1) when a country cannot service its foreign debt obligations, a banking crisis has
occurred.
2) the make-or-buy decision involves deciding whether a firm should make or buy the
component parts that go into the final product.
3) the imf can force countries to adopt the policies required to correct economic
mismanagement.
4) the communists believed that socialism could be achieved by democratic means, and
turned their backs on violent revolution and dictatorship.
5) antidumping policies vary drastically from country to country.
6) wto rules do not allow countries to impose antidumping duties on foreign goods that
are being sold cheaper than at home, or below their cost of production, even when
domestic producers can show that they are being harmed.
7) different tax regimes can determine the relative attractiveness of debt and equity in a
country.
8) a firm’s vertical differentiation determines where in its hierarchy the decision-making
power is concentrated.
9) because of diminishing returns, it is not feasible for a country to specialize to the
degree suggested by the simple ricardian model.
10) there is a perception that in the last 10 years the growing integration of the global
economy and the emergence of the global capital market have increased the correlation
between different stock markets, increasing the benefits of international diversification.
11) managers of foreign subsidiaries should never be evaluated in local currency terms.
12) the main factor that makes the eurocurrency market attractive to both depositors and
borrowers is its lack of government regulation.
13) one of the reasons for the lack of trust between firms engaged in international trade
is due to the problems of using an underdeveloped international legal system to enforce
contractual obligations.
14) when multinationals use their power in a positive way to increase social welfare, it
is ethical.
15) _____ uses price and volume data to determine past trends, which are expected to
continue into the future.
a.technical analysis
b.fundamental analysis
c.the fisher effect
d.the international fisher effect
16) licensing would be a good option for firms in which of the following industries?
a.high-technology industries in which protecting firm-specific expertise is of paramount
importance and licensing is hazardous
b.global oligopolies, in which competitive interdependence requires that multinational
firms maintain tight control over foreign operations
c.industries in which intense cost pressures require that multinational firms maintain
tight control over foreign operations
d.in fragmented, low-technology industries in which globally dispersed manufacturing
is not an option
17) when a currency is nonconvertible:
a.the country’s government allows both residents and nonresidents to purchase
unlimited amounts of a foreign currency with it
b.only nonresidents may convert it into a foreign currency without any limitations
c.neither residents nor nonresidents are allowed to convert it into a foreign currency
d.only residents may convert it internally into a foreign currency
18) identify the incorrect statement pertaining to accounting information.
a.it is often referred to as “the language of business”
b.it is means by which firms report their income to the government
c.it is consistent and standard across all countries
d.it enables the providers of capital to assess the value of their investments
19) what kind of retail systems do rural india and china have?
a.fragmented
b.direct
c.indirect
d.concentrated
20) which of the following is not a reason that the radical position of mnes was in
retreat by the end of the 1980s?
a.the strong economic performance of those developing countries that embraced
capitalism rather than radical ideology
b.the collapse of communism in eastern europe
c.the generally abysmal economic performance of those countries that embraced the
radical position
d.a growing belief in many capitalist countries that mnes tightly control key technology
and that important jobs in the mnes’ foreign subsidiaries go to home-country nationals
21) which of the following is not true about exporting?
a.a firm needs to be proactive about seeking export opportunities
b.exporting is almost always an end in itself
c.it is important for the exporter to retain the option of local production
d.localization can lead to greater market acceptance
22) the main problem with this structure is the limited voice it gives to area or country
managers, since it makes them subservient to product division managers.
a.worldwide product divisional structure
b.worldwide area structure
c.international structure
d.global matrix structure
23) the most enduring free trade area in the world is the:
a.asia pacific economic cooperation
b.mercosur
c.european free trade association
d.north american free trade association
24) which of the following statements about the trade-related aspects of intellectual
property rights agreement is false?
a.it was designed to oversee enforcement of much stricter intellectual property
regulations, beginning in 1995
b.it obliged wto members to grant and enforce patents lasting at least 20 years and
copyrights lasting 50 years
c.it directed rich countries to comply with its rules of intellectual property protection
within five years
d.it provided the very poorest countries 10 years to comply with its rules of intellectual
property protection
25) social rules and guidelines that prescribe appropriate behavior in particular
situations are best described as:
a.norms
b.values
c.culture
d.society
26) transnational _____ occurs when a firm based in one country enters another
country’s capital market to raise capital from the sale of stocks or bonds.
a.financing
b.development
c.sale
d.investment
27) according to porter, advanced factors:
a.include natural resources, climate, location, and demographics
b.are the least significant for competitive advantage
c.are naturally endowed
d.are a product of investment by individuals, companies, and governments
28) the _____ helps us to compare the relative prices of goods and services in different
countries.
a.interest rate
b.customs rate
c.exchange rate
d.tariff rate
29) a polycentric approach to staffing is one in which:
a.all key management positions are filled by parent company nationals
b.host-country nationals are recruited to manage subsidiaries while parent-company
nationals occupy key positions at corporate headquarters
c.the best people, regardless of nationality, are recruited to fill key positions throughout
the organization
d.parent-company nationals are recruited to manage subsidiaries while host-country
nationals occupy key positions
30) historically, most fdi has been directed at the _____ nations of the world as firms
based in advanced countries invested in:
a.underdeveloped; underdeveloped countries
b.developed; underdeveloped countries
c.developed; each other’s markets
d.underdeveloped; each other’s markets
31) identify the incorrect statement pertaining to exchange rate movements.
a.adverse changes in exchange rates can quickly alter a country’s attractiveness as a
manufacturing base
b.currency appreciation can transform a low-cost location into a high-cost location
c.currency appreciation can cause firms to move their manufacturing offshore to
lower-cost locations
d.a low-cost location can be transformed into a high-cost location because of currency
depreciation
32) if a firm invests its cash balances in money market accounts:
a.it will have unlimited liquidity and earn a high rate of interest.
b.it will have unlimited liquidity but will earn a relatively low rate of interest.
c.it will have limited liquidity but will earn a high rate of interest.
d.it will have limited liquidity but will earn a low rate of interest.
33) trade produces net gains for all involved and hence is a:
a.zero-sum game
b.balance-of-trade game
c.positive-sum game
d.equilibrium-gain game
34) a fixed exchange rate regime:
a.modeled along the lines of the bretton woods system will not work
b.allows each country to choose its own inflation rate
c.is characterized by speculation that adds to the uncertainty surrounding future
currency movements
d.leads to a situation where governments under political pressures expand monetary
supply too rapidly, causing unacceptably high price inflation
35) what is a joint venture? what type of joint venture is most common? provide an
example of a joint venture.
36) imagine that you are meeting with your superiors to discuss entering a foreign
market. your boss has asked you to analyze a joint venture prospect. why might you tell
your boss that the joint venture is not a good idea?
37) consider the notion that fdi flows are a reflection of strategic rivalry between firms
in the global marketplace. what is the main limitation of the theory?
38) how easy is it for countries to integrate?
39) explain what is meant by the globalization of markets. provide an example. what
are the most global markets?