1) When income inequality is high in a specific country, the per capita GDP figures are
more meaningful.
2) Most cultural variables are universal.
3) The infant-industry argument for trade protection holds that an industry needs
government protection from imports until it becomes competitive enough in world
markets.
4) An ethnocentric staffing policy is well matched with a multidomestic strategy.
5) Geocentrism is the preferred approach to international business practices for most
global firms.
6) In developed countries, the percentage of the working-age population (using today’s
standards) is expected to rise by 2050.
7) Political risk insurance is more likely to be purchased by MNEs that apply an active
approach to political risk management.
8) What is a key industry?
A) an industry that is locked up competitively by domestic producers
B) a turnkey operator specializing in the construction of infrastructure components
C) an industry that receives government subsidies
D) an industry that significantly affects the economy by virtue of its size or influence on
other sectors
9) Although electronic commerce offers companies an opportunity to promote their
products globally, doing so brings challenges. Which of the following is NOT one of
the challenges?
A) Many households, especially in developing countries, lack access to the Internet
B) Setting up and implementing Internet sales can be expensive
C) The appeals must be differentiated for every country of the world
D) Switching to Internet sales can upset current distribution
10) According to the theory of comparative advantage, a country gains from foreign
trade even though it may have an absolute advantage in the production of all products
because ________.
A) the country will forego producing its less efficient output in order to produce its
more efficient output
B) workers become more efficient through specialization
C) economies of scale will reduce cost
D) there will be more incentive to develop cost-saving technologies
11) A company’s operations are most likely to be taken over by a host government when
________.
A) the operations are relatively small and, thus, unlikely to incur the wrath of the
company’s home government
B) the operations are substantial and have a widespread effect on the country because of
the company’s size
C) the host country becomes involved in a regional war
D) the firm produces discretionary rather than essential products
12) All of the following are true about the Internet and electronic commerce EXCEPT
which one?
A) Suppliers can deal more quickly with their customers
B) It enhances companies’ ability to differentiate their marketing methods by country
C) Customers worldwide can quickly compare prices from different distributors
D) To be successful, companies must be able to deliver efficiently what they sell over
the Internet
13) Which of the following is NOT one of the regions included in the triad regions of
the world?
A) South America
B) Europe
C) North America
D) Asia
14) What is the primary problem associated with Anglo American PLC’s ART program?
A) unknown side effects to drugs and treatment
B) rising costs of medications and procedures
C) poor treatment adherence by employees
D) lack of sufficient insurance coverage
15) According to the accounting concept of mutual recognition, ________.
A) companies are required to reconcile financial statements to local GAAP
B) a country would accept financial statements of foreign companies prepared
according to the GAAP of the foreign country if a company wanted to list its shares on
that country’s stock exchange
C) companies would have to mutually agree to use GAAP issued by the IASB
D) companies would have to recast their financial statements in terms of local GAAP
16) In order to assure the quality of its products, Samsonite ________.
A) performs only internal quality tests
B) relies only on independent quality-assurance tests
C) conforms its products to industry-set standards
D) uses both internal quality tests and independent quality-assurance tests
17) Which of the following has been the LEAST likely outcome of e-commerce on
exporting?
A) enhancing supply chains
B) triggering a rise in born globals
C) overcoming capital limitations for SMEs
D) expanding market opportunities for traders
18) What is the primary argument against extraterritoriality?
A) increases opportunities for corporate bribery
B) contradicts demands for increased globalization
C) requires oversight by nongovernmental organizations
D) prohibits firms from expanding into foreign territories
19) Hotel chains are large providers of international management services through
collaborative operations. All of the following are reasons for this EXCEPT which one?
A) Some governments have restricted foreign ownership in hotels
B) Local hotel owners may be very knowledgeable about real estate, but know little
about hotel operations
C) Local companies can forego making a capital investment
D) Hotel chains can offer global brand recognition
20) Which of the following statements best describes a limitation of the Big Mac Index?
A) Profit margins vary by the strength of competition, which affect relative prices
B) The theory of PPP incorrectly assumes that there are barriers to trade
C) The Big Mac represents all possible commodities and services
D) Taxes have no effect on Big Mac prices
21) Labor cost advantages gained by moving into a country with low wages may be
short-lived because ________.
A) transport costs go up to cancel out the cost savings
B) tax increases cancel out all labor cost differentials
C) rivals adopt capital-intensive production methods
D) competitors follow leaders into low-wage areas
22) Procter & Gamble exchanges cleaning products for machinery with Russia and
Hungary. The nature of this transaction indicates that Procter & Gamble is engaging in
________.
A) third-party logistics
B) freight forwarding
C) countertrade
D) e-commerce
23) When selecting a commercial and/or investment bank to deal in foreign exchange,
corporations are most likely to use ________.
A) the exchange-based market rather than the over-the-counter market
B) more than one bank to meet different needs
C) banks located in the home country
D) investment banks only
24) Judson Baked Goods, a U.S. firm, grants the use of its trademark to a company in
Sweden and provides the Swedish company with operational assistance on a continuing
basis. Judson is most likely involved in ________.
A) a management contract
B) franchising
C) offshoring
D) appropriability
25) A manager practicing relativism would most likely ________.
A) adapt to local conditions instead of implementing home-country practices
B) enforce home-country laws on host-country employees and suppliers
C) refuse to change company policies and procedures to comply with local norms
D) apply universal laws to each country despite local customs and traditions