The shift toward deregulation has been easier for former command economies than for mixed economies.
FALSE In mixed economies, the role of the state was more limited but here too, in certain sectors the state set prices, owned businesses, limited private enterprise, restricted investment by foreigners, and restricted international trade. For these countries, deregulation has involved the same kind of initiatives that we have seen in former command economies, although the transformation has been easier because these countries often had a vibrant private sector.
1. As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities.
FALSE Over the past five decades, a fundamental shift has been occurring in the world economy. We have been moving away from a world in which national economies were relatively self-contained entities, isolated from each other by barriers to cross-border trade and investment
18. Mercantilism, propagated in the sixteenth and seventeenth centuries, advocated that countries should simultaneously encourage both imports and exports.
FALSE Propagated in the sixteenth and seventeenth centuries, mercantilism advocated that countries should simultaneously encourage exports and discourage imports.
75. Which of the following is the most appropriate solution to the problem of rising carbon dioxide emissions in developed economies? A. Roll back the trade liberalization efforts that have fostered economic growth and globalization. B. Tie free trade agreements to the implementation of fewer environmental and labor laws in less developed countries. C. Get the nations of the world to agree to policies designed to limit pollutant emissions. D. Increase the export of low-wage manufacturing jobs to developing nations. E. Restrict international trade and investment only to services.
Get the nations of the world to agree to policies designed to limit pollutant emissions
27. What is the shift toward a more integrated and interdependent world economy called? A. International trade B. Foreign direct investment C. Globalization D. Moore's Law E. Containerization
Globalization
Explain the concepts of "globalization of markets" and "globalization of production."
Globalization of Production: Sourcing good and services around the world [to take advantage of differences in cost and quality of factors of production] Globalization of Markets: Merging [historically distinct and separate] national markets into one huge global marketplace.
IQ/EQ
Hard Intelligence = Soft Skills
What are the roles of the International Monetary Fund (IMF) and the World Bank? Which of these institutions is more controversial? Why?
IMF: established to maintain order in the international monetary system World Bank: set up to promote economic development. IMF is more controversial because of the specific economic policies the lender must adhere to even if it goes against their own policies
61. Which of the following statements reflects an important trend in the changing nature of multinational enterprises? A. Global business activity is increasingly being dominated by large U.S. multinational corporations. B. The number of medium-size and small multinationals is decreasing continuously. C. The ranks of the world's largest 100 multinationals are dominated by firms from developing economies. D. The Internet is increasing the barriers that small firms face in building international sales. E. International business is conducted not just by large firms but also by medium-size and small enterprises.
International business is conducted not just by large firms but also by medium-size and small enterprises
78. Which of the following is a power of the WTO? A. It can restrict the membership of nations in other supranational organizations such as the United Nations. B. It can grant loans to cash-strapped governments in poor nations. C. It supersedes IMF and has complete authority over IMF's actions. D. It can issue a ruling instructing a member-state to change trade policies that violate GATT regulations. E. It can make decisions related to international trade without considering the collective interests of member-states.
It can issue a ruling instructing a member-state to change trade policies that violate GATT regulations
43. According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends? A. U.S. imports become less capital-intensive than U.S. exports. B. The pattern of international trade is affected by differences in factor endowments rather than differences in productivity. C. Over time, the United States switches from being an exporter of a product to an importer of the product. D. The wage rates in the United States decrease. E. Developing nations fail to upgrade their skill levels to compete with advanced countries
Over time, the United States switches from being an exporter of a product to an importer of the product.
81. Which of the following is NOT a concern for managers in international businesses? A. Fundamental differences in culture B. Perceived distance between home country and operating nations C. Government restrictions on international trade D. Cross-border transactions involving currency exchange E. Ethical adherence to environmental standards
Perceived distance between home country and operating nations
57. Which of the following refers to the total cumulative value of foreign investments? A. Purchasing power parity B. Multipoint pricing C. Stock of foreign direct investment D. Switch trading E. Bill of lading
Stock of foreign direct investment
20. Antidumping actions seem to be concentrated in certain sectors of the economy such as basic metal industries (e.g., aluminum and steel), chemicals, plastics, and machinery and electrical equipment.
TRUE Antidumping actions seem to be concentrated in certain sectors of the economy such as basic metal industries (e.g., aluminum and steel), chemicals, plastics, and machinery and electrical equipment. These sectors account for some 70 percent of all antidumping actions reported to the WTO.
13. To strengthen the moral courage of employees, companies should not retaliate against those employees who complain about unethical actions.
TRUE Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions.
11. Confucianism is not concerned with the supernatural and has little to say about the concept of a supreme being or an afterlife.
TRUE Confucianism is built around a comprehensive ethical code that sets down guidelines for relationships with others. High moral and ethical conduct and loyalty to others are central to Confucianism. Unlike religions, Confucianism is not concerned with the supernatural and has little to say about the concept of a supreme being or an afterlife.
19. Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors.
TRUE Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors. Intervention is dangerous it may invite retaliation and trigger a trade war. Intervention is unlikely to be well executed, given the opportunity for such a policy to be captured by special-interest groups.
12. Under the Islamic banking method of mudarabah, when an Islamic bank lends money to a business, rather than charging that business interest on the loan, it takes a share in the profits that are derived from the investment.
TRUE The Islamic banking method of the mudarabah contract is similar to a profit-sharing scheme. Under mudarabah, when an Islamic bank lends money to a business, rather than charging that business interest on the loan, it takes a share in the profits that are derived from the investment.
21. According to Alexander Hamilton, governments must temporarily support new industries until they have grown strong enough to meet international competition.
TRUE The infant industry argument is by far the oldest economic argument for government intervention. Alexander Hamilton proposed it in 1792. According to this argument, many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with established industries in developed countries. To allow manufacturing to get a toehold, the argument is that governments should temporarily support new industries (with tariffs, import quotas, and subsidies) until they have grown strong enough to meet international competition.
6. By adopting the Contracts for the International Sale of Goods (CIGS), a nation signals to other adopters that it will treat the convention's rules as part of its law.
TRUE By adopting the CIGS, a nation signals to other adopters that it will treat the convention's rules as part of its law. The CIGS applies automatically to all contracts for the sale of goods between different firms based in countries that have ratified the convention.
22. A firm's bargaining power is low when the host government places a low value on what the firm has to offer.
TRUE From the perspective of a firm negotiating the terms of an investment with a host government, the firm's bargaining power is high when the host government places a high value on what the firm has to offer, the number of comparable alternatives open to the firm is greater, and the firm has a long time in which to complete the negotiations. The converse also holds. The firm's bargaining power is low when the host government places a low value on what the firm has to offer, the number of comparable alternatives open to the firm is fewer, and the firm has a short time in which to complete the negotiations.
17. Individual firms should invest substantial financial resources in trying to build a first-mover advantage, even if that means several years of losses before a new venture becomes profitable.
TRUE Individual firms should realize that it pays to invest substantial financial resources in trying to build a first-mover or early-mover advantage even if that means several years of losses before a new venture becomes profitable.
14. Business leaders should use every relevant opportunity to stress the importance of business ethics and make sure that key business decisions not only make good economic sense but also are ethical.
TRUE Leaders in the business must give life and meaning to words in a code of ethics by repeatedly emphasizing their importance and then acting on them. This means using every relevant opportunity to stress the importance of business ethics and making sure that key business decisions not only make good economic sense but also are ethical.
24. Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk like the risks of expropriation (nationalization), war losses, and the inability to transfer profits back home.
TRUE Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk. The types of risks insurable through these programs include the risks of expropriation (nationalization), war losses, and the inability to transfer profits back home. Such programs are particularly useful in encouraging firms to undertake investments in politically unstable countries.
15. According to Friedman's doctrine, the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.
TRUE Milton Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.
16. Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.
TRUE Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production for example, to invest in better training for its employees and to increase its commitment to research and development.
10. According to the World Values Survey, as countries get richer, a shift occurs away from "traditional values" linked to religion, family, and country, and toward "secular rational" values.
TRUE The World Values Survey has documented how values change. The study linked these changes in values to changes in a country's level of economic development. According to the survey, as countries get richer, a shift occurs away from "traditional values" linked to religion, family, and country, and toward "secular rational" values.
7. The purchasing power parity for different countries is adjusted (up or down) depending upon whether a country's cost of living is lower or higher than the cost of living in the United States.
TRUE To account for differences in the cost of living, one can adjust GNI per capita by purchasing power. The base for the adjustment is the cost of living in the United States. The PPP for different countries is then adjusted (up or down) depending upon whether the cost of living is lower or higher than in the United States.
In the context of international trade and investment, describe how the former communist nations of Europe and Asia have been changing.
They share a commitment to democratic politics and free market economics.
45. The WTO's Agreement on which of the following is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules? A. Intellectual Property Rights Enforcement Directive (IPRED) B. Court of Arbitration of Intellectual Property (CAIP) C. Trade-Related Aspects of Intellectual Property Rights (TRIPS) D. Intellectual Property Rights Enforcement and Resolution (IPER) E. International Body on Intellectual Property (IBIP)
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
52. Which statement reflects the changing demographics of the global economy? A. U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports. B. The change in the position of the United States in terms of the share of world output is the result of the absolute decline in the health of the U.S. economy. C. From 1960 to 2010, countries that experienced a large decrease in their share of world output include Japan, Thailand, Malaysia, Taiwan, and South Korea. D. The United States is the only developed nation to see its relative standing in the share of world output slip. E. Today, roughly half the globe—the centrally planned economies of the communist world—is off-limits to Western international businesses.
U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports
51. Which of the following countries has seen a relative decline in its share of world output between 1960 and 2014? A. United States B. Brazil C. Thailand D. China E. South Korea
United States
59. ABC Company, which is headquartered in the United States, has production plants in Mexico and Vietnam. According to this information, ABC company is A. against globalization. B. a multinational enterprise. C. engaging in the globalization of markets. D. engaging in international trade. E. a local company.
a multinational enterprise
46. A charge of 15-20% was levied by the government of Cadmia on the value of automobile accessories imported from a neighboring country. This increased the price of those imported car accessories for the consumers in Cadmia. Which of the following instruments of trade policy is being used by the government of Cadmia? A. local content tariff B. ad valorem tariff C. subsidies D. import quotas E. antidumping duties
ad valorem tariff
73. In the context of the environment, globalization critics argue that A. free trade discourages firms from advanced nations to move manufacturing facilities to less developed countries. B. adhering to labor and environmental regulations significantly increases the costs of manufacturing enterprises. C. manufacturing enterprises are put at a competitive disadvantage by moving their production facilities to nations that do not have burdensome regulations. D. as countries get richer, they relax their environmental and labor regulations. E. while pollution levels are rising in the world's richer countries, they have been falling in developing nations.
adhering to labor and environmental regulations significantly increases the costs of manufacturing enterprises
What is a multinational enterprise? What have been the two most notable trends in the demographics of the multinational enterprise since the 1960s?
any business that has productive activities in two or more countries. 1. rise of non-U.S. multinationals 2. growth of mini-multinationals.
44. Which of the following has been excluded from the agenda for the Doha round of WTO talks that began in 2001? A. reducing barriers to cross-border investment B. phasing out subsidies to agricultural producers C. limiting the use of antidumping laws D. attempts to tie trade to labor standards in a country E. cutting tariffs on industrial goods and services
attempts to tie trade to labor standards in a country
37. Hofstede's fifth dimension of Confucian dynamism captures A. how a society deals with the fact that people are unequal in physical and intellectual capabilities. B. the relationship between an individual and his or her fellows along with the degree to which individual achievement and freedom are emphasized. C. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. D. attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors. E. the extent to which sex roles are differentiated and values such as achievement and power are emphasized.
attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors# attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors
38. Which of the following steps in ethical decision making is most likely to help businesspeople know if their decision process is working and if changes should be made to ensure greater compliance with a code of ethics? A. judging the ethics of the proposed decision B. auditing past decisions C. establishing a moral intent D. involving in moral imagination E. identifying the concerned stakeholders
auditing past decisions
53. Which of the following is most likely to be observed in today's global economy? A. increasing U.S. share of world output B. large U.S. entrepreneurial firms dominating the international business scene C. increasing U.S. dominance in the world economy and world trade picture D. most of the nations being governed by centrally planned economies of the communist world E. continued rise in the share of world output accounted for by developing nations such as China and India
continued rise in the share of world output accounted for by developing nations such as China and India
56. Which of the following identifies the motivation for much of the foreign direct investment by non-U.S. firms? A. desire to disperse production activities to optimal locations B. need to suppress emerging economies such as China, India, and Brazil C. demand for skilled workers in foreign nations D. lack of adequate environmental regulations E. establishment of multinational treaties
desire to disperse production activities to optimal locations
55. Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the A. rich industrialized nations of the world like Great Britain and Germany. B. centrally planned economies of the communist world. C. United States. D. developing nations of the world such as China, India, and Brazil. E. countries that are currently not members of the World Trade Organization.
developing nations of the world such as China, India, and Brazil
39. Which of the following terms, developed by Rawls, indicates that inequalities are justified if they benefit the position of the least-advantaged members of society? A. difference principle B. tragedy of the global commons C. theory of private equity D. unity of command E. laws of equivalent trade
difference principle
67. An argument in support of the falling barriers to international trade and investment is that the falling barriers A. prohibit countries from specializing in the production of goods and services. B. drive the global economy toward greater prosperity. C. reduce the need to export jobs overseas. D. increase the bargaining power of business firms by decreasing the incomes of consumers. E. reduce attacks from foreign competitors.
drive the global economy toward greater prosperity
Discuss the concerns voiced by critics of globalization regarding labor policies and the environment.
encourages firms from advanced nations to move manufacturing facilities to less developed countries that lack adequate regulations to protect labor and the environment from abuse by the unscrupulous
Briefly trace the history of the G20 and describe its current role in international business.
established in 1999 to formulate a coordinated policy response to financial crises in developing nations
35. When interacting with a Japanese business counterpart, Lorraine made it very clear that her culture was superior. Lorraine is demonstrating A. power distance. B. the class system. C. ethnocentrism. D. gerrymandering. E. Polycentrism
ethnocentrism
82. The minimum that a firm has to do to engage in international business is to A. export or import products from other countries. B. invest directly in operations in another country. C. establish joint ventures or strategic alliances with companies in other countries. D. export low-wage manufacturing jobs to companies in other countries. E. develop franchises and subsidiaries in other countries.
export or import products from other countries
49. Silicon Valley in California is the world center for the computer and semiconductor industry and has many of the world's major computer and semiconductor companies located close to each other, thus offering the location-specific advantage of A. a multipoint competition. B. an oligopoly. C. a first mover. D. externalities. E. free riders
externalities
41. Which of the following helps a firm to preempt available demand, gain cost advantages related to volume, and build an enduring brand ahead of later competitors? A. monopolistic practices B. comparative advantages C. absolute advantages D. first-mover advantages E. Mercantilism
first-mover advantages
70. Supporters of globalization insist that dislocation in the form of lost jobs is a trade-off that will ultimately lead to the economy being better off. Which of the following is being justified in this case? A. protectionism and retaliatory trade policy B. free trade of goods and services C. rise of communism D. high tariff on imports of manufactured goods E. the need to be a self-contained nation
free trade of goods and services
68. Globalization opponents argue that "exporting jobs" to low-wage nations has contributed to A. higher living standards in those countries that "export" the jobs. B. higher unemployment in wealthy advanced economies such as the United States. C. an increase in the income levels in those nations that "export" the jobs. D. lower standards of living in those countries to which the jobs are exported. E. reduced specialization in the production of goods and services.
higher unemployment in wealthy advanced economies such as the United States
32. The government of Nerumbia wants to open the country's economy to international business, and increase its overall attractiveness as a potential market or investment site. Which of the following will facilitate this decision of the Nerumbian government? A. shifting toward command economy or an economy where property rights are not enforced strictly B. investing in infrastructure and in the required supporting businesses C. frequently changing the government and the government policies D. maintaining a high inflation rate E. adopting a legal system which does not provide any protection for intellectual property rights
investing in infrastructure and in the required supporting businesses
80. Free trade alone, some argue, is a necessary but not sufficient prerequisite to help "highly indebted poorer countries" (HIPCs) bootstrap themselves out of poverty. They also recommend implementing A. a highly regulated command economy. B. weaker property rights laws. C. weaker labor regulations. D. large-scale debt relief. E. rapid expansion in population.
large-scale debt relief
33. MedPlus Incorporated, based in the United States, hesitates to enter into a joint venture with Azpak Limited, a Sri Lankan company, due to inadequate protection of intellectual property rights. MedPlus is trying to avoid what type of risk? A. political B. legal C. ethical D. economic E. Ethnographic
legal
60. What are mini-multinationals? A. multinational firms from relatively small countries in terms of area B. multinationals from the developing nations of the world C. multinational firms that operate in only one foreign country D. medium-sized and small multinationals E. subsidiaries of large multinationals in foreign countries
medium-sized and small multinationals
71. Globalization critics argue that the decline in unskilled wage rates in advanced economies is due to the A. migration of low-wage manufacturing jobs offshore. B. technology-induced shift toward jobs that require significant education and skills. C. increased supply of highly skilled workers. D. increasing demand for unskilled workers. E. reducing national differences in the cost of labor between developed and developing nations.
migration of low-wage manufacturing jobs offshore
62. Royal Teas, a U.K.-based company employing just 30 people worldwide, generates $1.5 million in revenues of which 60 percent comes from exports to Asian countries. In this context, Royal Teas is most likely classified as a A. large domestic firm. B. mini-multinational firm. C. greenfield firm. D. foreign firm. E. multinational giant.
mini-multinational firm
58. Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than two countries. As a result, it would be most appropriate to refer to Silver Fire Electric as what type of enterprise? A. greenfield B. universal C. private D. multinational E. public
multinational
42. Which of the following theories states that in those industries where the output required to attain economies of scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises? A. Heckscher-Ohlin B. comparative advantage C. product life-cycle D. new trade E. absolute advantage
new trade
47. Caputo Fine Chemicals, a U.S. company, invested in a manufacturing facility in Mexico. The production from the Mexican facility was entirely used to serve the company's U.S. customers. Caputo Fine Chemicals' activity is called A. onboard production B. offshore production. C. licensing. D. contract manufacturing. E. vertical integration
offshore production
34. When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise, the business enterprise is said to be facing which of the following type of risk? A. political B. demographic C. ethical D. technological E. Physiological
political
30. In what type of economy are all businesses state owned, the rationale being that the government can then direct them to make investments that are in the best interests of the nation as a whole rather than in the interests of private individuals? A. free market B. deregulated C. pure command D. mixed E. laissez-faire
pure command
48. Foreign managers trained in the latest management techniques can often help to improve the efficiency of operations in the host country, whether those operations are acquired or greenfield developments. This benefit of FDI falls into the category of A. employment effects. B. balance-of-payments effects. C. effects on competition. D. resource transfer effects. E. autonomy effects
resource transfer effects
40. Straight Arrow unloaded two tankers worth of toxic waste at an important port in the country of Urithmea. A hundred workers worked two days in their shorts and sandals to unload the barrels from the tankers for $5 a day. They were not told about the content of the barrels. Some observers felt that it was the obligation of not just the government of Urithmea but also of Straight Arrow to ensure that no harm was done to the workers. These observers are most likely A. justice theorists. B. cultural relativists. C. naïve immoralists. D. rights theorists. E. utilitarianists.
rights theorists
50. The advent of containerization has A. made the economies of the world's nation-states less intertwined. B. made moving goods from one mode of transport to another extremely labor-intensive. C. significantly lowered the costs of shipping goods over long distances. D. slowed down the globalization of markets and production. E. increased costs of coordinating and controlling a global organization
significantly lowered the costs of shipping goods over long distances
63. Which of the following conditions is most likely to act as a deterrent for foreign firms willing to do business with former communist nations of Eastern Europe and central Asia? A. high levels of economic development in these countries B. signs of growing unrest and totalitarian tendencies seen in these countries C. strong commitment to market-based economic systems seen in these countries D. collapse of communism in these countries E. low returns involved in doing business in these countries
signs of growing unrest and totalitarian tendencies seen in these countries
64. In the past two decades, the majority of Latin American countries have A. experienced a decline in the health of their economies. B. sold state-owned enterprises to private investors. C. been characterized by low growth, high debt, and hyperinflation. D. restricted investment by foreign firms. E. discouraged both democracy and free market reforms.
sold state-owned enterprises to private investors
77. A concern voiced by critics of globalization is that today's increasingly interdependent global economy shifts economic power toward A. supranational organizations such as the World Trade Organization. B. the communist states of eastern Europe and central Asia. C. the medium-size and small U.S. multinationals. D. the national governments of the countries participating in globalization. E. nations that have authoritarian forms of government.
supranational organizations such as the World Trade Organization
31. Collectivist-inclined totalitarian states tend to enact laws that severely restrict private enterprises, whereas the laws enacted by governments in democratic states, where individualism is the dominant political philosophy, tend to be pro-private enterprise and pro-consumer. This indicates that the A. economic system of a country is independent of its legal system. B. legal system of a country is not influenced by the prevailing political system. C. legal system does not affect the attractiveness of a country as an investment site or market. D. all countries have the same legal environments. E. the legal framework of a country reflects the rulers' dominant political ideology.
the legal framework of a country reflects the rulers' dominant political ideology
54. Which of the following has seen a positive change from 1960 to 2014? A. growth of the centrally planned economies of the communist world B. U.S. position in the world economy and world trade picture C. the share of world output enjoyed by rich industrialized countries such as Great Britain, Germany, and France D. the share of world output accounted for by developing nations E. prevalence of independent and self-contained national economies
the share of world output accounted for by developing nations
29. States that limit the freedom of religious expression with laws based on religious principles most likely follow the political system of A. theocratic totalitarianism. B. communist totalitarianism. C. right-wing totalitarianism. D. pure democracy. E. representative democracy
theocratic totalitarianism
69. According to globalization opponents, which of the following has increased in wealthy advanced economies as a result of globalization? A. unemployment B. price of goods and services C. demand for unskilled workers D. standard of living E. income equality between workers in all sectors
unemployment
72. Growing income inequality between the skilled and unskilled workers in advanced nations, such as the United States, is a result of the A. wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted. B. decrease in the outsourcing of low-wage manufacturing jobs offshore and a corresponding increase in demand for unskilled workers. C. shift within advanced economies toward jobs where the only qualification is the willingness to turn up for work every day. D. increasing wage gap between developing and developed nations. E. shortage of unskilled workers and an excess supply of highly skilled workers.
wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted
Explain the factors that led to the Great Depression of the 1930s.
world's nation-states erecting formidable barriers to international trade and foreign direct investment.
