Export controls are highly effective for digital products, such as computers, TVs, and
cameras.
Most world trade takes place between raw material exporters and manufacturing
exporters.
An arbitrageur is an exporter that seeks to conduct countertrade in emerging markets.
The Japanese yen makes up the largest portion of the international bond market.
A major pitfall of exporting is misclassifying products in terms of the destination
country’s tariff schedule, thereby incurring a higher tax or slower delivery.
Digitization has altered location economics and established a new global model for
service providers in the financial and legal industries.
The formation of CARICOM has primarily been triggered by the desire of Jamaica,
Trinidad, and Tobago to expand the region’s market size and attract more FDI.
Companies that have integrated their supply chains internationally tend to lobby their
home governments for increased protectionist measures.
An NGO is a private institution independent from the government.
The opportunity to increase profitability is the primary reason that firms decide to
export.
Sales potential is probably the most important variable in determining international
location decisions because consumer demand exceeds supply.
International companies often must customize products to comply with local standards
if they are to do business in a particular country.
The rule of man, a practice that has been in play for millennia, presumes that the law is
the will of the ruler, whether the king, czar, raj, or emperor.
Stockholders are typically more interested in corporate social responsibility than in
earning profits.
When recording the value of a purchase denominated in a foreign currency, the
company is required to use the spot rate when payment is made, as long as it is made 30
days or more in the future.
Collaborative arrangements prevent the possibility of information being passed to
potential competitors.
Consolidation of financial statements is the process of restating foreign subsidiary
financial statements into the GAAP of the parent company.
Change in the long-term industry growth rate has the potential to transform an
industry’s structure.
Inflation occurs because aggregate demand is growing as fast as aggregate supply.
According to 2010 surveys, the most frequently traded currency pair is the U.S. dollar
and Japanese yen.
MNEs use different report formats and schedules for foreign operations according to
local customs.
The range of economic systems in the world today, when represented on a spectrum,
has one end anchored by the idea of capitalism, the other with that of socialism.
If the forward rate for a foreign currency is less than the spot rate, the foreign currency
is selling at a forward premium.
The primary objective of multinational tax planning is to minimize the firm’s worldwide
tax burden.
Understanding trade theories helps companies know if they will need to compete
against goods and services produced abroad.
A strategic trade policy is one that develops industries to lessen dependence on foreign
military goods.
Regional integration is better known as global integration through the World Trade
Organization.
Taxation is an important cash flow issue, but it typically does not have a strong impact
on the choice of organizational form (such as branch or subsidiary) or the location of an
investment.
The rule of law holds that governmental authority is legitimately exercised only in
accordance with written, publicly disclosed laws that have been appropriately adopted
and which are enforced in keeping with established procedure.
The stages of development in a company’s export expansion are tied to company size.
Although most foreign-exchange activity takes place through big money center banks,
the use of electronic trading has allowed even regional banks to deal directly in
foreign-exchange markets.
The European Union is an example of regional integration.
According to the product life cycle (PLC) theory of trade, most new products are
produced in countries where wage rates are low.
Albert, an employee at Morgan Stanley, has been given the task of handling the foreign
exchange for a customer who is moving from Brazil to Switzerland in one week. Which
of the following should Albert most likely use when exchanging the client’s Brazilian
reais for Swiss francs?
A) spot rate
B) cross rate
C) currency option
D) current U.S. rate
Hoffman Electronics is a U.S. company. Which balance sheet format is most likely used
by Hoffman?
A) assets + liabilities = reserves
B) assets = liabilities + shareholders’ equity
C) noncurrent assets + current assets – current liabilities – noncurrent liabilities =
shareholders’ equity
D) current assets – current liabilities = fixed assets – noncurrent liabilities = capital and
reserves
Which of the following countries has the largest market for domestic bonds?
A) United Kingdom
B) United States
C) Japan
D) China
The staffing policy at Hanover International is to seek the best people for key jobs
throughout the organization, regardless of nationality. Hanover most likely follows a(n)
________ staffing approach.
A) geocentric
B) intercentric
C) polycentric
D) ethnocentric
The pound-dollar forward rate for pounds is $1.9068, and the spot rate is $1.9059.
Pounds are selling at a ________.
A) discounted premium
B) backward discount
C) forward premium
D) forward discount
Which of the following is NOT a factor driving local responsiveness among global
firms?
A) cross-national differences in distribution channels
B) diverging consumer tastes and preferences
C) cross-national differences in product standards
D) host government support of freer international trade
Country X brings in a large number of unskilled immigrants to meet its labor needs.
Which of the following is the LEAST likely to occur in Country X as a result?
A) Country X will develop a long-term class of “have-nots” if the children of
immigrants remain unskilled.
B) Country X will need more unskilled people in the future if immigrant children
become skilled.
C) The continual supply of unskilled labor will delay the development of labor-saving
technology in Country X.
D) Country X will experience a significant transfer of knowledge and a resulting rise in
start-up businesses.
Dependencia theory holds that ________.
A) countries should seek to diversify their economies
B) low-income countries have practically no power in dealings with MNEs
C) in a globalized world, no nation can be independent economically or politically
D) there is a natural division of labor whereby developing countries depend on
production using fairly unskilled labor and developed countries depend on highly
educated workers
The diamond of national advantage would be best used to answer which of the
following questions?
A) How do developed countries prevent the trade of blood diamonds?
B) How can developing countries create a significant trade surplus?
C) Why do specialized competitive advantages differ among countries?
D) Why do most innovative products originate in developed countries?
In designing an export plan, managers initially do all of the following EXCEPT
________.
A) sequence tactics
B) specify objectives
C) assess resources
D) organize financial support
The central bank in the United States is the ________.
A) Federal Reserve System
B) U.S. Exchange Reserve
C) Board of Governors
D) U.S. Treasury
In which of the following situations is a firm most likely to be able to choose the
foreign operating form it would most like to use?
A) Its main motive is to gain location-specific assets.
B) It has a desired and unique resource.
C) Its preference for entering foreign markets is via acquisition of foreign facilities.
D) It has little concern about appropriability.
Coca-Cola collaborates extensively abroad, but it refuses collaboration that might
imperil control of its core competency. As a result, which of the following is NOT one
of its international collaborative forms?
A) sharing ownership in the production of its secret formula concentrate
B) using franchisers to bottle, sell, and deliver Coke beverages
C) licensing Coke’s trademark for use on products in which it lacks skills
D) forming joint ventures with companies that provide supplies for Coke products
The nation offers a workable reference for studying cultural differences because
________.
A) a nation contains only one distinct culture
B) similarity among people is both a cause and effect of national boundaries
C) the commonality of language within a nation eases the process of conducting
surveys
D) different groups within the same country always have more in common with each
other than with groups in other countries
Melissa, a foreign-exchange trader, wants to buy euros from Stephanie. Which of the
following is the price at which Melissa is willing to buy euros?
A) spread
B) offer
C) bid
D) cross rate
Which term refers to how companies value assets such as inventory?
A) measurement
B) conservatism
C) disclosure
D) optimism
The incremental internationalization view of exporting holds that companies first target
countries that are ________ their home market.
A) different from
B) similar to
C) smaller than
D) larger than
Libor is best defined as the ________.
A) interest rate of the National Bank of London
B) short-term interest rate for dollars held in the Eurodollar market
C) interest rate of the European Union
D) deposit rate that applies to commercial loans in the European Union
A multinational enterprise (MNE) is best defined as a firm ________.
A) that is a member of the Fortune 500
B) with foreign business partners
C) involved in global franchising
D) with foreign direct investments
The International Fisher Effect ________.
A) links interest rates and inflation
B) implies that the currency of the country with the lower interest rate will weaken in
the future
C) implies that the country with the higher interest rate should have lower inflation
D) links interest rates and exchange rates
Which of the following firms would most likely be involved in a turnkey operation?
A) American Airlines
B) Bechtel Construction
C) Burger King
D) Microsoft
If a company from Country A decides to sell merchandise to a company from Country
B, then the company from Country A ________.
A) will denominate the sale in its own currency since it is too hard to convert foreign
currency
B) will denominate the sale in the currency of the buyer since it is too hard for them to
convert foreign currency
C) can denominate the sale in either currency and use the foreign-exchange market to
convert currency
D) can use the OTC market to convert receipts in the future and the exchange markets
to convert receipts in the spot market
Country X wants to eliminate its balance of trade deficit while simultaneously keeping
prices low for imported essentials. Which of the following methods would most likely
achieve these dual objectives?
A) devaluing its currency
B) enacting selective import restrictions
C) using tight monetary policies to deflate price levels
D) spurring productivity increases through general tax breaks for industry
Successful trade retaliation is most likely achieved ________.
A) on agricultural products
B) on manufactured products
C) by a large trading country
D) by a small trading country
Dixon Electronics recently introduced a new computer with features unavailable from
other products on the market. Dixon is charging a very high price for the computer and
has plans to progressively lower the price over the next year. Dixon is most likely using
a ________ strategy.
A) cost-plus
B) skimming
C) penetration
D) diversification
Which strategy champions worldwide consistency and standardization to support the
firm’s goal to become the low-cost leader?
A) international strategy
B) localization strategy
C) global strategy
D) transnational strategy
Elison Enterprises is planning international geographic expansion. A manager at Elison
has been given the task of scanning for locations primarily to ________.
A) reduce the number of options available to a manageable number for further detailed
analysis
B) assure the compatibility between the mode of corporate operation and the country
C) assure that all countries within a region have similar investment climates
D) decide whether to use a concentration or a diversification strategy
Country X is in the process of transforming from a command economy to a market
economy. This process most likely involves ________.
A) standardized procedures implemented by the state
B) high economic growth rates for the long term
C) privatization of many factors of production
D) violent political and legal upheaval
A ________ strategy is when a company collects foreign-currency receivables before
they are due when the foreign currency is expected to weaken.
A) lead
B) lag
C) global price
D) hedging
Which of the following best defines international business?
A) It includes all economic flows between two or more countries.
B) It includes all private economic flows between two or more countries.
C) It includes all business transactions involving two or more countries.
D) It includes all business transactions in countries other than your home country.
Why is the argument that “anything legal is ethical” most likely insufficient?
A) Everything that is unethical is also illegal.
B) The law is an extremely efficient way to solve ethical dilemmas.
C) Laws are frequently based on imprecisely defined moral concepts.
D) Laws can never be changed; thus, rules for all possible ethical dilemmas are found
in the law.
In a country like Russia, where there is a great deal of corruption, an MNE would most
likely use ________ to fund corporate activities.
A) equities
B) debt
C) cash
D) countertrade
What is the most likely reason that firms avoid aggressively seeking export
opportunities?
A) Exporting is an activity best left to large, resource-rich firms.
B) Firms are unaware of opportunities in foreign markets.
C) Foreign customers cannot easily communicate their needs.
D) Firms are reluctant to adjust their established business practices.
In reality, the organizational charts of ________ MNEs neatly depict a functional,
divisional, or matrix structure.
A) no
B) few
C) most
D) all
According to the PLC theory, developing countries have their best production
advantage in which stage of the product life cycle?
A) growth
B) maturity
C) decline
D) introduction
