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Chapter 01 – Globalization 1-1 Globalization Learning objectives • Understand what is meant by the term globalization. • Recognize the main drivers of barriers to cross-border trade and investment (distance, time zones, language, differences globalization. • Describe the changing nature […]

International Business, 12e (Hill) Chapter 1 Globalization 1) Since Wally’s Whistles is a medium-size business, it wouldn’t benefit from globalization. Answer: FALSE Explanation: A company does not have to be the size of multinational giants to facilitate, and benefit from, […]

Chapter 01 – Globalization 1-8 However, supporters of globalization contend that the power of these organizations is limited to what nation-states agree to grant, and that the power of the organizations lies in their ability to get countries to agree […]

29) Since the collapse of communism over a quarter of a century ago, formerly communist nations have transformed their economies by globalizing their markets. This involves A) regulating markets. B) privatizing state-owned enterprises. C) decreasing competition. D) reducing foreign investment. […]

49) ________ predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months. A) Keynes‘s Law B) Say’s Law C) Moore’s Law D) Sullivan Principle Answer: C Explanation: Moore’s Law predicts that […]

69) To be classified as an MNE, a company must have productive activities in at least ________ countries. A) two B) three C) four D) twenty Answer: A Explanation: A multinational enterprise (MNE) is any business that has productive activities […]

89) Managing an international business is different from managing a purely domestic business for which of the following reasons? A) Countries prefer to keep business transactions between domestic partners. B) The range of problems confronted is wider and more complex. […]

Chapter 10 ‒ The Foreign Exchange Market 10-1 The Foreign Exchange Market Learning objectives • Describe the functions of the foreign exchange market. • Understand what is meant by spot exchange rates. • Recognize the role that foreign exchange rates […]

International Business, 12e (Hill) Chapter 10 The Foreign Exchange Market 1) The foreign exchange market converts the currency of one country into that of another country. Answer: TRUE Explanation: One function of the foreign exchange market is to convert the […]

Chapter 10 ‒ The Foreign Exchange Market 10-8 Firms can reduce economic exposure by ensuring assets are not too concentrated in countries where likely rises in currency values will lead to damaging increases in the foreign prices of the goods […]

29) The ________ helps consumers compare the relative prices of goods and services in different countries. A) interest rate B) GDP growth rate C) exchange rate D) tariff rate Answer: C Explanation: The exchange rate is the rate at which […]

49) ________ is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates. A) An arbitrage B) A carry trade C) A spot exchange D) A currency swap Answer: D Explanation: A currency […]

69) Which of the following is referred to as the purchasing power parity puzzle? A) reduced levels of inflation in countries where the growth in the money supply is faster than the growth in its output B) the reason countries […]

89) A(n) ________ involves attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate and paying foreign currency payables before they are due when a currency is expected to appreciate. A) A follower strategy B) […]

Chapter 11 ‒ The International Monetary System 11-1 The International Monetary System Learning objectives • Describe the historical development of the modern global monetary system. • Explain the role played by the World Bank and the IMF in the international […]

International Business, 12e (Hill) Chapter 11 The International Monetary System 1) The international monetary system refers to the institutional arrangements that govern exchange rates. Answer: TRUE Explanation: The international monetary system refers to the institutional arrangements that govern exchange rates. […]

Chapter 11 ‒ The International Monetary System 11-8 A currency crisis occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency, or forces authorities to expend large […]

27) Prior to the introduction of the euro, many EU countries participated in a ________ system, in which the values of a set of currencies are fixed against each other at some mutually agreed upon exchange rate. A) floating exchange […]

47) The agreement reached at Bretton Woods established the A) International Monetary Fund. B) World Economic Forum. C) United Nations. D) International Atomic Energy Agency. Answer: A Explanation: The agreement reached at Bretton Woods established two multinational institutions—the International Monetary […]

67) Exchange rates are ________ under a pure “free float” system. A) completely balanced B) determined by market forces C) wildly variable and unpredictable D) determined by the government Answer: B Explanation: Under a pure “free float” system, exchange rates […]

87) What is the international monetary system? What are the major trading currencies? Answer: The international monetary system refers to the institutional arrangements that govern exchange rates. The four major trading currencies are the U.S. dollar, the European Union’s euro, […]

Chapter 12 ‒ The Global Capital Market 12-1 The Global Capital Market 12 Learning objectives • Describe the benefits of the global capital market. • Identify why the global capital diversify their portfolios, thereby reducing their risk. market has grown […]

International Business, 12e (Hill) Chapter 12 The Global Capital Market 1) A capital market brings together those who want to invest money and those who want to borrow money. Answer: TRUE Explanation: Capital markets bring together those who want to […]

Chapter 12 ‒ The Global Capital Market 12-8 from investors. When it launched on September 18, 2014, Alibaba’s IPO was the largest in history. Discussion of the case can begin with the following questions: QUESTION 1: Why did Jack Ma […]

29) ________ perform a direct connection function in capital markets. A) Insurance brokers B) Investment banks C) Pension fund managers D) Commercial banks Answer: B Explanation: Market makers are the financial service companies that connect investors and borrowers. They include […]

49) In ________, the limited pool of investors implies that borrowers must pay more to persuade investors to lend them their money. A) a purely domestic market B) a mixed market C) an international market D) a purely Euro market […]

68) Foreign bonds sold in the United States are A) Yankee bonds. B) Uncle Sam‘s bonds. C) Bulldogs. D) Eagles. Answer: A Explanation: Many foreign bonds have nicknames; foreign bonds sold in the United States are called Yankee bonds and […]

88) ________ can inject risk into foreign currency borrowing. A) Movements in exchange rates B) Use of fixed-exchange rates C) Issue of domestic bonds D) Use of pegged exchange rates Answer: A Explanation: Unpredictable movements in exchange rates can inject […]

Chapter 13 ‒ The Strategy of International Business 13-1 The Strategy of International Business 13 Learning objectives • Explain the concept of global strategy. • Recognize how firms can profit This chapter looks at how firms can increase their by […]

International Business, 12e (Hill) Chapter 13 The Strategy of International Business 1) A firm’s strategy can be defined as the actions that managers take to attain the goals of the firm. Answer: TRUE Explanation: A firm’s strategy can be defined […]

Chapter 13 ‒ The Strategy of International Business 13-7 The Evolution of Strategy Strategy is an evolutionary process. Firms need to change their strategic approach as the environment changes. CRITICAL THINKING AND DISCUSSION QUESTIONS QUESTION 1: In a world of […]

27) Top management should be viewed as part of the firm’s A) primary activities. B) experience curve. C) infrastructure. D) universal strategy. Answer: C Explanation: A support activity is the company infrastructure, or the context within which all the other […]

47) ________ enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible. A) Core competencies B) Global standardization strategies C) Operations D) Location economies Answer: A […]

67) A multinational firm may need to delegate marketing functions to national subsidiaries to A) fully implement the firm’s localization strategy. B) employ economies of scale. C) meet the requirements for a global standardization strategy. D) be responsive to local […]

85) A firm facing low pressures for cost reductions and low pressures for local responsiveness is most likely to follow ________ strategy. A) a global standardization B) a localization C) an international D) a transnational Answer: C Explanation: There are […]

Chapter 14 ‒ The Organization of International Business 14-1 The Organization of International Business Learning objectives • Explain what is meant by organizational architecture. • Describe the different enterprise profitability requires three conditions: organizational architecture choices that can be made […]

International Business, 12e (Hill) Chapter 14 The Organization of International Business 1) Organizational structure refers to the totality of a firm’s organization. Answer: FALSE Explanation: Organizational architecture refers to the totality of a firm’s organization. Organizational structure refers to three […]

Chapter 14 ‒ The Organization of International Business 14-8 are centralized and others are decentralized, coordination needs are high, and an array of formal and informal integrating mechanisms are used. Environment, Strategy, Architecture, and Performance For a firm to succeed, […]

29) ________ are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. A) Cultural controls B) Control systems C) Output controls D) Incentives Answer: B Explanation: The relationships between […]

49) Which of the following is one of the four main arguments favoring centralization? A) It permits greater flexibility. B) Motivational research favors it. C) It can avoid the duplication of activities. D) It gives top management time to focus […]

69) The need for coordination between subunits is greatest in firms pursuing A) a localization strategy. B) an international strategy. C) a global strategy. D) a transnational strategy. Answer: D Explanation: The need for coordination is greatest in transnational firms, […]

89) Firms pursuing a transnational strategy A) have a low need for coordination. B) require very few integrating mechanisms. C) cultivate a strong culture. D) operate with a worldwide product division structure. Answer: C Explanation: In addition to output and […]

Chapter 15 ‒ Entry Strategy and Strategic Alliances 15-1 Entry Strategy and Strategic Alliances Learning objectives • Explain the three basic decisions that firms must make when they decide on foreign When a firm that wishes to enter a foreign […]

International Business, 12e (Hill) Chapter 15 Entry Strategy and Strategic Alliances 1) The choice of which international markets to enter should be driven by an assessment of absolute short-run growth and profit potential. Answer: FALSE Explanation: The choice of which […]

Chapter 15 ‒ Entry Strategy and Strategic Alliances 15-11 Another Perspective: To explore Starbucks’ international strategy further, go to: {https://www.forbes.com/sites/greatspeculations/2016/01/18/how-starbucks-plans-to– grow-its–international-operations/#187a86e21941} and {https://news.starbucks.com/news/investor-day-2016-press-release}. Teaching Tip: To expand the discussion of Starbucks’ international strategy, consider Starbucks CEO Howard Schultz on First […]

28) Costs that an early entrant has to bear that a later entrant can avoid are known as A) first-mover costs. B) late-mover disadvantages. C) pioneering costs. D) licensing fees. Answer: C Explanation: Pioneering costs are costs that an early […]

46) There are several disadvantages of franchising as an entry mode. Which of the following is one of them? A) There is little incentive for the franchisee to build a profitable operation as quickly as possible. B) The firm incurs […]

66) Which of the following is an advantage of franchising? A) A firm takes profits out of one country to support competitive attacks in another. B) A firm is relieved of many of the costs and risks of opening a […]

86) The main advantage of ________ is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants. A) an acquisition B) strategic alliances C) greenfield investment D) franchising Answer: C Explanation: […]

100) Explain the idea of a turnkey project. Why should a firm use this arrangement to expand internationally? In what industries are turnkey arrangements most common? Answer: In a turnkey project, the contractor agrees to handle every detail of the […]

Chapter 16 ‒ The Organization of International Business 14-1 Exporting, Importing, and Countertrade Learning objectives • Explain the promises and risks associated with exporting. • Identify the steps managers Exporting is not just for large enterprises; many can take to […]

International Business, 12e (Hill) Chapter 16 Exporting, Importing, and Countertrade 1) Proactive firms do not consider exporting until their domestic market is saturated. Answer: FALSE Explanation: Proactive firms continually seek opportunities for profitable exporting and systematically scan foreign markets to […]

Chapter 16 ‒ Exporting, Importing, and Countertrade 16-8 5. Switch trading Pros and Cons of Countertrade The main attraction of counter trade is that it gives a firm a way to finance an export deal when other means are not […]

30) What is true of reactive firms? A) Reactive firms consider a variety of markets for selling their products and services. B) They consider exporting only after their domestic market is saturated. C) They systematically scan foreign markets for profitable […]

50) Which of the following is a major advantage of using a letter of credit? A) It gives the importer time to resell the merchandise before payment. B) It guarantees the exporter preexport financing. C) It helps international traders engage […]

70) Countertrade emerged in the 1960s as a way for the ________ to purchase imports. A) United States B) European Union C) ASEAN countries D) Soviet Union and the then-communist states of Eastern Europe Answer: D Explanation: Countertrade emerged in […]

90) The main attraction of ________ is that it can give a firm a way to finance an export deal when other means are not available. A) switch trading B) counterpurchase C) offsets D) countertrade Answer: D Explanation: The main […]

Chapter 17 ‒ Global Production and Supply Chain Management 17-1 Global Production and Supply Chain Management Learning objectives • Explain why global production and supply chain management decisions are of central importance to many global companies. • Explain how country […]

International Business, 12e (Hill) Chapter 17 Global Production and Supply Chain Management 1) Production is also sometimes referred to as operations as part of a global supply chain. Answer: TRUE Explanation: Production is sometimes also referred to as manufacturing or […]

Chapter 17 ‒ Global Production and Supply Chain Management 17-8 {http://www.epiqtech.com/supply_chain-Global-Management.htm} and explore some of the services that the company provides. Interorganizational Relationships Interorganizational relationships range from those requiring a low degree of coordination (with vendors or buyers, for example) […]

30) Before a firm is allowed access to the European marketplace, the European Union requires that the quality of the firm’s manufacturing processes and products be certified under a quality standard known as A) Six Sigma. B) ISO 9000. C) […]

50) The level of output at which most plant–level scale economies are exhausted is referred to as the A) minimum efficient scale of output. B) downstream supply chain. C) flexible machine. D) upstream supply chain. Answer: A Explanation: The level […]

70) An advantage of engaging in in–house production of products and components is that A) the firm will have fewer subunits to control by making products in-house. B) it will help the firm capture more orders from other countries. C) […]

88) Which of the following statements is true of cloud–based EDI systems? A) Cloud-based EDI systems are more expensive than proprietary solutions. B) Small firms will not be able to make use of cloud-based EDI systems. C) Cloud-based systems are […]

Chapter 18 ‒ Global Marketing and R&D 18-1 Global Marketing and R&D Learning objectives • Explain why it might make sense to vary the attributes of a product from country to country. • Recognize why and how a firm’s distribution […]

International Business, 12e (Hill) Chapter 18 Global Marketing and R&D 1) The set of choices the firm offers to its targeted markets is known as the marketing mix. Answer: TRUE Explanation: The marketing mix is the set of choices the […]

Chapter 18 ‒ Global Marketing and R&D 18-8 1. Data on the country and potential market segments (geography, demography, sociocultural factors, and psychological factors) 2. Data to forecast customer demands within specific country or world region (social, economic, consumer, and […]

30) According to Levitt, which of the following statements is true? A) Technology drives the world toward a converging commonalty. B) There are accustomed differences in national preferences. C) The multinational corporation operates in a number of countries at low […]

50) A ________ retail system is one in which there are many retailers, none of which has a major share of the market. A) concentrated B) consolidated C) focused D) fragmented Answer: D Explanation: A fragmented retail system is one […]

70) Which of the following statements is true? A) Firms in consumer goods industries that are trying to sell to a large segment of the market generally favor a push strategy. B) Mass communication is costlier for firms in consumer […]

90) Drober Consulting is a large software service provider. The company has the largest market share in the industry. In order to restrain the smaller competitors in the market, the company sells some of its products at very low prices. […]

106) Designing for manufacturing A) decreases product quality. B) increases costs. C) can increase product quality. D) not only increases costs, but also lowers product quality. Answer: C Explanation: Designing for manufacturing can lower costs and increase product quality. Difficulty: […]

Chapter 19 ‒ Global Human Resource Management 19-1 Global Human Resource Management Learning objectives • Summarize the strategic role of human resource management in international business. resources. These activities include human • Identify the pros and cons of different approaches […]

International Business, 12e (Hill) Chapter 19 Global Human Resource Management 1) An expatriate manager is a citizen of one country who is working abroad in one of the firm’s subsidiaries. Answer: TRUE Explanation: An expatriate manager is a citizen of […]

Chapter 19 ‒ Global Human Resource Management 19-7 The key issue in international labor relations is the degree to which organized labor is able to limit the choices available to an international business. Another Perspective: The International Labor Organization (ILO) […]

30) A strong ________, the organization’s norms and value systems, can help a firm to implement its strategy. A) corporate culture B) human resources division C) mission statement D) beliefs systems Answer: A Explanation: Corporate culture refers to the organization’s […]

50) ________ staffing policy can be expensive to implement because training and relocation costs increase when transferring managers from one country to another. A) A geocentric B) A eurocentric C) A polycentric D) An ethnocentric Answer: A Explanation: A geocentric […]

70) Training can help a manager and spouse cope with issues of adjusting to the foreign environment. ________ is aimed at helping the expatriate manager and family ease themselves into day–to-day life in the host country. A) Language training B) […]

90) Which of the following is an action taken by organized labor to respond to the increased bargaining power of multinational corporations? A) trying to establish international labor organizations B) increasing competition between national unions C) lobbying the European Union […]

102) Discuss the reasons expatriate managers fail to complete their foreign assignment. Answer: The question of why expatriates fail to complete their foreign assignments was studied by R.L. Tung, who found that U.S. firms experienced a significantly higher failure rate […]

Chapter 02 – National Differences in Political, Economic, and Legal Systems 2-1 National Differences in Political, Economic, and Legal Systems Learning objectives • Understand how the political systems of countries differ. • Understand how the economic systems of countries differ. […]

International Business, 12e (Hill) Chapter 2 National Differences in Political, Economic, and Legal Systems 1) The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based. Answer: FALSE […]

Chapter 02 – National Differences in Political, Economic, and Legal Systems 2-8 protection of intellectual property. The site is: {http://www.wipo.int/portal/index.html.en}. Another Perspective: The World Intellectual Property Organization offers suggestion on how exporters can avoid common pitfalls when exporting intellectual property. […]

29) Modern socialists trace their intellectual roots to ________, although socialist thought clearly predates this individual. A) David Hume B) Karl Marx C) Adam Smith D) John Stuart Mill Answer: B Explanation: Modern socialists trace their intellectual roots to Karl […]

49) ________ refers to a state where political power is monopolized by a party, group, or individual that governs according to religious principles. A) Representative democracy B) Theocratic totalitarianism C) Tribal anarchism D) Monotheistic communism Answer: B Explanation: Theocratic totalitarianism […]

69) Which of the following is the most widely practiced theocratic legal system in the world today? A) Hindu law B) Sikh law C) Islamic law D) Jewish law Answer: C Explanation: A theocratic law system is one in which […]

88) Judges in a(n) ________ system have the power to interpret the law so that it applies to the unique circumstances of an individual case. A) civil law B) international law C) common law D) theocratic law Answer: C Explanation: […]

Chapter 20 ‒ Accounting and Finance in the International Business 20-1 Accounting and Finance in the International Business Learning objectives • Discuss the national differences in accounting standards. decisions, investment decisions, financing decisions, and money management decisions • Explain the […]

International Business, 12e (Hill) Chapter 20 Accounting and Finance in the International Business 1) Accounting information is the means by which firms communicate their financial position to the providers of capital. Answer: TRUE Explanation: Accounting information is the means by […]

Chapter 20 ‒ Accounting and Finance in the International Business 20-8 and {https://www.bloomberg.com/news/articles/2017-11-14/nike-knocked-by-unions-for- company-s-tax-avoidance-strategies}. Moving Money across Borders: Attaining Efficiencies and Reducing Taxes Firms transfer liquid funds across borders as dividend remittances, royalty payments and fees, transfer prices, and fronting […]

30) In countries such as the United States and Britain, firms typically raised capital by A) obtaining funding from the government. B) borrowing money from national banks. C) issuing stock or bonds to investors. D) borrowing money from international banks. […]

50) According to Lessard and Lorange, the ________ rate refers to the spot exchange rate when the budget is adopted. A) ending B) initial C) ideal D) projected Answer: B Explanation: Lessard and Lorange point out three exchange rates that […]

70) A ________ specifies that parent companies are not taxed on foreign source income until they actually receive a dividend. A) bilateral agreement B) tax credit C) deferral principle D) tax treaty Answer: C Explanation: A deferral principle specifies that […]

90) The age of a foreign subsidiary A) has no influence on payment of dividends. B) indicates the number of capital investment needs; older subsidiaries have higher needs. C) influences dividend policy in that younger subsidiaries tend to remit a […]

Chapter 03 – National Differences in Economic Development 3-1 National Differences in Economic Development Learning objectives • Explain what determines the level of economic development of a nation. • Identify the macropolitical and macroeconomic changes occurring worldwide. • Describe how […]

International Business, 12e (Hill) Chapter 3 National Differences in Economic Development 1) GDP allows a more direct comparison of living standards in different countries than other measures. Answer: FALSE Explanation: The purchasing power parity (PPP) adjustment allows a more direct […]

Chapter 03 – National Differences in Economic Development 3-7 Privatization – transferring the ownership of state property into the hands of private individuals, frequently by the sale of state assets through an auction. Creation of a legal system to safeguard […]

26) ________ per person figures can be misleading because they don’t consider differences in the cost of living. A) Gross domestic product (GDP) B) Gross national income (GNI) C) Purchasing power parity (PPP) D) Human Development Index (HDI) Answer: B […]

46) According to Amartya Sen, development should be A) seen as a process of expanding the real freedoms that people experience. B) seen as a nonpolitical concept that focuses on the net income of a country. C) viewed as a […]

66) Many states in Asia, Latin America, and Western Europe have shifted away from a mixed economy to a market–based economy. Which of the following measures is most likely to be promoted by such states? A) state-ownership of enterprises B) […]

86) It may be more costly to do business in relatively primitive or undeveloped economies because of A) international trade restrictions. B) the lack of governmental support. C) difficulty obtaining workers. D) the lack of infrastructure and supporting businesses. Answer: […]

Chapter 04 – Differences in Culture 4-1 Differences in Culture Learning objectives • Explain what is meant by the culture of a society. • Identify the forces that lead to The discussion then addresses the major questions of the chapter: […]

International Business, 12e (Hill) Chapter 4 Differences in Culture 1) In today‘s world of global communications, rapid transportation, and global markets, cultural differences have ceased to exist. Answer: FALSE Explanation: In these days of global communications, rapid transportation, worldwide markets, […]

Chapter 04 – Differences in Culture 4-8 Hofstede recently added another dimension, called indulgence versus restraint to capture the notion of relatively free gratification of basic and natural human drives related to enjoying life and having fun versus suppressed gratification […]

28) Cross-cultural literacy refers to A) an individual’s self-concept derived from perceived membership in a relevant social group. B) the phenomenon of merging and converging cultures. C) abstract ideas about what a group believes to be good, right, and desirable. […]

48) Which of the following refers to the extent to which individuals can move out of the strata into which they are born? A) caste stratification B) class system C) social mobility D) individual potential Answer: C Explanation: The term […]

68) Which of the following observations is correct? A) The economic principles established in the Koran are against free enterprise. B) The economic principles of Islam prohibit the payment or receipt of interest. C) The Koran speaks disapprovingly of earning […]

88) Class-based conflict between workers and management in class-conscious societies can lead to A) increased costs of doing business. B) decreased costs of doing business. C) companies going out of business. D) workers looking for new jobs in other businesses. […]

49) ________ arguments suggest that improving working conditions beyond the level required by the law and necessary to maximize employee productivity will reduce profits and are therefore not appropriate. A) Rawls’ B) Kantian C) Sullivan’s D) Friedman’s Answer: D Explanation: […]

Chapter 05 – Ethics, Corporate Social Responsibility, and Sustainability 5-1 Ethics, Corporate Social Responsibility, and Sustainability Learning objectives • Understand the ethical issues faced by international businesses. • Recognize an ethical dilemma. is acceptable behavior in one nation may be […]

International Business, 12e (Hill) Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability 1) Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople. Answer: FALSE Explanation: An ethical strategy is a strategy, or course of […]

Chapter 05 – Ethical Issues in International Business 5-8 To foster ethical behavior, businesses need to build an organizational culture that places a high value on ethical behavior. A code of ethics provides a formal statement of ethical priorities. Business […]

29) Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations? A) Sullivan principles B) the righteous moral […]

69) Identify the correct statement about the rights theories. A) Human beings have fundamental rights and privileges that transcend national boundaries. B) The moral worth of actions or practices is determined by their consequences. C) People should be treated as […]

89) Companies can strengthen the ________ of employees by committing themselves to not retaliate against employees who complain about unethical actions. A) moral courage B) code of ethics C) ethical strategies D) organizational culture Answer: A Explanation: Companies can strengthen […]

Chapter 06 – International Trade Theory 6-1 International Trade Theory Learning objectives • Understand why nations trade with each other. • Summarize the different theories explaining trade flows between Since then, various trade theories have developed, along with efforts to […]

International Business, 12e (Hill) Chapter 6 International Trade Theory 1) The theories of Smith and Ricardo show that a country should engage in international trade, even for products that it is able to produce for itself. Answer: TRUE Explanation: The […]

Chapter 06 – International Trade Theory 6-9 The balance-of-payments accounts keep track of the payments to foreigners for imports of goods and services, and receipts from foreigners for goods and services exported to them. There are three main accounts: the […]

27) David Ricardo’s theory of comparative advantage explains global trade in terms of the A) first-mover advantage that certain countries and firms enjoy. B) geographical differences between various countries. C) international differences in labor productivity. D) late-mover advantage that certain […]

47) The theory of comparative advantage provides strong rationale for supporting the idea of A) business nationalism. B) free trade. C) protectionist trade policies. D) governmental intervention in trade. Answer: B Explanation: The theory of comparative advantage suggests that trade […]

67) Factor endowments refer to the extent to which a country A) supports education, research, and development. B) develops the infrastructure to support industrialism. C) supports free trade. D) has such resources as land, labor, and capital. Answer: D Explanation: […]

81) Porter contends that government A) can influence the domestic demand conditions and the domestic rivalry components of the diamond, but not the other two components. B) can influence each of the four components of the diamond either positively or […]

Chapter 07 – Government Policy and International Trade 7-1 Government Policy and International Trade Learning objectives • Identify the policy instruments used by governments to influence international trade flows. With an introduction to tariffs, subsidies, and the • Understand why […]

International Business, 12e (Hill) Chapter 7 Government Policy and International Trade 1) Tariffs are generally pro-consumer and anti-producer. Answer: FALSE Explanation: Tariffs are generally pro–producer and anti–consumer. While they protect producers from foreign competitors, this restriction of supply also raises […]

Chapter 07 – Government Policy and International Trade 7-9 • the protection of intellectual property rights • the reduction of agricultural subsidies • the strengthening of GATT’s monitoring and enforcement mechanisms The Future of the WTO: Unresolved Issues and the […]

27) Which of the following is one of the main instruments of trade policy? A) tariffs B) credit portfolios C) opportunity costs D) countervailing duties Answer: A Explanation: Trade policy uses seven main instruments: tariffs, subsidies, import quotas, voluntary export […]

47) Tariff rate quotas are common in agriculture, where their goal is to A) reduce the use of synthetic fertilizers. B) limit imports over quota. C) increase agricultural imports. D) increase foreign competition. Answer: B Explanation: Under a tariff rate […]

66) Strategic trade policy suggests that in industries where the existence of substantial scale economies implies that the world will profitably support only a few firms, countries may predominate in the export of certain products simply because they had firms […]

86) A key goal of the 1986 Uruguay Round was to A) extend GATT to cover trade in commodities. B) extend GATT rules to cover trade in services. C) increase agricultural subsidies. D) loosen the GATT’s monitoring and enforcement mechanisms. […]

100) Discuss the economic reasons for government intervention in markets. Answer: The economic reasons for government intervention have undergone a renaissance in recent times. The oldest argument for intervention is the infant industry argument. According to this argument, many developing […]

Chapter 08 ‒ Foreign Direct Investment 8-1 Foreign Direct Investment Learning objectives • Recognize current trends regarding foreign direct investment (FDI) in the world economy. firm buying a firm in a different country, or • Explain the different theories of […]

International Business, 12e (Hill) Chapter 8 Foreign Direct Investment 1) The amount of foreign direct investment (FDI) undertaken over a given time period is known as the flow of FDI. Answer: TRUE Explanation: The flow of FDI refers to the […]

Chapter 08 ‒ Foreign Direct Investment 8-7 There are three mains costs from inward FDI for the host country: the possible adverse effects of FDI on competition within the host nation; adverse effects on the balance of payments; and the […]

29) Developing nations currently account for ________ of FDI in the form of cross-border mergers and acquisitions. A) well over half B) about one-third or less C) about 50 percent D) the largest share Answer: B Explanation: FDI flows into […]

49) Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets. A) internalization theory B) product life-cycle theory C) perfect markets theory D) random walk theory Answer: […]

69) Recent years have seen a ________ in the number of countries that adhere to a radical ideology regarding FDI. A) marked decline B) slight decline C) marked increase D) slight increase Answer: A Explanation: Recent years have seen a […]

89) ________ is essentially the service-industry version of licensing, although it normally involves much longer-term commitments. A) Franchising B) Subsidizing C) Greenfield investment D) Patenting Answer: A Explanation: Franchising is essentially the service–industry version of licensing, although it normally involves […]

Chapter 09 ‒ Regional Economic Integration 9-1 Regional Economic Integration Learning objectives • Describe the different levels of regional economic integration. • Understand the economic and among themselves. political arguments for regional economic integration. • Understand the economic and political […]

International Business, 12e (Hill) Chapter 9 Regional Economic Integration 1) Charlyce lives in a country where there are no barriers to the trade of goods and services. This is called a free trade area. Answer: TRUE Explanation: In a free […]

Chapter 09 ‒ Regional Economic Integration 9-11 QUESTION 1: NAFTA has produced significant benefits for the Canadian, Mexican, and U.S. economy. Discuss. ANSWER 1: NAFTA’s proponents argue that the agreement should be viewed as an opportunity to create an enlarged […]

27) Which of the following is a reason the European Union is considered an imperfect economic union? A) Factors of production are not allowed to move freely between member countries. B) Not all members of the union have adopted the […]

Chapter 09 ‒ Regional Economic Integration 9-18 End of Part Case Notes Part Three Legal Outsourcing QUESTION 1: What are the benefits to a law firm of outsourcing of legal services to a foreign country? What are the potential costs […]

47) The ________ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states. A) European Parliament B) European Commission C) Council of the European Union D) Court of Justice Answer: B Explanation: The […]

67) Which of the following is the most frequently aired objection to free trade in Africa? A) These economies are too small for free trade to exist. B) These countries are not ready for a full-fledged political union with a […]

85) Firms outside of trading areas run the risk of being shut out of the single market by the creation of a A) “trade fortress.” B) contracting economy. C) single-market zone. D) destabilized economy. Answer: A Explanation: One threat to […]