Arbitrage opportunities abound in the foreign exchange markets and they tend to be
available for long periods of time.
The attractiveness of a country as a potential market for an international business
depends on balancing the benefits, costs, and risks associated with doing business in
that country.
The lowering of barriers to international trade enables firms to view the world, rather
than a single country, as their market.
According to WTO data, the volume of world merchandise trade has grown faster than
the world economy since 1950.
Non-U.S. firms increasingly began to invest across national borders because they
wanted to disperse production activities to optimal locations and to build a direct
presence in major foreign markets.
Barter is a reciprocal buying agreement that occurs when a firm agrees to purchase a
certain amount of materials back from a country to which a sale is made.
The basic principle behind incentive systems is to ensure that the incentive scheme for
an individual employee is linked to an output target that he or she has some control over
and can influence.
According to Ricardo’s theory of comparative advantage, countries shall not produce a
good, even if they have an absolute advantage in its production, if they do not produce
it efficiently.
The number of command economies has fallen dramatically since the demise of
communism in the late 1980s.
Eurocurrency can be created anywhere in the world.
Supporters of debt relief argue that new democratic governments in poor nations should
not be forced to honor debts incurred by corrupt and dictatorial predecessors.
A current trend in international business is the decline of medium-sized and small
multinationals, known as mini-multinationals.
Factor endowments refer to the extent to which a country is gifted with such resources
as land, labor, and capital.
The choice between centralization and decentralization is not absolute.
Foreign Credit Insurance Association is a part of the U.S Department of Commerce and
guides the activities of the Export-Import Bank.
A company that depends on mass media advertising to communicate its marketing
message to potential consumers is using a push strategy.
The theories of Smith and Ricardo show that countries should not engage in
international trade for products that it is able to produce for itself.
The globalization of the world economy has resulted in a relative increase in the
dominance of U.S. firms in the global marketplace.
An executive who performs well in a domestic setting may not be able to adapt to
managing in a different cultural setting.
The long-run monetary benefits of doing business in a country are a function of the size
of the market, the present wealth of consumers in that market, and the likely future
wealth of consumers.
A counterpurchase gives exporters more flexibility than an offset.
Political freedom is one of the measures used by the Human Development Index (HDI)
to measure the quality of human life in different nations.
The Trade-Related Aspects of Intellectual Property Rights, attempts to reduce
intellectual property protections to enhance trade.
The most important trading centers for currencies are Zurich, Frankfurt, Paris, Hong
Kong, and Sydney.
According to Max Weber, Protestantism encouraged capitalism’s development by
emphasizing the importance of wealth creation and frugality.
Markets can be segmented in only one way: by socio-cultural factors.
In polycentric firms, the lack of managers’ mobility among national operations implies
that pay can and should be kept country-specific.
Cultural myopia refers to a firm’s failure to understand host-country cultural differences
that require different approaches to marketing and management.
Financial services is an information-intensive industry.
An organizational culture can be strong but bad.
To leverage subsidiary skills, companies should establish incentive systems that
encourage local employees to acquire new skills.
Lowering the costs is one of the objectives of the production and logistics function of
an international firm.
Democracy is a form of government that prohibits opposing political parties.
Economist Martin Feldstein has coined the term “hot money” to pertain to long-term
capital flows.
The products of Carmen Stores, an international sports apparel chain, are manufactured
in sweat factories in China. According to the company president, using sweatshop labor
offers a means of livelihood to children and young adults, as well as supplies good
quality apparel to customers at a lower cost. She asserts that the actions of the company
are justified because it results in the benefit of the maximum number of people. The
company president’s argument is based on which of the following ethical viewpoints?
A. The righteous moralist
B. The Friedman doctrine
C. Kantian approach to business ethics
D. Utilitarian approach to business ethics
Who was the author of The Wealth of Nations in which it is stated that an individual
who intends his own gain is led by an invisible hand to promote an end that was not
part of his intention?
A. David Hume
B. Adam Smith
C. Karl Marx
D. John Stuart.
Which of the following is true of firms that compete in the global marketplace?
A. They must employ a transnational policy in order to have a competitive edge.
B. Because differentiation across countries can involve significant duplication and a
lack of product standardization, it may raise costs.
C. They must employ a domestic policy in order to have a competitive edge.
D. Because differentiation across countries can involve significant duplication and a
lack of product standardization, it may reduce costs.
In a seminal study, R. L. Tung found that for Japanese multinationals, the biggest
impediment to expatriate success was:
A. the inability of the spouse to adjust.
B. inadequate compensation.
C. the manager’s inability to cope with larger overseas responsibilities.
D. the lack of adequate technical training.
A quota rent is:
A. a quota on trade imposed by the exporting country.
B. levied as a fixed charge for each unit of a good imported.
C. levied as a proportion of the value of the imported good.
D. the extra profit producers make when supply is artificially limited by an import
quota.
Money management decisions attempt to manage the firm’s _____ most efficiently.
A. cash flow
B. corporate expenses
C. working capital
D. corporate revenues
_____ are levied as a proportion of the value of the imported good.
A. Specific tariffs
B. Import quotas
C. Ad valorem tariffs
D. Tariff rate quotas
Which of the following was the outcome of the Treaty of Lisbon signed in 2007?
A. It established the European Community.
B. It resulted in the adoption of the Euro.
C. It changed the name of the European Community to the European Union.
D. It increased the power of the European Parliament.
Which treaty, signed in December 1991, committed EC members to adopting a
common currency by January 1, 1999?
A. The Maastricht Treaty
B. The Treaty of Rome
C. The Single European Act
D. The Treaty of Lisbon
_____ includes obligations for the purchase or sale of goods and services at previously
agreed prices and the borrowing or lending of funds in foreign currencies.
A. Economic exposure
B. Transaction exposure
C. Corporate financial exposure
D. Translation exposure
In common law, _____ refers to cases that have come before the courts in the past.
A. custom
B. precedent
C. codification
D. tradition
Google launched Google Plus to gain a foothold in the social media market. However,
given that there are numerous social networking platforms and Facebook is already a
leader in social media, Google Plus found it challenging to generate brand loyalty and
establish itself in the market. This was because of _____.
A. incumbent disadvantage
B. disintermediation disadvantage
C. late-mover disadvantage
D. horizontal integration disadvantage
The economic freedom associated with a _____ creates greater incentives for
innovation and entrepreneurship than either a planned or a mixed economy.
A. mixed economy
B. planned economy
C. market economy
D. command economy
The Heckscher-Ohlin theory predicts that countries will:
A. export those goods that make intensive use of factors that are locally scarce.
B. export those goods that make intensive use of factors that are locally abundant.
C. import those goods that make intensive use of factors that are locally abundant.
D. import those goods that make intensive use of factors that are available world-wide.
_____ is considered the language of world business.
A. Chinese
B. English
C. Spanish
D. Hindi
There are four main institutions that make up the political structure of the EU. Which of
them is
responsible for proposing EU legislation, implementing it, and monitoring compliance
with EU laws?
A. European Council
B. Court of Justice
C. European Commission
D. European Parliament
A free market economy in which property rights are protected leads to subsequent
economic growth, which often leads to the establishment of:
A. a democratic regime.
B. a planned economy.
C. government owned enterprises.
D. a socialist economy.
When a company charges whatever the market will bear, the company is using _____.
A. strategic pricing
B. price discrimination
C. a push strategy
D. a pull strategy
In several Western democracies, the poor performance of state-owned enterprises,
because of protection from competition and guaranteed government financial support,
led to _____.
A. privatization
B. nationalization
C. liberalization
D. socialization of production
An integrated international capital market is _____ compared to a nonintegrated
market.
A. highly volatile
B. more shock-proof
C. less volatile
D. less resistant to change
The pragmatic nationalist view highlights _____ of FDI.
A. only the benefits
B. only the costs
C. both the benefits and costs
D. neither the benefits nor the costs The pragmatic nationalist view is that FDI has both
benefits and costs.
Which of the following was established to maintain order in the international monetary
system?
A. The WTO
B. The GATT
C. The World Bank
D. The IMF
_____ refers to a society that allows relatively free gratification of basic and natural
human drives related to enjoying life and having fun.
A. Persistence
B. Indulgence
C. Reciprocation
D. Restraint
Most service firms have found that _____ with local partners work best for controlling
subsidiaries.
A. joint ventures
B. licensing agreements
C. greenfield investments
D. turnkey projects
Cross-cultural literacy refers to:
A. an individual’s self-concept derived from perceived membership in a relevant social
group.
B. the phenomenon of merging and converging cultures.
C. abstract ideas about what a group believes to be good, right, and desirable.
D. an understanding of how cultural differences can affect business.
_____, a Nobel Prize-winning economist, has argued that development is not just an
economic process, but it is a political one as well.
A. Hernando de Soto
B. Karl Marx
C. Samuel Huntington
D. Amartya Sen
A disadvantage of _____ is that the firm that enters into such an arrangement will have
no long-term interest in the foreign country.
A. wholly owned subsidiaries
B. exporting
C. licensing
D. turnkey projects
The _____ believed that socialism could be achieved only through violent revolution
and totalitarian dictatorship.
A. socialists
B. communists
C. collectivists
D. social democrats
There is a tendency for greater retail concentration in _____.
A. rural areas
B. developed countries
C. urban areas
D. developing countries
What will happen, according to Paul Samuelson’s critique, if a rich country enters into a
free trade agreement with a poor country?
A. Both the countries will incur losses due to the exchanges between them.
B. The productivity of the poor country will decline rapidly.
C. The poor country will rapidly improve its productivity.
D. Both the countries will garner benefits from the exchanges between them.
Which of the following is an example of intellectual property?
A. A music score
B. A lazer-tag game
C. A software business
D. A theater
A(n) _____ is made when a corporation sells stock to investors.
A. corporate bond sale
B. debt loan
C. Eurobond investment
D. equity loan
Eurodollars:
A. refer to the exchange value of dollar with Euro.
B. are used to pay for imports from Europe.
C. are dollars banked outside of the United States.
D. refer to the exchange buffer that Euro has against dollar.
Why should a firm be cautious about entering a licensing agreement?
How do product factors affect the decision of where to locate production? Where will
you locate your firm’s production plant if your firm produces refined sugar?
Discuss the economic reasons for government intervention in markets.
What is the political case for integration? How did political arguments influence the
establishment of the European Union?
Explain the relationship between first-mover disadvantages and pioneering costs.
Explain organizational structure.
Discuss the significance of the Jamaica Agreement.
Discuss why the stratification of a society is important to business.
Discuss what occurred in Seattle in 1999 at the meeting of the WTO and why the events
were important to the future of global trade.
Discuss the establishment of GATT.
Discuss the trends in FDI over the last 30 years.
What is the law of one price?
A fronting loan is a loan between a parent and its subsidiary channeled through a
financial intermediary.
What factors affect the rate of new-product development in countries?
Discuss the location of decision-making in a firm that is following a transnational
strategy.
What are the main steps in the control process of a typical firm?