51) The seizing of a company’s assets without payment is called
A) confiscation.
B) expropriation.
C) domestication.
D) exchange controls.
E) local-content laws.
52) When a government seizes an investment of a foreign investor but some reimbursement for
the assets is made, the government follows a process called
A) confiscation.
B) expropriation.
C) domestication.
D) exchange controls.
E) local-content laws.
53) When an expropriated investment becomes a government-run entity, it is
A) democratized.
B) domesticated.
C) nationalized.
D) prioritized.
E) socialized.
54) ________ occurs when host countries gradually cause the transfer of foreign investment to
national control and ownership through a series of government decrees.
A) Confiscation
B) Expropriation
C) Domestication
D) Democratization
E) Socialization
55) The government in Chile recently informed Mario’s company that his retail grocery chain in
Chile would have to be gradually turned over to the people of Chile by the year 2050 as it is a
foreign company in Chile. Additionally, starting the following year, 50 percent of the board of
directors of the Chilean operation of the company must be Chileans. What political risk action is
Mario’s company facing in Chile?
A) confiscation
B) expropriation
C) domestication
D) patronization
E) nationalization
56) Which statement about domestication is correct?
A) The ultimate goal of domestication is to force domestic investors to share more of the profits
with the government.
B) The risk of domestication appears to have decreased over the last two decades.
C) Domestication has always led to more technologically advanced and competitive businesses.
D) Countries often require companies to become domesticated as a condition for investment.
E) Domestication refers to the seizing of a company’s assets without payment.
57) Marziland found that a large amount of capital was leaving the country due to foreign
corporate ownership, so it instituted controls over all movements of capital to conserve the
supply of foreign exchange. These are called ________ controls.
A) exchange
B) local-content
C) price
D) tax
E) production
58) If there is a substantial amount of capital leaving a country, what is a country most likely to
implement to control the situation?
A) exchange controls
B) local-content laws
C) import restrictions
D) tax controls
E) price controls
59) In Thailand, it is required that any milk product sold in the country by a foreign company
must use the milk that is at least 50 percent produced by Thai dairy farmers. What economic risk
is faced by the international producers of milk products in this situation?
A) exchange controls
B) local-content laws
C) export restrictions
D) tax controls
E) price controls
60) The United States requires that 50 percent of all parts used to construct an automobile in the
United States be manufactured in the United States. As a result of this, when Toyota Motor
Company builds automobile manufacturing plants in Tennessee and Ohio, it faces economic
risks associated with
A) exchange controls.
B) local-content laws.
C) export restrictions.
D) tax controls.
E) price controls.
61) Taxes must be classified as a(n) ________ risk when used as a means of controlling foreign
investments.
A) political
B) social
C) ignorable
D) environmental
E) harmless
62) The government of Namibia is strapped for cash, and it has decided to tax all foreign
investments (such as food packaged in the country) by up to 40 percent of the appraised value.
The Namibian government has found that this is the handiest and quickest means of finding
operating funds. The economic risk in discussion here is
A) exchange controls.
B) local-content laws.
C) tax restrictions.
D) tax controls.
E) price controls.
63) Price controls applied during inflationary periods may have the effect of
A) controlling the cost of living.
B) restricting exports to foreign countries.
C) negotiating trade contracts favoring the host country.
D) encouraging imports.
E) collecting taxes on foreign investments.
64) In North Korea, foreign investors or producers are required to sell products at prices stated
by the North Korean government rather than letting market value and demand determine the
prices. This implies that there is application of
A) exchange controls.
B) local-content laws.
C) import restrictions.
D) tax controls.
E) price controls.
65) Which of these items is most likely to be subjected to price control?
A) leather garments
B) mobile phone accessories
C) aspirin and antacids
D) camcorders and lenses
E) ceramic tiles
66) Stopping or refusing to trade with another nation for political reasons is called
A) monopolizing.
B) boycotting.
C) confiscation.
D) democratization.
E) expropriation.
67) What is true of political sanctions?
A) Political sanctions normally control and rectify situations within a nation.
B) Political sanctions are generally unsuccessful.
C) Political sanctions are illegal.
D) The United Nations encourages boycotts as a means of settling political disputes.
E) The use of political sanctions is the most effective way to increase world trade.
68) What are effective tools that political and social activists (PSAs) use to spread word about
their causes?
A) political sanctions
B) monetary barriers and trade embargoes
C) the Internet and cellphones
D) local-content laws and questionnaires
E) export controls
69) Which of these organizations is an NGO (nongovernmental organization)?
A) Central Intelligence Agency
B) Peace Corps
C) Millennium Challenge Corporation
D) Oxfam
E) FedEx
70) Why do terrorism experts predict multinational businesses will be targeted by terrorists more
frequently?
A) They impose export controls on the underdeveloped nations.
B) They are the major cause for political sanctions against Arab nations.
C) They are less well defended than government targets.
D) They destroy and pollute the environment.
E) They are subterfuge for espionage agents.
71) Which form of terrorism is most likely to use the Internet to inflict damage?
A) Germterrorism
B) Bioterrorism
C) Cyberterrorism
D) Ecoterrorism
E) Narcoterrorism
72) As the FBI investigates security breaches, the analyses are more often pointing to ________
as the most serious threat.
A) Russian government supported hackers
B) religious extremists
C) white supremacists
D) American rogue hackers
E) the Chinese government
73) Bao is attempting to forecast political instability and help his company’s management
identify and evaluate political events and their potential influence on current and future
international business decisions. Bao is engaged in
A) political risk assessment.
B) political confiscation.
C) democratization.
D) arbitration.
E) risk expropriation.
74) In terms of political risk, what poses the greatest threat to international marketers?
A) newer environmental regulations approved by global trade bodies
B) change of economic policies
C) exchange rate fluctuations affecting margins
D) the possibility of the government actually failing
E) membership or withdrawal of membership of the government in trade blocs
75) Relations between governments and MNCs are generally positive if the investment
A) increases the volume of imports.
B) uses globally produced resources.
C) transfers capital, technology, and skills.
D) brings in a higher number of foreign nationals.
E) decreases the volume of exports.
76) Meteora Inc. is planning to enter the Kenyan market by establishing a mobile phone
manufacturing operation in Kenya. Meteora is most likely to have a positive relationship with
Kenyan government through its investment if it
A) uses locally produced resources.
B) imports phone components from China.
C) establishes an R&D center in California and has all its technology patented there.
D) ensures that its middle and upper management are expatriates.
E) bargains for a tax holiday for the next five financial years.