1 Central state control does not allow, or limits, private ownership of businesses, and markets
are closed because only the government operates all business.
(A) True
(B) False
2 _______ refers to the act of exporting goods and services to foreign countries at very low
prices, sometimes even below cost, in order to increase market share and potentially leading to
putting competitors out of business and then raising prices.
(A) Importing
(B) Dumping
(C) Retaliating
(D) Safeguarding
(E) Cheating
3 The _______ deals with the global rules of trade between member nations and ensures
smooth and predictable operations.
(A) World Health Organization
(B) International Trade Commission
(C) World Trade Organization
(D) United Federation of Free Markets
(E) Global Business Group
4 Which of the following is not part of the World Bank Group?
(A) the Trilateral Commission.
(B) the International Bank for Reconstruction and Development
(C) the International Development Association
(D) the International Finance Corporation
(E) The Multilateral Investment Guarantee Agency
5 Which of the following is not true of the EU?
(A) The EU has its laws (all countries must follow) and state law (each country/state has its
own laws) similar to U.S. federal and state laws.
(B) The EU has a common currency, the euro, similar to the U.S. dollar.
(C) The EU has a central back system under the European Central Bank (ECB), similar to the U.S. Federal
Reserve.
(D) The EU has a president with similar powers of that of the U.S. president.
(E) It is comprised of, at the writing of the textbook, 27 countries.
6 ________are designed to eliminate trade barriers to create free trade between countries
and groups of countries.
(A) trade deficits
(B) Trade agreements
(C) Trade embargos
(D) Trade resolutions
(E) Business communities
7 ________assess the underlying moral justification for businesses’ actions and the
consequences of those actions.
(A) Ethical quandaries
(B) Ethical imperialism
(C) Ethical dilemmas
(D) Environmental impact studies
(E) Ethical impact statements
8 Which statements about the types of businesses in the global economy are true?
(A) An American domestic company conducts business in just one state.
(B) An international company is based in one country but transacts business in other countries.
(C) A multinational company (MNC) has significant direct investment operations in more than one country.
(D) Many domestic companies are importers, and they don’t buy or sell foreign products locally.
(E) A direct investment refers to owning operating facilities in other countries.
9 Which statements about U.S. business ownership and government–business relations are
true?
(A) Governments of major goods-producing countries all behave similarly regarding business
and government interaction.
(B) The EU and Japan governments do not engage in business ownership.
(C) EU and Japanese governments are more like referees with business, much like in the U.S.
(D) Democracies are generally more open to capitalism with free enterprise.
(E) The U.S. government generally does not own any business enterprises, does not have joint business
ownership, and doesn’t even invest in company stocks.
10 Which statements about who benefits and pays the cost of protectionism are true?
(A) Although the global economy is moving toward more free trade, it is mixed with
protectionism because international trade policy is driven by domestic politics.
(B) Society pays the cost of protectionism through decreased efficiency in the allocation and utilization of
the country’s resources.
(C) Society benefits through the government collecting more taxes though keeping foreign goods out of
the country.
(D) Consumers pay higher prices, with fewer product choices, to finance business profits and employee
wages.
(E) Isolationism and protectionism tend to work against each other.
11 Which statements about the types of trade barriers are true?
(A) Subsidies are government funds given to business to lower its cost.
(B) Levees are a tax on imports and exports, making them more expensive.
(C) Quotas set limits on imports and exports, driving up product prices.
(D) Bans prohibit the import or export of products.
(E) All countries welcome free trade and place few restrictions on business activity.
12 Which statements about the WTO, World Bank, and IMF are true?
(A) The IMF acts as a monitor of global currency exchange by helping to maintain a system of
payments between all countries by setting the fixed value of each currency.
(B) The WTO administers trade agreements, develops trade rules, and settles trade disputes between
member nations.
(C) The World Bank is a lending institution that provides loans and technical assistance to poor countries
so that they can conduct trade in the global economy.
(D) The World Bank provides loans to poor countries, and the IMF provides currency exchange services
and loans to help with the balance of payments between countries to pay for trade.
(E) The WTO sets and enforces trade rules without providing any financial services.
13 Which statements about grease payments, bribes, and offsets are true?
(A) Grease payments involve small amounts of money paid to facilitate employees to do their
jobs, usually paid to lower-level employees.
(B) Bribes are given to business and government officials for the purpose of getting or maintaining
business, usually paid to high-level officials to buy products.
(C) All are considered illegal in the U.S. However, under U.S. law, grease payments are not considered
illegal in foreign countries.
(D) Contingences are government requests to fund non-business projects as a prerequisite to conducting
business.
(E) Offsets and extortion are basically the same thing.
14 Identify the four elements of democracy.
Answer:
15 Explain competitive theory.
Answer:
16 Discuss the concepts of trade deficit and trade surplus and describe the relationship
between the two.
Answer:
17 What is the World Bank?
Answer:
18 The EU has three important systems that improve trade for member countries, and those
who conduct business in the EU. Describe how the EU benefits from these systems.
Answer:
19 A ________ occurs when a country imports more than it exports.
(A) trade deficit
(B) trade embargo
(C) trade surplus
(D) trade ban
(E) retaliation
20 The ________ Act directed companies operating in America to set up whistleblower hotlines
for employees to report potential corporate abuse.
(A) Fair Trade
(B) Sherman Anti-Trust
(C) Wheeler-Lea
(D) Sarbanes-Oxley
(E) McCain-Romney
21 ________ holds that international trade is based on gains from trade.
(A) Initialization
(B) Competitive theory
(C) Comparative advantage
(D) Unfair advantage
(E) Central state control
22 China is a Communist country with central planning that has no market economy.
(A) True
(B) False
23 With the collapse of the Communist Party rule in the former Soviet Union and its satellites in
Eastern Europe, only a few real central state control systems remain,
(A) True
(B) False
24 Competitive advantage of nations means that a country has a cluster of similar companies in
industries that give the country a special advantage over other countries.
(A) True
(B) False
25 Supporters of tariffs claim they help save jobs at home; however, others disagree.
(A) True
(B) False
26 Protectionism works in the long-run.
(A) True
(B) False
27 The International Trade Administration of the Department of Commerce and the
International Trade Commission administer certain aspects of trade law.
(A) True
(B) False
28 The Trade Adjustment Assistance Act provides help for those injured by imports by
providing retraining programs to find new jobs, but it is not awarded very often.
(A) True
(B) False
29 The International Monetary Fund (IMF) keeps track of the global economy and the
economies of member countries but does not lend to countries with balance of payments
difficulties nor give economic and financial policy advice.
(A) True
(B) False
30 Piracy in China, and other developing countries, has been a big problem for U.S. business.
(A) True
(B) False
31 Europe has changed over the years to become more like the United States by having
independent state/countries join together as one market, which is similar to the U.S. system of
free trade between its states.
(A) True
(B) False
32 NAFTA is a trade agreement between the United States, and countries of Central and South
America that links millions of people producing trillions of dollars worth of goods and services.
(A) True
(B) False
33 Bribes are commonly given to high-level officials to buy products, but they are also given to
avoid taxes, to stop unfavorable government intervention, and to gain favorable treatment.
(A) True
(B) False
34 Transparency International has a vision of a world in which government, politics, business,
civil society, and the daily lives of people are free of corruption.
(A) True
(B) False
35 A ________ company conducts business in one country.
(A) homegrown
(B) international
(C) domestic
(D) multinational
(E) semi-private
36 Three primary political systems include democracy, single-party, and ______.
(A) republican
(B) non-partisan
(C) laisser-faire
(D) military dictatorship
(E) up-front party
37 Which of the following is not true of a democracy?
(A) Powers of legislative, executive, and judicial branches of government are combined within
one office.
(B) Fair elections with multiple party candidates
(C) Independent media with freedom of political speech without fear of censorship or punishment
(D) Separation of powers among the legislative, executive, and judicial government branches
(E) Open society with independent organizations pursuing social, religious, and cultural goals
38 Which of the following is true of the business-government connection?
(A) Democracies are generally open to capitalism with free enterprise.
(B) North America, Japan, EU countries, and India have little free enterprise.
(C) Most of the Scandinavian countries’ governments and businesses do not tend to intermingle.
(D) The governments of Japan and China, the government has no ownership in business.
(E) Fannie Mae and Freddie Mac are mixed government and private ownership.
39 Discuss ethical imperialism as opposed to cultural relativism.
Answer: