Which of the following has been declining in the developing nations of the world such
as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil?
A.Economic opportunities for international trade
B.Industrialization
C.Contribution toward the share of world output
D.The stock of foreign direct investment
E.Barriers to the free flow of goods, services, and capital
Answer:
Which of the following statements is most likely to be true about the risks of doing
business in a country?
A.Political risk is low in countries that contain more than one ethnic nationality.
B.Economic risks are independent of political risk.
C.One visible indicator of economic risk is the level of business and government debt in
the country.
D.One visible indicator of legal risk tends to be a country’s inflation rate.
E.Political risk tends to be low in those countries that have high inflation and falling
living standards.
Answer:
Which of the following is defined as a group of countries committed to removing all
barriers to the free flow of goods and services between each other, but pursuing
independent external trade policies?
A.Free trade area
B.Command economy
C.Efficient market
D.Foreign exchange market
E.Location economy
Answer:
In the context of property rights, which of the following best exemplifies private
action?
A.Levying excessive taxes
B.Requiring expensive licenses or state permits from private property holders
C.Taking assets into state ownership without compensating the owners
D.Government bureaucrats demanding bribes from businesses in return for the rights to
operate in a country
E.Business owners stealing their competitors’ trade secrets and intellectual properties
Answer:
Bilateral voluntary export restraints, or VERs, circumvented GATT agreements,
because:
A.these nations withdrew their membership to the GATT.
B.the member nations had ceased to recognize GATT as a regulatory body for
international trade.
C.VERs were not a recognized trade barrier under the GATT constitution.
D.neither the importing country nor the exporting country complained to the GATT
bureaucracy for it to take action.
E.member nations erected a wall of tariff barriers.
Answer:
Which of the following is a drawback of the currency board system?
A.The ease with which governments can set and manipulate interest rates acts as a
limitation.
B.Higher domestic inflation rates compared to the inflation rate in the country to which
the currency is pegged can make the currency uncompetitive.
C.The currency board can issue additional domestic notes and coins even when there
are no foreign exchange reserves to back it.
D.The system is a true fixed exchange rate regime, because the domestic currency is
fixed against other currencies.
E.The system lacks commitment to convert domestic currency on demand into another
currency.
Answer:
Which of the following is true according to Theodore Levitt’s article in the Harvard
Business Review about the globalization of world markets?
A.Accustomed differences in national or regional preferences are significant in world
markets.
B.The global corporation operates consistently at high relative cost.
C.Technology has led to the emergence of global markets for standardized consumer
products.
D.The global corporation sells different things in different ways.
E.Ancient differences in national tastes or modes of doing business are reinforced.
Answer:
A second strategic objective shared by production and supply chain management is to
increase product quality. In this context, quality means:
A.affordability.
B.flexibility.
C.reliability.
D.adaptability.
E.patentability.
Answer:
Which of the following is an implication of the global changes in political and
economic systems for international business?
A.The ideological conflict between collectivism and individualism is less in evidence
today.
B.Adoption of Western ideology is declining worldwide.
C.The global tide has been running in favor of command economies and totalitarian
dictatorships.
D.Free markets and democracy are being replaced by mixed economies and communist
governments.
E.Liberalization and privatization of state-owned enterprises has been losing popularity.
Answer:
Typically, the price a firm charges for a good or service is:
A.less than the value placed on that good or service by the customer.
B.more than what customers assume it would be.
C.more than the market price for similar goods or services.
D.the same as the value placed on that good or service by the customer.
E.less than the lowest priced similar good or service in the market.
Answer:
The value of a product to an average consumer is V, the average price that the firm can
charge a consumer for that product is P, and the average unit cost of producing that
product is C. For this scenario, which of the following is true?
A.The firm makes a profit so long as C is greater than P.
B.The higher C is relative to P, greater will be the profit.
C.The consumer surplus per unit is equal to V – P.
D.The higher the intensity of competitive pressure, the higher the price charged relative
to V.
E.The lower the consumer surplus, the greater the value for the money the consumer
gets.
Answer:
Veronica had been getting red patches on her face after using a protein-based lotion
manufactured by Nature Life Research Lab. On consulting a dermatologist, she learned
that the lotion’s steroid levels were beyond the standard levels permitted by the
government and the damage caused by the lotion was irreversible. Which of the
following will address Veronica’s grievances?
A.Laws related to property rights
B.Product liability laws
C.Intellectual property laws
D.Foreign Corrupt Practices Act
E.Sarbanes-Oxley Act
Answer:
Which of the following best explains the reason for the rise in protectionist pressures
around the world during the 1980s?
A.The strict GATT bureaucracy in Geneva controlling trade regulations
B.The opening up of international markets to cheap products from China
C.The fall of the Soviet Union
D.The persistent trade deficit in the world’s largest economy, the United States
E.The economic failure of Japan which hampered the global economy
Answer:
Which of the following statements is true of industrial products such as steel?
A.They serve needs that are the same all over the world.
B.They have drastic national differences in consumer taste and preference.
C.The need for local responsiveness for these products is more than consumer products.
D.It makes sense to produce these products in multiple locations close to major
markets.
E.A plant must operate at the highest minimum efficient scale of output for these
products.
Answer:
A regional free trade agreement will benefit the world only if:
A.it raises the standard of living in one of the member countries.
B.the amount of trade it creates exceeds the amount it diverts.
C.the currencies of the nations involved appreciate.
D.the balance-of-trade situation remains stable in the region.
E.it creates trade surplus for one of the countries involved.
Answer:
Which of the following statements is true about privatization?
A.The privatization movement started in China in the early 1980s.
B.Privatization involves replacing a state-owned monopoly with a private monopoly.
C.For privatization to become successful, countries should adopt communism.
D.When newly privatized firms are extensively protected from foreign competition,
they have little incentive to restructure their operations to become more efficient.
E.In today’s context, a country runs the risk of experiencing a serious economic crisis if
it liberalizes and privatizes state-owned enterprises.
Answer:
Which of the following is true of the relationship between trade and economic growth?
A.Countries open to international trade display higher growth rates than those that close
their economies to trade.
B.Within a group of developing countries, closed economies grow faster than open
economies.
C.The Leontief paradox notes that adopting an open economy and embracing free trade
does not reward a nation with higher economic growth.
D.Free trade hampers economic growth and leads to lower living standards in the long
run.
E.Free trade has historically benefited poor counties and hence trade barriers should be
introduced to protect rich countries from exploitation.
Answer:
Mergers and acquisitions differ from greenfield investments in that:
A.greenfield investments are quicker to execute than mergers and acquisitions.
B.greenfield investments are undertaken to take advantage of valuable strategic assets,
such as brand loyalty and trademarks or patents, of a foreign competitor.
C.the majority of FDI flows into developed nations are in the form of greenfield
investments rather than mergers and acquisitions.
D.the majority of FDI flows into developing nations are in the form of cross-border
mergers and acquisitions.
E.the percentage of mergers and acquisitions is lower than greenfield investments in
developing nations.
Answer:
Which of the following factors creates a potential market for new products?
A.Rising inflation
B.Affluent consumers
C.Lack of competition among firms
D.Firms suffering from first-mover disadvantages
E.Declining demand
Answer:
Which of the following describes a turnkey project?
A.Granting rights to intangible property to other firms
B.Establishing firms that are jointly owned by two or more otherwise independent firms
C.Exporting process technology to other countries
D.Setting up wholly owned subsidiaries in foreign nations
E.Selling products produced in one country to residents of other countries
Answer:
Which of the following strategies is concerned with the selection of employees for
particular jobs?
A.Compensation policy
B.Staffing policy
C.Performance appraisal policy
D.Training policy
E.Management development policy
Answer:
Which of the following is a course of action suggested by Christopher Bartlett and
Sumantra Ghoshal for companies based in developing nations?
A.Build up financial resources to match those of the largest global competitors.
B.Enter foreign markets at a similar time and scale as multinational companies.
C.Enter markets rapidly and exit at an equally rapid pace to avoid heavy losses.
D.Benchmark one’s operations and performance against foreign multinationals.
E.Do not focus on market niches that multinational companies ignore.
Answer:
Automobile companies promote different car models in different countries depending
on a range of factors such as demographics, local taste, local fuel costs, income levels,
traffic congestion, and cultural values. This most likely demonstrates that:
A.significant differences still exist among national markets.
B.cultural diversity has been replaced by global uniformity.
C.the global market is less complex than national markets.
D.only multinational giants can benefit from the globalization of markets.
E.the social norms in a country do not affect purchase decisions of consumers.
Answer:
The argument for unrestricted free trade is that both import controls and export
incentives:
A.help firms build a competitive advantage that is subsequently difficult to challenge.
B.help firms to capture first-mover advantages.
C.imply that a laissez-faire stance toward trade is in the best interests of a country.
D.are self-defeating and result in wasted resources.
E.are not in line with principles of mercantilism.
Answer:
Which of the following is true of multipoint pricing?
A.It involves aggressive pricing in one market to elicit a competitive response from a
rival in another market.
B.It involves a firm pricing its products at a loss in order to drive out competitors from
the market.
C.It involves buying products at a cheaper rate in one country and selling those at a
higher price in another country.
D.It involves allowing markets to determine the pricing of a product.
E.It involves pricing two similar products at low and high prices in order to boost sales
of the lower priced products.
Answer:
The term global commons refers to:
A.social norms and values that are common across the globe.
B.a group of nations that share similar ideologies on globalization.
C.natural resources from which everyone benefits but for which no one is specifically
responsible.
D.common laws to be obeyed by companies involved in international business.
E.arrangements, like common currencies, between countries to simplify international
trading.
Answer:
The interest rate on borrowings in Rhodia is 2 percent and the interest rate on bank
deposits in Maritia is 7.5 percent. In this scenario, a carry trade would be to:
A.borrow money in Maritian currency, convert it into Rhodian currency, and deposit it
in a Rhodian bank.
B.borrow money in Rhodian currency and invest in stocks with good growth potential
in Rhodia.
C.borrow money in Rhodian currency, convert it into Maritian currency, and deposit it
in a Maritian bank.
D.invest in bank deposits of Maritia and reinvest the earnings in Rhodia.
E.invest in bank deposits of Rhodia and reinvest the earnings in Maritia.
Answer:
The philosophy behind intellectual property laws is to:
A.reward the originator of a new invention, book, musical record, and the like for his or
her idea and effort.
B.protect consumers from being subjected to business malpractice.
C.safeguard a firm and its officers from being responsible for injury, death, or damage
caused by the firm’s product.
D.eliminate monopoly in international trade.
E.ensure that the rights to manufacture, use, or sell an invention are made available to
the whole society.
Answer:
In economic terms, the long-run monetary benefits of doing business in a country are
most likely to be a function of the:
A.gender ratio of the country.
B.latitudinal and the longitudinal location of the country.
C.natural resources available in the country.
D.present wealth (purchasing power) of consumers of the country.
E.political history of the country.
Answer:
The two phenomena that help explain the experience curve are:
A.learning effects and economies of scale.
B.technology inputs and wealth transfer.
C.leveraging subsidiary and local responsiveness.
D.standardized manufacturing and global web.
E.efficiency frontier and location economies.
Answer:
Which of the following occurs when a government increases the money supply?
A.It results in an overall decrease in credit.
B.It makes it difficult for individuals and companies to borrow from banks.
C.It makes it easier for banks to borrow from the government.
D.It causes a decrease in demand for goods and services.
E.It causes price deflation as the money supply exceeds goods and services output.
Answer: