1) governments do not always act in the national interest when they intervene in the
economy; politically important interest groups often influence them.
2) the foreign exchange market is a market for converting the currency of one country
into that of another country.
3) historically, upward mobility could be achieved in a single generation in britain.
4) barriers to cross-border capital flows limit the ability of capital to roam the world
freely in search of the highest risk-adjusted return; consequently, at any one time, there
may be too much capital invested in some markets and too little in others.
5) classical economics and the international trade theories of adam smith and david
ricardo form the basis for the free market view.
6) contracts under a civil law system tend to be very detailed with all contingencies
spelled out.
7) there are no impediments to the free flow of goods and services in an efficient
market.
8) when distribution channels are short, firms should:
a.use a direct channel
b.use a push strategy
c.focus on consumer products or other standardized products
d.focus on industrial products or other complex products
9) which of the following countries has been the largest recipient of foreign direct
investment and received about $70 billion a year in inflows in 2005 and 2006?
a.brazil
b.russia
c.india
d.china
10) when a firm emphasizes personal selling rather than mass media advertising in the
promotional mix, the firm is using a:
a.standardized strategy
b.pull strategy
c.push strategy
d.localized strategy
11) which of the following is not an advantage associated with entering a foreign
market before other international businesses?
a.ability to preempt rivals and capture demand by establishing a strong brand name
b.ability to ride down the experience curve ahead of rivals
c.ability to create switching costs
d.ability to avoid pioneering costs
12) _____ refer(s) to systematic reductions in production costs that have been observed
to occur over the life of a product.
a.experience curve
b.economies of scale
c.location economies
d.production possibility
13) _____ involves dominant enterprises setting different prices in different markets to
reflect varying demand conditions.
a.conditional pricing
b.dual pricing
c.price discrimination
d.foreign market pricing
14) which of the following statements is true regarding transfer pricing?
a.most governments favor the use of transfer pricing.
b.the correct transfer price, according to the irs guidelines, is an arm’s-length pricethe
price that would prevail between unrelated firms in a market setting.
c.transfer pricing is consistent with a policy of treating each subsidiary in the firm as a
profit center.
d.the opportunity for price manipulation is much greater with arm’s-length pricing than
it is for cost-based transfer pricing.
15) the theory of _____, developed by michael porter, focuses on the importance of
country factors, in addition to factor endowments, such as domestic demand and
domestic rivalry in explaining a nation’s dominance in the production and export of
particular products.
a.new trade
b.absolute advantage
c.comparative advantage
d.national competitive advantage
16) _____ arises when people behave recklessly because they know they will be saved
if things go wrong.
a.a debt situation
b.moral hazard
c.a conflict of interest
d.policy failure
17) the _____ dimension of hofstede’s study explores how a society deals with the fact
that people are unequal in physical and intellectual capabilities.
a.power distance
b.individualism vs. collectivism
c.uncertainty avoidance
d.masculinity vs. femininity
18) for _____ to work, the firm must normally have a profitable position in another
national market, which it can use to subsidize aggressive pricing in the market it is
trying to monopolize.
a.multipoint pricing
b.value-based pricing
c.experience curve pricing
d.predatory pricing
19) which of the following is not likely to lead to unethical behavior?
a.an organizational culture that deemphasizes business ethics
b.a process that does not incorporate ethical considerations into business decision
making
c.a strong personal ethical code governing the conduct of an individual
d.pressure from the parent company to meet unrealistic performance goals
20) which of the following is a characteristic of manufacturing technology that should
be considered by a firm contemplating international production?
a.trade barriers
b.value-to-weight ratio
c.
21) a(n) _____ involves the free flow of products and factors of production between
member countries and the adoption of a common external trade policy, along with a
common currency, harmonization of members’ tax rates, and a common monetary and
fiscal policy.
a.free trade area
b.economic union
c.common market
d.customs union
22) what are transaction costs? how can they be reduced?
23) why do acquisitions fail?
24) compare and contrast import quotas and voluntary export restraints.
25) evaluate the product life cycle. how well does the theory hold up? what are the
theory’s weaknesses?
26) what are eurobonds? explain with the help of an example.
27) what is the leontief paradox?
28) consider the case for fixed exchange rates.
29) compare and contrast the fisher effect and the international fisher effect.
30) what are the economic implications of hinduism?