1) A company that adapts its marketing to foreign differences without deviating very
much from its experience is following a customer orientation.
2) U.S.-based MNEs are not permitted to set budgets and monitor results using the
same exchange rate.
3) A growing number of MNEs in Asia and Latin America are using performance-based
pay to link compensation with business results.
4) Inflation affects interest rates, exchange rates, the cost of living, general economic
confidence, and the stability of the current political system.
5) In foreign-exchange markets, reporting dealers trade more foreign exchange with
other reporting dealers than with any other category of users.
6) Foreign trade zones (FTZs) can be either general-purpose zones or subzones.
7) A confirmed letter of credit may obligate the exporter’s bank to honor a draft
presented to it.
8) A positive brand image cannot overcome negative perceptions of the country where
the product is made.
9) U.S. MNEs that operate in Europe are under pressure to conform to the emissions
standards of the Kyoto Protocol.
10) An irrevocable letter of credit is the basis for multilateral netting.
11) Consolidation of financial statements is the process of restating foreign subsidiary
financial statements into the GAAP of the parent company.
12) The primary result of the Jamaica Agreement was to ________.
A) allow greater exchange-rate flexibility
B) set austerity measures for debt control
C) establish a system based on par values
D) implement fixed exchange rates
13) Which of the following statements about approaches to political risk management is
NOT true?
A) Passive political risk management discourages managers from fully or partially
hedging their bets against exposure to political hazards
B) Passive political risk management assumes that it is difficult, if not impossible, to
systematically model political risk
C) Active political risk management assumes that positive and negative political events
in any country are neither independent nor random events
D) Active political risk management assumes that political events unfold in observable
patterns that statistical methods can detect
14) In order to join the IMF, a country must contribute a certain sum of money, called a
________.
A) special drawing right
B) trade balance
C) monetary reserve
D) quota
15) A company’s overall geographic strategy should be flexible enough to ________.
A) implement concentration strategies instead of diversification strategies
B) respond to new opportunities and withdraw from less profitable ones
C) import from anywhere in the world to a single production location
D) export anywhere in the world from a single production location
16) Ferguson Manufacturing, an American MNE, has facilities in India and Mexico.
Ferguson fills management positions at the facility in India with Indians and
management positions in Mexico with Mexicans. Ferguson most likely follows a(n)
________ approach to staffing.
A) ethnocentric
B) geocentric
C) polycentric
D) intercentric
17) A foreign-exchange contract that is an agreement between two parties to buy or sell
a particular currency at a particular price at a particular date in the future as specified in
a standardized contract to all participants in the specified market is known as a(n)
________.
A) spot contract
B) forward contract
C) futures contract
D) equity currency contract
18) Which of the following governmental actions is LEAST likely to increase national
debt?
A) macroeconomic stimulus plans
B) unemployment benefits
C) corporate bailouts
D) T-bond sales
19) According to the optimum tariff theory, a foreign producer will most likely
________.
A) ship highly taxed goods internationally on a per-unit basis
B) lower its export prices if the importing country imposes an import tax on its products
C) assess a tax on goods shipped internationally based on a percentage of the goods’
value
D) seek import tariffs by using the comparable access argument
20) Which of the following is NOT one of the three prevalent approaches to
coordination?
A) standardization
B) mutual adjustment
C) adaptation
D) planning
21) An Australian company makes athletic wear for women, men, and adults. After
several years of successfully exporting its products to the U.K. and the U.S., the
company began exporting to Japan. This is an example of ________.
A) a born-global company
B) a location advantage
C) third-party exporting
D) incremental internationalization
22) Fair Day Paper Products is a family-owned start up that imports bamboo paper from
China to make custom greeting cards. The firm has experienced many problems in
receiving the supplies from China; recurring problems include lost shipments, delays,
and damaged products. Fair Day would most likely benefit by enlisting the help
provided by which of the following?
A) countertraders
B) customs brokers
C) import agents
D) third party logistics