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Which of the following statements is true?
A. Firms in consumer goods industries that are trying to sell to a large segment of the
market generally favor a push strategy.
B. Mass communication has cost advantages for firms in consumer goods industries
that are trying to sell to a large segment of the market.
C. Direct selling may be the only way to reach consumers in poor nations with low
literacy levels.
D. Firms that sell industrial products or other complex products favor a pull strategy.
A country has an absolute advantage in the production of a product when it:
A. has the capability to produce the product within its boundaries.
B. is more efficient than any other country in producing it.
C. has the largest domestic demand for the product.
D. has access to the raw materials needed to produce the product.
Economies that arise from performing a value creation activity in the optimal place for
that activity are referred to as _____.
A. factor economies
B. production economies
C. location economies
D. value creation economies
In a pure market economy:
A. all productive activities are owned by the state.
B. production is determined by the interaction of supply and demand.
C. collectivist goals are given priority over individual goals.
D. the prices at which goods are sold is determined by the government.
Antitrust laws in the United States are designed to:
A. restrict agricultural subsidies.
B. increase trade barriers.
C. outlaw monopolies.
D. restrict privatization.
The _____ believed that socialism could be achieved only through violent revolution
and totalitarian dictatorship.
A. existentialists
B. social democrats
C. communists
D. anarchists
A _____ is an association of two or more individuals who have a shared sense of
identity and who interact with each other in structured ways on the basis of a common
set of expectations about each other's behavior.
A. society
B. collective
C. social strata
D. group
A firm's _____ include customers, suppliers, and lenders.
A. internal stakeholders
B. clients
C. external stakeholders
D. community
The _____ suggests that given relatively efficient markets, the price of a "basket of
goods" should be roughly equivalent in each country.
A. random walk theory
B. theory of competitive advantage
C. theory of price inflation
D. purchasing power parity theory
_____ refers to the building of interpersonal relationships between the firms' managers
in a strategic alliance.
A. Alliance partnerships
B. Joint management
C. Relational capital
D. Team building
Which of the following is a disadvantage of a worldwide area structure?
A. Firms that use this structure tend to have a high degree of diversification.
B. Decision-making is centralized and subsidiaries cannot customize to local marketing
needs.
C. The fragmentation of the organization that makes it difficult to realize location and
experience curve economies.
D. It does not facilitate local responsiveness.
_____ occurs when high-cost domestic producers are replaced by low-cost producers
within the free trade area.
A. Trade deficit
B. Trade diversion
C. Trade creation
D. Trade distortion
According to John Rawls:
A. each person should be permitted the maximum amount of basic liberty compatible
with a similar liberty for others.
B. freedom of speech and assembly is the single most important component in a justice
system.
C. equal basic liberty is impossible in a pure market economy.
D. ethics is culturally determined.
A(n) _____ requires a corporation to repay a predetermined portion of the loan amount
at regular intervals regardless of how much profit it is making.
A. equity loan
B. stock loan
C. debt loan
D. bonded loan
Class-based conflict between workers and management in class-conscious societies can
lead to:
A. increased costs of doing business.
B. decreased costs of doing business.
C. companies going out of business.
D. workers looking for new jobs in other businesses.
One reason for the shift in values away from collectivism and toward individualism
may be:
A. that richer societies exhibit less need for social and material support structures built
on collectives.
B. individualism is a more important trait in a global society.
C. that richer societies exhibit more need for social and material support structures built
on collectives.
D. increased urbanization and improvements in the quality and availability of education
are both a function of economic progress.
The rise in the value of the dollar between 1985 and 1988:
A. gave U.S goods a competitive advantage over others.
B. made imports relatively cheap.
C. gave U.S. goods a comparative advantage over others.
D. made imports expensive.
Borrowers can hedge against foreign exchange risks by entering into a _____ contract.
A. hedge fund insurance
B. prevailing exchange rate
C. forward
D. global capital market
Mendenhall and Oddou identified cultural toughness as one of the dimensions in their
study on dimensions that predict success in foreign jobs postings. This dimension refers
to the:
A. expatriate's self-esteem, self-confidence, and mental well-being.
B. expatriate's ability to interact effectively with host-country nationals.
C. expatriate's ability to understand why people of other countries behave the way they
do.
D. relationship between the country of the assignment and how well an expatriate
adjusts to a particular posting.
Advocates of a _____ argue that removal of the obligation to maintain exchange rate
parity would restore monetary control to a government.
A. fixed exchange rate regime
B. dirty-float system
C. floating exchange rate regime
D. pegged exchange rate regime.
According to political scientist Samuel Huntington, the rise of Islamic fundamentalism
is a response to the:
A. corruption prevalent in planned economies.
B. restricted access to formal education.
C. alienation produced by modernization.
D. restrictions associated with totalitarian regimes.
A currency crisis occurs when:
A. investors lose confidence in a country's banking system.
B. a speculative attack on the exchange value of a currency results in a sharp
depreciation in the value of the currency.
C. authorities hoard large volumes of international currency reserves and sharply
decrease interest rates.
D. a speculative attack on the exchange value of a currency results in a sharp
appreciation in the value of the currency.
Which of the following is true of licensing?
A. Licensing is used when a firm possesses some tangible property but does not want to
pursue a potential application itself.
B. The firm does not have to bear the development costs and risks associated with
opening a foreign market.
C. It is also an attractive option when a firm is interested in pursuing a foreign market
and is ready to commit substantial resources to a foreign market.
D. It is an attractive option for firms that have the capital to open overseas markets.
According to _____, some specific fraction of a good must be produced domestically.
A. import quotas
B. voluntary export restraints
C. local content requirements
D. antidumping duties
In a _____, the state owns all means of production.
A. mixed economy
B. planned economy
C. market economy
D. totalitarian state
Which of the following is true of the supporters of debt relief for HIPCs?
A. They argue that free trade alone is sufficient to bring HIPCs out of poverty.
B. They argue that new democratic governments should be forced to honor debts
incurred by previous corrupt predecessors.
C. They include Bono, the Dalai Lama, and Jeffrey Sachs among their ranks.
D. They are working against the policies of the IMF and World Bank.
Judges in a(n) _____ have the power to interpret the law so that it applies to the unique
circumstances of an individual case.
A. civil law system
B. international law system
C. common law system
D. theocratic law system
A(n) _____ occurs when a firm supplies technology, equipment, training, or other
services in a country and agrees to take a certain percentage of the resultant output as
partial payment for the contract.
A. counterpurchase
B. offset
C. barter
D. buyback
Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable in:
A. politically unstable developing nations that operate with a mixed or command
economy.
B. nations where there is a dramatic upsurge in either inflation rates or private-sector
debt.
C. politically stable developed and developing nations that have free market systems.
D. developing nations where speculative financial bubbles have led to excess
borrowing.
If a service firm wants to build a global presence quickly and at a relatively low cost
and risk, it must employ _____.
A. chartering
B. exporting
C. a turnkey strategy
D. franchising
Which of the following is a major flaw associated with mercantilism?
A. Mercantilists do not support government intervention in trade.
B. Mercantilists view trade as a zero-sum game.
C. Mercantilists recommend policies to maximize imports.
D. Mercantilists recommend countries to maintain a negative trade balance.
Which of the following is a feature of a democracy?
A. Exercise of absolute control by one person or political party.
B. Governance by people or elected representatives.
C. Prohibition of entry to opposing political parties.
D. Complete restriction of individual political freedom.
