WGU C211 Practice Tests 11/12/20
Which of the following is a modern trade theory?
national competitive advantage
MNEs from the Triad dominate the list of the 500 largest MNEs; their share has been _____
shrinking
A large-scale French dairy that produces milk, cheese, yogurt, and other related products decides to buy a chain of mini-marts located throughout many EU countries. Their objective is to sell their dairy products, as well as other products, through these mini-marts. This is an example of:
vertical FDI.
The theory of mercantilism:
views international trade as a zero-sum game
The size of the global economy at the beginning of the 21st century (measured by total GDP) is approximately:
$60 trillion.
Which are the three views of globalization?
A recent force, a long-running evolution, and a pendulum
____ are tariffs levied on imports sold below costs to drive domestic firms out of business
Antidumping duties
If Google and Microsoft were to propose a joint venture to develop a new internet search engine, the US government would block them based on:
Antitrust law
More than 25% of global GDP comes from _____.
BRICS countries
Which of the following is NOT a driver for counterattacks?
Blue ocean strategy
Which of the following countries would be characterized as an emerging economy?
Brazil
BRIC is an acronym for the emerging economies of:
Brazil, Russia, India, and China.
Which of the following arguments advocates that the US trade deficit with China is a huge problem
Cheap imports sold at "the China price" push down prices and cause deflation
Which of the following is NOT a nontariff trade barrier (NTB)
Cultural distance
The theory of comparative advantage was advocated by:
David Ricardo
Which of the following is NOT a method used by competitors to signal their intention to reduce competitive intensity to other competitors?
Developing new markets where there is less competition
If a country's competition and antitrust policies are pro-incumbent and pro-producer, which of the following is a likely outcome
Domestic consumers will most likely pay high prices.
Which of the following statement(s) about dumping are correct?
Exporter sells below cost abroad and exporter plans to raises prices after eliminating local competitors.
What is one advantage of FDI compared with licensing?
FDI provides tight control over foreign operations
_____ refers to the total accumulation of inbound FDI in a country or outbound FDI from a country.
FDI stock
The advantages of agglomeration result from all of the following EXCEPT:
Fewer competitors in the same location
Chile requires 50 units of resource to produce one ton of wine and 20 units of resource to produce one ton of blueberries. France requires 30 units of resource to produce one ton of wine and 40 units of resource to produce one ton of blueberries. Which of the following is true?
France has a comparative advantage in wine.
The primary political views on FDI are:
Free market and pragmatic nationalism
What is the difference between the traditional definition of International Business and this text's definition of global business?
In many cases, international business refers to domestic firms expanding into international (cross-border) economic activities; here, global business also includes domestic firms' strategies for competing against foreign firms entering their home territory.
Choose the set of countries that are all emerging economies
India, China, Thailand, Malaysia
Which of the following is NOT a motivation for trading internationally?
Institutions can either limit or facilitate trade.
____ refers to the replacement of cross-border markets with one firm locating in two or more countries.
Internalization
Which of the following is true of globalization according to the "new force" perspective?
It is a western ideology focused on exploiting and dominating the world through MNEs
Which of the following is true of voluntary export restraints?
It is an export quota levied by a country on the quantity of its exports
Which of the following is true of the Group of 20 (G-20)?
It only has 19 member countries.
Which of the following is a benefit of FDI to home countries?
Learning from operations
Which of the following situation represents the LOWEST intensity of rivalry between two companies?
Low resource similarity and high market commonality
Which of the following would be an example of a top down innovation?
Lowering prices and features of existing products to meet emerging market needs
Which of the following is NOT one of the factors that make an industry particularly conducive to collusion?
Many firms in the industry
Which of the following trade theories divides the nations of the world into three categories?
Product life cycle
Which of the following was the first international trade theory to account for changes in the patterns of trade over time
Product life cycle theory
Which of the following is NOT a political argument against free trade?
Protection for infant industries
An import quota is:
Restriction on the quantity of imports that can be brought into a country.
Which of the following theories does NOT lead to the conclusion that unrestricted free trade is in the best interests of all countries?
Strategic trade theory
_____ are government payments to domestic firms.
Subsidies
Which of the following are the two key components of a balance of trade
Surplus and deficit
Which of the following economic perspectives on FDI has its principles rooted in Marxism
The radical view
The modern trade theories include the following EXCEPT
Theory of comparative advantage
In which of these categories is the United States NOT the top trading nation
Top service exporter
Which of the following does the institution-based view of global business lay emphasis on?
Understanding the laws and values of the firm's host nation
Which three countries invest the most money in other countries (FDI outflow)?
United States, France, Germany
The fundamental question in global business is:
What determines the success and failure of firms around the globe?
Which of the following statements about the effects of FDI on host countries is true?
While FDI creates jobs and encourages the development of management know-how within the host country, it can also lead to adverse effects on competition and capital outflow.
What are some possible benefits to studying global business?
You will be more competent to interact with foreign suppliers and partners on behalf of the company you work for. b. All of these reasons. c. Your depth of understanding of the global economy will make you more employable. d. If you go to work for a multinational, you will be better prepared for expatriate assignments abroad.
Firms in a multimarket competitive situation might want to avoid engaging in cross-market retaliation because:
a price war may be too costly for all involved.
The gross domestic product plus the income from non-resident sources abroad gives the ____
gross national product
What is the primary difference between FDI and FPI?
a. FDI is direct and FPI is indirect. b. All of these answers c. FDI is defined as a 10% or more equity stake and FPI is less than 10%. d. FDI is foreign direct investment and FPI is foreign portfolio investment.
In addition to FDI, other ways a firm can enter foreign markets include:
a. Outsource b. License and trademark c. Import and export
Which of the following are examples of ownership, location, and internalization (OLI) advantages?
a. Possession of valuable foreign assets b. Replacement of cross-border markets with one firm operating in two markets c. All of these d. Unique natural resources that provide advantages to the firm
What is an important reason to study global business?
a. To gain competence in interacting with foreign suppliers, customers, and partners. b. All of these c. To prepare for an expatriate assignment. d. To advance your career in a global economy.
Firms can increase their chances of success with FDI by:
a. leveraging OLI advantages in a way that is valuable, unique, and hard to imitate by rival firms. b. assessing whether FDI is justified, in light of other options. c. all of these answers d. understanding that political realities either facilitate or constrain FDI.
A group of activists, known for their objection to globalization, is picketing the headquarters of a very large, international coffee distributor and retail operation. The activists believe this large firm does not pay fair prices to coffee growers in South America, Africa, and other developing regions. In general, they are picketing because of:
a. the location of the firm in one of the largest and most affluent countries in the world. b. the extremely large size of the firm. c. the power the country derives in part from being home to this firm.
Peru is rich with gold and copper mines. Assume that Peruvians have set up expert systems for mining and exporting more of these natural resources than any other country. This is an example of:
an absolute advantage
Purchasing power parity is
an adjustment made to the GDP to reflect differences in the cost of living.
How do firms create value when engaging rivals?
b. Launch products in multiple markets. c. Hold a dominant position in key markets. d. Secure patents on key products.
Which of the following is a type of attack?
b. Price reduction c. New product introduction d. Advertising campaign
Globalization can be viewed as:
b. a new force sweeping through the world in recent times. c. a pendulum that swings from one extreme to another from time to time. d. a long-run historical evolution since the dawn of human history.
Price setting by a monopolist at a level higher than the competitive price level is:
collusive price setting.
The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' response is called _____
competitor analysis
A Middle Eastern cosmetics company focused on regional sales is facing increasing competition from European and American cosmetics firms. In response, it refines its products and advertising messaging to emphasize its close ties to Middle Eastern cultural norms and values. This is an example of a(n):
defender strategy
Facing strong competition from MNE cosmetics firms, an Israeli firm focused on products with unique components extracted from the Dead Sea that couldn't be found in other parts of the world. This is an example of:
defender strategy.
The owners of a small rice noodle manufacturing firm in Thailand are facing increasing competition from larger food manufacturers and distributors throughout Asia who wish to move into the Thai market. In response, they sell their company to one of these larger firms. This is an example of a(n):
dodger strategy.
Imagine that that same electronics manufacturer exports the new smart phone to a foreign market for sale at an extremely low cost. Its intention is to eliminate its foreign rivals, after which it plans to significantly raise its prices. The firm is engaging in:
dumping
According to the theory of absolute advantage, under free trade,
each nation gains by specializing in economic activities in which a nation has absolute advantage.
The theory of comparative advantage _____.
explains patterns of trade based on factor endowments
A vertical FDI refers to a type of FDI in which _____.
firm moves upstream or downstream at different value chain stages in a host country
The resource-based view of global business differs from the institution-based view of global business in that the resource-based view _____
focuses on the internal strengths on the firm
Protectionism is similar to mercantilism as they both advocated ____
government involvement in international trade
A mortgage broker that dominates the American Southwest has decided to expand into Mexico and several Central American countries. Its new offices in the host countries offer the same mortgage services as in the home country. This is an example of:
horizontal FDI
Deadweight costs are net losses that occur when _____ are imposed.
import tariffs
An oligopoly is an
industry dominated by a small number of competitors
Local firms, in emerging economies, use a dodger strategy to respond to MNEs entry when:
industry pressures to globalize are high and assets are customized to home markets.
Foreign direct investment (FDI) is:
investment in activities that control and manage value-added activities in foreign countries.
Foreign portfolio investment (FPI) is:
investment in foreign stocks and bonds that do not involve the active management of foreign assets.
Beyond the enforcement of antitrust laws, collusion often fails because:
it has incentive problems associated with the "prisoners' dilemma
Which of the following describes resource mobility as assumed by the classical theories of international trade
it is the expectation that all resource-based transactions will have no foreign exchange complications.
A Spain-based chain of tapas bars authorizes a French company to open a chain of tapas bars using the Spanish company's name, logo, menu, process, and advertising. This is an example of:
licensing
Assume that Germany passes a law regarding automobile manufacturing. The law states that at least 50% of the components of each car must be made in Germany and at least 35% of the assembly work must be done in Germany. This is an example of:
local content requirements.
Which of the following industry characteristic makes collusion difficult?
low entry barriers
The television industry in the United States is controlled by seven giant corporations: The Walt Disney Company, CBS Corporation, Viacom, Comcast, Hearst Corporation, Time Warner, and News Corporation. Thus, the television industry in the U.S. is a typical _____ industry.
oligopolistic
OLI advantages refer to a firm's quest for _____via FDI.
ownership advantages, location advantages, and internalization advantages
The three OLI advantages are:
ownership, location, internalization
Imagine that an electronics manufacturer introduces a new smart phone in its home market at an extremely low cost. Its intention is to eliminate its domestic rivals, after which it plans to significantly raise its prices. The firm is engaging in:
predatory pricing.
In the third stage of the product life cycle theory, the ___
product is standardized
The three modern theories of international trade are:
product life cycle, strategic trade, national competitive advantage of industries
Firms prefer FDI to licensing because FDI_____.
provides the firm with direct ownership to its foreign assets
Imagine your manufacturing plant gets most of its raw materials from suppliers along the Gulf Coast of the United States. However, you have alternate suppliers from other parts of the country lined up, just in case the Gulf Coast is hit with a devastating hurricane or other debilitating disaster and your suppliers there can't deliver the raw goods. You have engaged in:
scenario planning.
When firms indirectly coordinate actions by signaling their intentions, often in an attempt to reduce output and maintain pricing above competitive levels, they are engaging in:
tacit collusion
Semiglobalization suggests:
that there are barriers to market integration at borders which are high but not high enough to insulate countries from each other completely.
From an institution-based view, a government's legal requirement for a business to pay taxes would be an example of:
the influence of a formal institution.
____ occurs when firms engage the same rivals in numerous markets
Multimarket competition
Viewing the global economy as a pyramid, the Triad refers to _____
North America, Western Europe, and Japan
___ refers to the deal struck by MNEs and host governments, which change their requirements after the initial FDI entry.
Obsolescing bargain
An industry dominated by a small number of players is called
an oligopoly
The Group of 20 (G-20) is:
group of 19 countries plus the European Union whose leaders meet to solve global economic problems.