1) The argument for using protectionism to bring about industrialization in developing
countries presumes that gains will occur because the industry will become
internationally competitive.
2) Many professional basketball teams recruit tall youngsters in foreign countries into
basketball camps where they can develop basketball skills and perhaps become
candidates for professional play This is an example of engaging in international
business to acquire resources
3) The number of computer industry firms located in California’s Silicon Valley
exemplifies the concept of agglomeration.
4) The factor proportions theory holds that countries should concentrate production on
those products that use their most abundant production factors.
5) Cultures do not transcend national (state) boundaries.
6) Published government data is most often inaccurate because of translation errors
from other countries’ languages.
7) The potential of new entrants in an industry is one of the forces in the Five-Forces
Model of Industry Structure.
8) A matrix organization is a hybrid of the functional and geographic organizations.
9) Most people’s basic values are acquired during childhood and are not readily changed
later in life.
10) Pressures for local responsiveness are especially important in industries where
value creation is a function of a company’s capacity to adapt to local market conditions.
11) External debt results when the government spends more than it collects in revenues,
whereas internal debt results when a government borrows money from foreign lenders.
12) The ownership of foreign bonds is an example of a portfolio investment
13) Neoclassical structures aim to centralize decision-making authority by removing
boundaries that impede the decentralization of decision making.
14) According to Adam Smith’s theory of absolute advantage, specialization allows
countries to increase their efficiency for each of the following reasons EXCEPT
________.
A) labor could become more skilled by repeating the same tasks
B) transportation costs could be lowered by producing closer to markets
C) labor would not lose time in switching from the production of one kind of product to
another
D) higher production would provide incentives for the development of more effective
working methods
15) Johnson Construction is an MNE that designs and builds commercial buildings
around the world. Johnson has a new contract to construct a building in Pakistan. Tom,
a construction manager, will be relocating to Pakistan with his wife, and he will receive
additional pay to compensate for the dangerous environment. Which of the following
has Johnson Construction most likely offered Tom?
A) repatriation allowance
B) hardship allowance
C) housing allowance
D) spouse allowance
16) A multidomestic configuration is most important when ________.
A) demand in individual countries decreases significantly
B) exporting is the company’s main strategy
C) demand in individual countries becomes significant
D) low-priced, standardized products are available
17) According to the text, which currency is expected to experience the most change in
the upcoming years?
A) yen
B) yuan
C) euro
D) U.S. dollar
18) What is the primary difficulty associated with dismantling developed countries’
agricultural subsidies?
A) Rural areas in the United States, the European Union, and Japan are
disproportionately represented in their governments
B) Developing countries put pressure on developed countries to maintain the subsidies
so that they receive food products at a lower price
C) The subsidies are used to counter the commodity agreements set up mainly by
developing countries
D) The subsidies are at the consumer, rather than producer, level, and everyone benefits
from the lower prices
19) When using equity financing, firms run the risk of ________.
A) losing a controlling interest to shareholders
B) acquiring capital through the sale of shares
C) incurring an unmanageable amount of debt
D) falling victim to currency exchange rates
20) When divergent cultures come in contact, ________ occurs.
A) power distance
B) culture shock
C) cultural collision
D) group membership
21) Foreign source income that is derived from the active conduct of a trade or business
and therefore subject to U.S. taxation is known as ________.
A) passive income
B) active income
C) uncontrollable foreign corporation income
D) tax haven income
22) The Human Capital Index, based on a comprehensive global study of more than
2,000 companies, found that superior human capital practices were ________ correlated
with a firm’s financial returns and were a(n) ________ indicator of increased
shareholder value.
A) negatively; lagging
B) positively; leading
C) insignificantly; timely
D) weakly; accurate
23) The two main categories in the balance of payments are the ________.
A) merchandise exchange account and the services account
B) external debt and the unilateral transfers account
C) merchandise trade account and the capital account
D) current account and the capital account
24) In computing GNI, the value of a Ford car that is manufactured in Mexico using
capital from the United States would ________.
A) be added to the GNI of the United States as well as to the GNI and GDP of Mexico
B) not be added to the GNI of the United States but would be added to the GNI of
Mexico
C) only affect the computation of GDP and have no bearing on GNI
D) be added to the GNI of the United States but not the GNI of Mexico
25) The accounting principle that relates to more, rather than less, extensive footnotes
in reports is known as ________.
A) secrecy
B) measurement
C) conservatism
D) transparency