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1) a benefit to companies of economic integration is the opportunity to centralize their
production and reduce costs.
2) the financial crisis that started in the united states and swept around the world in
2008 and 2009 could be attributed to the increasing correlation between different stock
markets across the world.
3) there is research supporting the view that multinational firms often transfer
significant technology when they invest in a foreign country.
4) in 1997, the currencies of several asian nations including south korea, indonesia, and
thailand lost between 50 percent between 80 percent of the value against the u.s. dollar
over the period of a few months.
5) the small business administration is a good source of export assistance.
6) trade is mutually beneficial, according to new trade theory, because it allows for the
specialization of production, the realization of scale economies, and the production of a
greater variety of products at lower prices.
7) the merging of historically distinct and separate markets into one huge global
marketplace is known as the globalization of markets.
8) educating customers is a part of pioneering costs.
9) firms that pursue a transnational strategy are trying to simultaneously do all of the
following except:
a.achieve low costs through location economies
b.standardize their product offering for the global market
c.foster a multidirectional flow of skills between different subsidiaries
d.achieve low costs through economies of scale and learning effects
10) because of the long-term implications of volatile exchange rates, firms should:
a.use the forward market because it is a perfect predictor of future exchange rates
b.get complete insurance coverage for exchange rates that might occur several years in
the future
c.pursue strategies that reduce economic exposure
d.avoid transactions that involve foreign currencies
11) a wholly owned subsidiary is appropriate when:
a.the firm wants to share the cost and risk of developing a foreign market
b.the firm wants 100 percent of the profits generated in a foreign market
c.the firm wants a plant that is ready to operate
d.the firm wants to test a market
12) economies of scale arise from all of the following sources, except:
a.increasing fixed costs by limiting them to small volumes
b.serving domestic and international markets from the same production facilities
c.serving global markets
d.bargaining with suppliers to bring down the cost of key inputs
13) which of the following statements is true regarding practical training?
a.practical training is provided to foster an appreciation for the host country's culture
b.the local community is a significant source of support in helping an expatriate family
adapt to a foreign culture
c.expatriates should delay the process of establishing a routine as it increases the
likelihood of premature return on account of monotony
d.where an expatriate community exists, firms often devote considerable effort to
ensuring that the new expatriate family is quickly integrated into that group
14) until 1995, gatt rules applied to all of the following except:
a.manufactured goods
b.services
c.textiles
d.agricultural products
15) the expertise, competencies, and skills of established retailers in a nation, and their
ability to sell and support the products of international businesses is referred to as their:
a.channel exclusivity
b.channel knowledge
c.channel quality
d.channel skill
16) a(n) _____ involves delaying collection of foreign currency receivables if that
currency is expected to appreciate and delaying payables if the currency is expected to
depreciate.
a.follower strategy
b.interim strategy
c.lead strategy
d.lag strategy
17) _____ is essentially the service-industry version of licensing, although it normally
involves much longer term commitments.
a.franchising
b.subsidizing
c.greenfield investment
d.patenting
18) all of the following are reasons why economic integration has never been easy to
achieve or sustain except:
a.even though it aids the majority, it has its costs
b.a nation as a whole may benefit significantly, but certain groups may lose
c.there are concerns over loss of national sovereignty
d.linking neighboring economies makes them increasingly dependent on each other
19) what is the long-term goal of international trade secretariats (itss)?
a.to reduce the competition between national unions
b.to be able to bargain transnationally with multinational firms
c.to reduce the ideological gap between union leaders in different countries
d.to get national and international bodies to regulate multinationals
20) switching costs:
a.drive early entrants out of the market
b.make it easy for later entrants to win business
c.make it difficult for later entrants to win business
d.give later entrants a cost advantage over early entrants
