Market economies are primarily characterized by ________.
A) formal cooperation among government, companies, and workers to achieve stable
growth
B) heavy government spending and high taxation to pay for a range of social services
C) minimal governmental participation
D) restricted consumer powers
Which of the following is NOT one of the three main types of importers?
A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens
for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the
lowest possible price
D) importers using foreign sourcing to optimize their supply chains
Johnson Enterprises manufactures computer chips used in cell phones. The MNE has
long production runs that lower the per unit cost of each chip. The firm also purchases
materials in bulk from its suppliers with whom Johnson has long-term contracts.
Johnson is most likely benefiting from ________.
A) economies of scale
B) the cluster effect
C) digitization
D) location economies
What types of payments are legal and illegal under the Foreign Corrupt Practices Act
(FCPA) of the United States? Provide an example.
Which of the following statements would most likely be made by a SUPPORTER of
globalization?
A) Globalization encourages the adoption of uniform and superior standards for
combating environmental problems.
B) Economic growth created by globalization is largely in services, which involves the
use of few nonrenewable resources.
C) Global competition discourages resource-saving technologies, which are costly.
D) Air pollution and toxic runoff problems increase with global economic growth.
Proponents of ________ argue that individual interests are not as important as the
welfare of the group.
A) pluralism
B) capitalism
C) collectivism
D) individualism
Whereas executives specify roles and relationships in a functional structure in terms of
________, they use the divisional structure format to specify them according to
________.
A) inputs; outputs
B) buyers; suppliers
C) markets; countries
D) politics; economics
The major objective of the European Central Bank is to ________.
A) set monetary policy for EU countries that adopt the euro
B) ensure that EU interest rates are equal to U.S. rates
C) control taxes as a means of monitoring EU debt
D) reduce spending by EU countries
Which of the following languages has the most NATIVE speakers?
A) English
B) Mandarin
C) Spanish
D) Hindi
Which of the following best supports the idea that MNEs should remain in countries
that allow child labor?
A) MNEs have a positive influence on government employment policies in most
foreign countries.
B) Many MNEs have substantially improved the working conditions of their foreign
plants.
C) MNEs are required to pay child workers more than local companies.
D) Most MNEs employ local managers to handle cultural differences.
________ is the measuring of performance so that companies can respond appropriately
to changing conditions.
A) Coordination
B) Configuration
C) Control
D) Compatibility
People in the port city of Jeddah were less culturally conservative than people in the
interior of the country. The most likely reason for this is that ________.
A) people in the port cities have more contact with foreigners
B) the coastal area has to trade with countries using different religious holidays
C) the coastal area has a culture with a higher uncertainty avoidance
D) the coastal area is secular, whereas the interior of Saudi Arabia has a state religion
Firms alter their products for foreign markets for all of the following reasons EXCEPT
________.
A) the home country export requirement
B) religious differences abroad
C) weak infrastructures in some countries
D) to respond to legal requirements
Under the current-rate method of translation, any gain or loss is known as a(n)
________.
A) liability
B) foreign-exchange
C) annual net income
D) accumulated translation adjustment
Ampco Industries has a production facility in an area of India in which roads are poorly
maintained and dangerous. What part of Ampco’s marketing mix do these conditions
most likely affect?
A) distribution
B) branding
C) product standardization
D) promotion
A U.S. firm with a production facility in Brazil uses its own personnel to handle almost
all activities because their outsourcing would be too costly and inefficient. Its
internalization will most likely lead to cost savings because the firm can avoid
________.
A) costly customs brokers
B) high, fixed start-up costs
C) the costs of enforcing an agreement
D) sharing profits
A major criticism of offshoring is that it ________.
A) increases production costs
B) exchanges good jobs for bad jobs
C) threatens the sovereignty of larger countries
D) allows companies to avoid payment of any taxes
The same automobile company produces Fiats and Ferraris. The company builds an
engine plant in China with low production costs for Fiats but not Ferraris. The probable
reason is that ________.
A) Fiat competes mainly on a focus strategy, whereas Ferrari competes mainly on a
mass-market strategy
B) Fiat competes mainly on a mass-market strategy, whereas Ferrari competes mainly
on a focus strategy
C) Ferrari faces global competitors in China, whereas Fiat competes in China mainly
against Chinese competitors
D) although Ferrari did not build an engine plant, it will use the same Fiat engines in its
models
Carnival Cruise Lines lowers its taxes by all of the following EXCEPT ________.
A) hiring host-country nationals who pay no taxes
B) taking advantage of taxation laws in foreign countries
C) sailing in international waters outside countries’ tax jurisdiction
D) paying substantial port fees instead of taxes during stopovers
Local content regulations are primarily intended to ________.
A) address cultural differences between local employees and expatriates
B) encourage MNEs to increase production activities in a country
C) address contract negotiation difficulties
D) assess local tax rates on MNEs
The process of combining financial statements of different subsidiaries into one
statement is known as ________.
A) conversion
B) translation
C) consolidation
D) recognition
Tests to substantiate the factor proportions theory have had mixed results most likely
because ________.
A) labor migration quickly outdates any studies
B) most countries have a favorable balance of trade
C) labor skills and education are not homogeneous
D) large and small countries have different trade policies
In which of the following situations would tax rate differences among countries be most
important for deciding where to place an investment?
A) Companies find advantages in being located near specialized private and public
institutions.
B) Companies must compare the benefits of labor- versus capital-intensive production.
C) Companies want to serve an entire region within a regional trading bloc.
D) Companies must deal with difficult start-up regulations.
Which term refers to two or more companies that share ownership of an FDI?
A) turnkey operation
B) transnational firm
C) joint venture
D) franchise
Reebok pays a royalty to the German Soccer League to use the team’s logo on t-shirts
that it sells. Reebok and the German Soccer League most likely have a ________.
A) turnkey operation contract
B) licensing agreement
C) portfolio investment
D) joint venture
The term ________ refers to a global company that thrives on seeking unique ideas and
insights from locations around the world and then leveraging that knowledge in
international markets.
A) multidomestic
B) domestic
C) metanational
D) cross-cultural
Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand
operations into a country with a great deal of violence by staffing mostly with U.S.
personnel. A vice president argues that Jordan should send its employees there. Which
of the following statements LEAST supports the vice president’s position?
A) Jordan can evacuate personnel more quickly than in earlier eras in case of a real
emergency.
B) It is hard to identify countries without a possibility for violence.
C) Operating costs are lower in violent areas.
D) Jordan’s industry does not allow the firm the luxury of avoiding high risk locations.
Which of the following statements is most likely FALSE?
A) Developing countries trade mainly with developed countries.
B) Developed countries trade mainly with other developed countries.
C) Cultural similarity among countries enhances their trade with each other.
D) The greater the geographic distance between countries, the greater the trade.
Ultimately, countertrade is an inefficient way of doing business because it ________.
A) encourages buyers and sellers to use customs brokers to handle exchanges
B) requires buyers and sellers to negotiate a fair value on the exchange
C) reduces the risk that the goods sent as payment are of poor quality
D) eliminates the potential for price and financial distortion
Which of the following is typically NOT an argument used for keeping the U.S. trade
embargo with Cuba intact?
A) There is not much economic potential from trade given Cuba’s small population and
low per capita income.
B) Removal of the embargo will cause much more Cuban immigration to the United
States.
C) If the Cuban economy is weakened just a bit more, the Cuban political-economic
system cannot be sustained.
D) There will be a backlash among countries supplying such commodities as sugar to
the United States if the U.S. buys them from Cuba instead.
The Economic Freedom Index indicates that economic freedom is positively correlated
with all of the following EXCEPT ________.
A) life expectancy
B) literacy
C) environmental sustainability
D) diversity
Developing countries have sometimes adopted policies to shift people out of agriculture
and into industry by protecting manufactured production. One of the problems they
have encountered is that ________.
A) people have been too reluctant to leave rural areas to go to the cities
B) food shortages have increased in rural areas because of worker shortages
C) demand for social and political services has increased excessively in the cities
D) developed countries have retaliated with protection of products from the developing
countries
The most common type of tariff is the ________ tariff.
A) export
B) import
C) transit
D) ad valorem