1) in the period 1950-1990, the world gdp showed a consistent decline as opposed to
the volume of exports.
2) mercantilism advocated that countries should encourage exports and imports.
3) historically, most fdi has been directed at the developed nations of the world as firms
based in advanced countries invested in the markets of other advanced countries.
4) a current account deficit exists when a country imports more than it exports.
5) collectivist inclined totalitarian states tend to be pro-private enterprise and
pro-consumer.
6) establishment of the euro created the largest currency zone in the world, replacing
the position the u.s. dollar had held for decades.
7) cultural relativism is the belief that ethics are nothing more than a reflection of
culture and therefore, a firm should adopt the ethics of the culture in which it is
operating.
8) until recently, only 5 percent of intra-asean trade consisted of goods whose tariffs
had been reduced through an asean preferential trade arrangement.
9) the process of identifying distinct groups of consumers whose purchasing behavior
differs from others in important ways is known as market segmentation.
10) an investor based in the middle east buying exxon mobil corporation stock through
the new york stock exchange would be an example of transnational financing.
11) according to the new trade theory, firms that establish a first-mover advantage with
regard to the production of a particular new product may subsequently dominate global
trade in that product.
12) multilateral netting is an extension of bilateral netting.
13) a(n) _____ is valuable because it can be used as a nonbureaucratic conduit for
information flows within a multinational enterprise.
a.liaison network
b.matrix structure
c.organizational structure
d.knowledge network
14) identify the incorrect statement about the ppp theory.
a.it predicts that exchange rates are determined by relative prices
b.it yields accurate predictions in the short run
c.it best predicts exchange rate changes for countries with high rates of inflation
d.it assumes away transportation costs and barriers to trade
15) a(n) _____ is any currency banked outside of its country of origin.
a.dollar amount
b.global currency
c.international currency
d.eurocurrency
16) flexible manufacturing technology is also known as:
a.mass customization
b.lean production
c.flexible machine cells
d.minimum efficient scale
17) the international capital market boom in the 1980s, 1990s, and 2000s can be
attributed to the
a.advances in information technology
b.increased regulations by governments
c.increase in real cost of recording, transmitting, and processing information
d.decreased acceptance of the free market ideology
18) which of the following is not a reason why wto is being criticized by those
opposing free trade?
a.its trade laws allow imports from low-wage countries and result in a loss of jobs in
high-wage countries
b.its rules outlawing the ability of nations to stop imports from countries where working
conditions are hazardous
c.the adverse impact that some of its rulings have had on environmental policies
d.its lack of ability to force any member nation to take an action to which it is opposed
19) market makers are:
a.financial service companies that connect investors and borrowers
b.those who want to borrow money including individuals, companies, and governments
c.nonbank financial institutions who want to invest money
d.high net worth individuals with surplus cash to reinvest
20) this is an islamic banking method where banks lend money to a business, and rather
than charging that business interest on the loan, they take a share in the profits that are
derived from the investment.
a.mudarabah
b.murabaha
c.maysir
d.mudarib
21) adjusting discount rates to reflect a location’s riskiness:
a.is not widely practiced by firms.
b.treats all risk as a single problem.
c.penalizes distant cash flows too heavily.
d.does not penalize early cash flows enough.
22) in 1997, the stock markets of several asian countries, including south korea,
malaysia, indonesia, and thailand, lost over 50 percent of their value in response to the
asian financial crisis, while at the same time the s&p 500 increased in value by over 20
percent. this indicates that:
a.relatively low correlation exists between the movement of stock markets in different
countries
b.international diversification has failed in reducing the risks of global capital
movement
c.capital controls result in segmentation of different stock markets
d.the integration of global capital disproportionately favors developed countries in
europe and america
23) during the 1960s and 1970s, class divisions in _____ raised the cost of doing
business there, relative to other european countries.
a.great britain
b.switzerland
c.norway
d.germany
24) according to islam, those who hold property are regarded as:
a.trustees
b.owners
c.tenants
d.speculators
25) facilitating payments are:
a.permitted under the amended foreign corrupt practices act
b.a direct violation of the foreign corrupt practices act
c.permitted so long as they designed only to gain exclusive preferential treatment
d.used to secure contracts that would otherwise not be secured
26) according to the product life-cycle theory, the locus of global production initially
switches from the u.s. to other advanced nations and then from those nations to
developing countries. the consequence of this trend for the pattern of world trade is that
over time the u.s.:
a.becomes the sole producer of the product
b.switches from being an exporter of the product to being an importer of the product
c.switches from being an importer of the product to being an exporter of the product
d.becomes the sole consumer of the product
27) which of the following is seen as a disadvantage of the euro?
a.higher foreign exchange and hedging costs
b.national authorities losing control over monetary policy
c.it becomes difficult to compare prices across europe
d.undermines the development of a pan-european capital market
28) restrictions on a project, because of which a firm may not be able to remit all its
cash flows to the parent company:
a.do not affect the net present value of the project to the parent company.
b.do not affect the net present value of the project itself.
c.do not limit the cash flows of the parent company in any manner.
d.establishes the fact that a foreign project need not be analyzed from the perspective of
the parent company.
29) economies that arise from performing a value creation activity in the optimal place
for that activity are referred to as:
a.factor economies
b.production economies
c.location economies
d.value creation economies
30) the law that makes it illegal to bribe a foreign government official in order to
maintain business over which that foreign official has authority, and requires all
publicly traded companies to keep detailed records that would allow determining
whether a violation of the act has occurred is the:
a.cigs
b.foreign corrupt practices act
c.economic cooperation anti corruption act
d.convention on combating bribery of foreign officials in international transactions
31) grease payments:
a.are not the same as facilitating payments or speed money
b.are facilitating payments made to expedite routine government action
c.are payments to gain exclusive preferential treatments
d.can be used to secure contracts that would otherwise not be secured
32) firms pursuing _____ business strategies disperse each value creation activity to its
optimal location in the world.
a.localization and transnational
b.global and localization
c.transnational and global
d.localization and international
33) explain what is meant by countertrade. what is the purpose of countertrade?
34) what was the bretton woods agreement? how was it different from the gold
standard?
35) discuss the limitations of hofstede’s research.
36) discuss the sources of inertia in organizations. is it easy to make organizational
changes?
37) does new trade theory support the work of heckscher and ohlin? is the theory at
variance with the theory of comparative advantage?
38) what are the drawbacks of the eurocurrency market?