1) Identify and briefly compare the major regional trading groups in Latin America,
Asia, and Africa.
2) If a foreign subsidiary is located in a low tax country, the parent company would
probably use a ________.
A) high transfer price on inventory shipped from the parent to the subsidiary
B) high transfer price on goods sold by the subsidiary to the parent
C) low transfer price on inventory shipped from the subsidiary to the parent
D) tax credit price to minimize local tax liabilities
3) Country X is in the process of transforming from a command economy to a market
economy. This process most likely involves ________.
A) standardized procedures implemented by the state
B) high economic growth rates for the long-term
C) privatization of many factors of production
D) violent political and legal upheaval
4) Gomez Enterprises, a firm based in Mexico City, exported 1,000 circuit boards to
Taylor Industries, a firm based in Chicago. Taylor received a document from Gomez
that requests immediate payment for the goods. Gomez has most likely sent a
________.
A) time draft
B) sight draft
C) spot draft
D) futures draft
5) Which of the following is NOT one of the top exchanges that trade in foreign
currency futures and options?
A) CME
B) UBS
C) NYSE Liffe
D) NASDAQ OMX
6) The concept of liquidity preference in international operations refers to ________.
A) a company’s willingness to accept a lower rate of return on investments in countries
where it can more easily sell them and convert the proceeds at a favorable rate
B) a company’s willingness to accept lower rates of return in poor countries that really
need the investments
C) management’s need to maintain sufficient funds, preferably in local currency, in each
country of operation to ensure meeting daily cash needs
D) investors’ preference for foreign stocks over foreign bonds because of the larger
market for them
7) According to the PLC theory, what is the most likely reason that companies
manufacture products in locations with high labor rates during the introductory stage of
a product’s life cycle?
A) Doing so allows use of long production runs using capital-intensive methods
B) Many consumers are willing to pay high costs for the newest products
C) Transportation costs are reduced by focusing on markets in developed countries
D) Import restrictions prevent production in countries other than the ones making
product innovations
8) Which of the following best describes globally standardized advertising?
A) a campaign that is identical in all markets
B) a campaign that meets the legal and ethical standards of all countries
C) a campaign that is similar but not identical from market to market
D) a campaign that depends primarily on push rather than pull promotion
9) Phillip is an international business manager with Corbin Manufacturing. Which of
the following serves as an external influence on the business decisions that Phillip
makes?
A) production plant locations
B) host country monetary policy
C) supply chain linkages
D) product design standards
10) A major reason for the Parmalat accounting scandal is that the firm ________.
A) sold milk in countries without a license
B) used U.S. GAAP standards instead of IFRS
C) used off-balance-sheet financing to hide debts
D) transferred most of its assets to banks in Switzerland
11) The free trade theories of specialization primarily assume that ________.
A) domestic resources are unable to move from the production of one good to another
B) countries have objectives other than economic efficiency
C) specialization triggers unemployment
D) resources are immobile internationally
12) NAFTA is a good example of ________.
A) trade divestment
B) trade diversion
C) the theory of trade disruption
D) the theory of trade implementation
13) The U.S. catfish industry petitioned the U.S. government for increased taxes on
imported Vietnamese fish, claiming that the fish were being sold below the cost of
production. The U.S. catfish industry was accusing the Vietnamese fish industry of
________.
A) dumping
B) using an embargo
C) subsidizing
D) using offsets
14) All of the following are possible advantages of globally standardized advertising
programs EXCEPT ________.
A) cost savings
B) improvement of local-level quality
C) avoidance of legal impediments
D) faster entry into different markets
15) Why is China most likely considering a greater reliance on the SDR?
A) gains in the foreign-exchange market
B) concerns about the value of the U.S. dollar
C) demands to replace the dollar with the euro for reserves
D) requirements by the IMF to make China’s currency more flexible