The population of a(n) ________ market is mostly rural and is characterized by poor
infrastructure with little credit or collateral.
A) emerging
B) traditional
C) developed
D) virtual
According to the international product life cycle theory, in which stage of a product’s
life cycle does a company directly invest in production facilities in countries where
demand is great enough to warrant production facilities?
A) new product stage
B) maturing product stage
C) standardized product stage
D) declining product stage
The ________ altered the U.S. trade policy from a stance of free trade to one of
protectionism in the 1930s.
A) Norris-LaGuardia Act
B) Smoot-Hawley Act
C) Wheeler-Lea Act
D) Taft-Hartley Act
The international monetary system created by the Bretton Woods Agreement collapsed
because ________.
A) of its heavy dependence on the stability of the dollar
B) it was not accepted by a majority of the world’s nations
C) it did not have the funds necessary for its functioning
D) it favored only the developed countries and was of no help to struggling nations
Banks in the interbank market ________.
A) provide long-term loans to small-sized and medium-sized companies
B) provide long-term loans to large companies
C) offer advice on trading strategies
D) exchange currencies exclusively at spot rates
Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of
twelve. The company has operations in Switzerland and would like to expand its
foreign operations with a new facility in China.
The practice of insuring against potential losses that result from adverse changes in
exchange rates is called currency arbitrage.
________ is political risk that affects only a specific firm or firms within a specific
industry.
A) Inclusive political risk
B) Exclusive political risk
C) Micropolitical risk
D) Macropolitical risk
Partnerships between a government and a host company in the context of foreign direct
investment lead to ________.
A) increased exploitation of workers in the home country
B) domination of industries in the home country by large international firms
C) increased market access for the host company
D) increased control for the host country over its operations
Scenario: Verandas International
Verandas International is expanding its operations in North America. The Dutch
company supplies customized furniture to five-star hotels. Verandas International is a
leader in this industry, but the company believes it must increase its geographic reach to
maintain that position.
Economic forecasts reveal that the U.S. dollar is expected to decline relative to the
Euro. Which of the following is the most advantageous method of obtaining funding for
Verandas under these conditions?
A) borrowing from U.S. banks
B) issuing equity in Germany
C) issuing equity in the U.S.
D) borrowing from Dutch banks
________ would most likely be recruited for nonmanagerial positions at foreign
subsidiaries that do not require specialized skills.
A) Recent graduates from colleges in the home country
B) Home-country specialists
C) Workers from the local host-country market
D) Current employees from the company headquarters
Tariff-quotas are used extensively in the trade of ________.
A) manufactured goods
B) services
C) textiles
D) agricultural products
To teach its employees the values, attitudes, manners, and customs of the host-country
culture, Gem Jewels should offer ________.
A) language training
B) environmental briefings
C) cultural assimilation
D) field experience
When one company is hired to design, construct, and test a production facility for a
client, the arrangement is called ________.
A) a turnkey project
B) licensing
C) a joint venture
D) franchising
To minimize the economic inequality within developing nations, studies suggest that the
nations can boost incomes of their poorest citizens by ________.
A) rejecting globalization and sheltering themselves from exploitation
B) embracing globalization and integrating themselves into the global economy
C) fortifying trade barriers and discouraging exports
D) encouraging economic independence and restricting imports
The stated aim of the organization for Asia Pacific Economic Cooperation (APEC) is to
________.
A) build another trading bloc
B) introduce stringent trade and investment procedures among member countries
C) strengthen the multilateral trading system
D) increase members’ tariff rates from an average of 7.5 percent to 15 percent