The Smoot-Hawley Act aimed at:
A. diverting consumer demand toward foreign products.
B. promoting unrestricted free trade.
C. limiting global warming.
D. avoiding rising unemployment.
A(n) _____ distribution channel is one that is difficult for outsiders to access.
A. selective
B. intensive
C. exclusive
D. multi-channel
_____ exists when the tastes and preferences of consumers in different nations are
similar if not identical.
A. Universal needs
B. Homogenous needs
C. Basic needs
D. Bundled needs
A _____ is generally favored by consumer goods firms that are trying to sell to a large
segment of the market.
A. push strategy
B. globalization strategy
C. pull strategy
D. localization strategy
_____ occurs when a firm exports goods or services to consumers in another country.
A. International trade
B. Foreign direct investment
C. Inward investment
D. Outsourcing
A _____ grants the inventor of a new product or process exclusive rights for a defined
period of time to the manufacture, use, or sale of that invention.
A. copyright
B. trademark
C. contract
D. patent
The European Community was established by the:
A. Treaty of Rome signed in 1957.
B. Maastricht Treaty signed in 1991.
C. Maastricht Treaty of 1994.
D. Single European Act of 1987.
Which of the following balance-of-payment accounts records one-time changes in the
stock of assets?
A. Capital account
B. Current account
C. Financial account
D. Monetary account
Which of the following combinations of exchange rates was ruled out by Lessard and
Lorange as illogical and unreasonable?
A. Translating budget using ending rate and translating actual performance using initial
rate
B. Translating both actual performance and budget using projected rate
C. Translating both actual performance and budget using initial rate
D. Translating budget using projected rate and translating actual performance using
ending rate
Transfer price refers to the:
A. price at which goods and services are transferred to a subsidiary.
B. price at which the title of products is transferred to a customer.
C. price at which a supplier provides raw materials to a firm.
D. cost incurred when goods or services are transferred from one place to another.
Firms pursuing a(n) _____ attempt to create value by transferring core competencies
from home to foreign subsidiaries.
A. localization strategy
B. international strategy
C. transnational strategy
D. global strategy
Which of the following is true of ASEAN?
A. China, India, South Korea, and Singapore are among its members.
B. Collectively, the member states account for about 55 percent of world trade.
C. It is slowly progressing toward establishing a free trade zone.
D. It has been successful in fulfilling its basic objective of fostering freer trade between
member countries.
_____ is the most common method by which firms transfer funds from foreign
subsidiaries to the parent company.
A. Issue of long-term loans
B. Payment of annual fee
C. Issue of bonds
D. Payment of dividends
_____ can be defined as the rate of return that the firm makes on its invested capital,
which is calculated by dividing the net profits of the firm by total invested capital.
A. Profitability
B. Performance
C. Cash flow
D. Efficiency
A country’s balance-of-payments accounts keep track of the:
A. basic factor endowments and advanced factor endowments that the nation possesses.
B. payments to and receipts from other countries for a particular time period.
C. income taxes paid by domestic firms and the spending on the firms.
D. total value of taxes paid by domestic firms and the spending on the firms.
_____ 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
_____ implies that a firm may be able to customize its product range to suit the needs of
different customer groups without bearing a cost penalty.
A. Assembly-line production
B. Mass customization
C. Six Sigma production
D. Product standardization
A(n) _____ requires a common currency, harmonization of the member countries’ tax
rates, and a common monetary and fiscal policy.
A. full political union
B. common market
C. economic union
D. customs union
The efficiency frontier has a convex shape because of _____.
A. consumer surplus
B. diminishing returns
C. profitability
D. differentiation strategy
Which of the following statements is true of exporting?
A. It increases the trade deficit that nations have.
B. Exporting leads to diseconomies of scope.
C. It helps a firm achieve economies of scale.
D. Exporting is not beneficial to a country’s economy.
Countries with _____ retail systems tend to have long channels of distribution.
A. fragmented
B. intermarket
C. concentrated
D. exclusive
Centralization and decentralization differ because:
A. centralization hinders coordination, while decentralization facilitates coordination.
B. centralization prevents top-level managers from making required organizational
changes, while decentralization gives top-level managers greater power to make
organizational changes.
C. centralization ensures that decisions are consistent with organizational objectives,
while decentralization can result in decisions at variance with organizational goals.
D. centralization promotes flexibility, while decentralization reduces flexibility.
Funds can be moved out of a particular country in which a parent country has set up a
subsidiary by:
A. setting high transfer prices for the goods supplied.
B. removing royalties imposed on the subsidiary.
C. charging a discounted fee on the subsidiary.
D. issuing loans to the subsidiary at discounted rates.
Which of the following helps in adjusting GNI such that it accounts for the differences
in the cost of living?
A. Purchasing power parity (PPP) adjustment
B. Human Development Index
C. Debt to GNI ratio
D. Consumer Price Index
What will happen if a country increases its money supply rapidly under fixed exchange
rate regime?
A. Imports will become less attractive in that country.
B. The country will face negative inflation.
C. Trade deficit would widen in that country.
D. The country’s products will become more attractive in world markets.
Underlying most of the trade theories discussed is the notion that:
A. different countries have particular advantages in different productive activities.
B. firms that establish a first-mover advantage with regard to the production of a
particular new product will dominate global trade in that product.
C. it usually makes sense for a firm to consolidate its productive activities in one
country.
D. despite a pivotal role in international trade, businesses are typically unable to
influence government trade policy.
The need for coordination is high in:
A. firms trying to pursue localization strategies.
B. international firms.
C. firms trying to profit from location and experience curve economies.
D. domestic corporations.
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 Recent years have seen a marked decline in the number of countries
that adhere to a radical ideology regarding FDI.
What was the main objection raised by those in the United States and Canada who
opposed the ratification of the NAFTA?
A. Job losses
B. Balance of payment problems
C. Threat of competition from Asian companies
D. Threat of a loss of national sovereignty
_____ exchange rates were declared as acceptable in the Jamaica agreement of the
International Monetary Fund.
A. Pegged
B. Fixed
C. Floating
D. Gold standard
_____ refer to cooperative agreements between potential or actual competitors.
A. Greenfield investments
B. Strategic alliances
C. Takeovers
D. Licensing agreements