Just-in-time inventory systems:
A. are used when procurement is not organized.
B. require large warehouses for storage.
C. economize on inventory holding costs.
D. maintain large buffer for inventory.
_____ are reported on a real time basis on many financial Web sites and are continually
changing—their value being determined by supply and demand for that currency
relative to others.
A. Spot exchange rates
B. Currency swaps
C. Forward exchange rates
D. Future exchange rates
FDI can benefit the home country’s _____ if the foreign subsidiary creates demands for
home-country exports of capital equipment, intermediate goods, complementary
products, and the like.
A. balance of payments
B. oligopolistic industry
C. current accounts
D. licensing endeavors FDI can benefit the home country’s balance of payments if the
foreign subsidiary creates demands for home-country exports of capital equipment,
intermediate goods, complementary products, and the like.
Which of the following arguments strengthen the idea of floating exchange rates?
A. External agencies should not interfere in the monetary policies of a country.
B. Trade deficits can be corrected through changes in exchange rates.
C. Changes in exchange rates will not impact the trade balance in a country.
D. Governments should act in ways to minimize the uncertainty in monetary markets.
Which of the following arguments is against the use of fixed exchange rates?
A. Monetary discipline is the most important determinant of a strong economy.
B. Each country has the freedom to choose its own inflation rate.
C. Market speculation can cause fluctuations in exchange rates.
D. Governments are likely to expand the monetary supply far too rapidly due to
political pressures.
A lag strategy involves:
A. attempting to collect foreign currency receivables early when a foreign currency is
expected to depreciate.
B. delaying collection of foreign currency receivables if that currency is expected to
appreciate.
C. paying foreign currency payables before they are due when a currency is expected to
appreciate.
D. delaying collection of foreign currency receivables if that currency is expected to
depreciate.
Which of the following is seen as a benefit of the euro?
A. Governments gaining greater control over their monetary policies
B. Reduced competition in most industries
C. Zero interest expense for businesses
D. Lower foreign exchange and hedging costs
A country’s _____ keeps track of its payments to and its receipts from other countries.
A. federal payments ledgers
B. concurrent accounts
C. checks-and-balances accounts
D. balance-of-payments accounts A country’s balance-of-payments accounts track both
its payments to and its receipts from other countries.
The shift toward a more integrated and interdependent world economy is referred to as
_____.
A. outsourcing
B. international marketing
C. privatization
D. globalization
Increasingly the _____ has been acting as macroeconomic police of the world economy,
insisting that countries seeking significant borrowings adopt certain macroeconomic
policies.
A. Economic and Social Council (ECOSOC)
B. International Monetary Fund (IMF)
C. United Nations (UN)
D. World Bank
Which of the following is a reason why the European Union is considered an imperfect
economic union?
A. Factors of production are not allowed to move freely between member countries.
B. Not all members of the union have adopted the euro.
C. Almost all markets are heavily regulated.
D. Products and services are not allowed to move freely between member countries.
These are typically defined on the basis of characteristics such as family background,
occupation, and income.
A. Social strata
B. Norms
C. Social structure
D. Groups
A situation in which none of the available alternatives seems morally acceptable is
called:
A. an ethical dilemma.
B. noblesse oblige.
C. the tragedy of the commons.
D. the free rider problem.
According to the _____ point-of-view, a firm should adopt the ethics of the culture in
which it is operating.
A. cultural relativism
B. righteous moralist
C. nave immoralist
D. utilitarian approach
Which level of economic integration eliminates trade barriers between member
countries and adopts a common external trade policy?
A. Political union
B. Customs union
C. Common market
D. Economic union
A(n) _____ is the simultaneous purchase and sale of a given amount of foreign
exchange for two different value dates.
A. arbitrage
B. carry trade
C. spot exchange
D. currency swap
Safety standards to which a product must adhere are set by:
A. safety certifications.
B. contract laws.
C. product safety laws.
D. product liability laws. Product safety laws set certain safety standards to which a
product must adhere.
_____ stresses that in some cases countries specialize in the production and export of
particular products because the world market can support only a limited number of
firms.
A. New trade theory
B. Absolute advantage
C. The world market theory
D. Mercantilism
A firm with a(n) _____ staffing policy will fill all key management positions with
parent-country nationals.
A. geocentric
B. ethnocentric
C. eurocentrict
D. polycentric
Drober Consulting is a large software service provider. The company has the largest
market share in the industry. In order to restrain the smaller competitors in the market,
the company sells some of its products at very low prices. This is an example of _____
pricing.
A. penetration
B. multipoint
C. predatory
D. experience curve
Countries that require substantial loans from the International Monetary Fund to survive
will _____ due to IMF-mandated economic policies.
A. benefit from a sharp expansion of demand in the long term
B. endure a sharp contraction of demand in the long term
C. benefit from a sharp expansion of demand in the short term
D. endure a sharp contraction of demand in the short term
Which of the following was formed in March 2001 to replace the International
Accounting Standards Committee (IASC)?
A. U.S. Securities and Exchange Commission
B. International Accounting Standards Board
C. Office of Economic Analysis
D. Financial Accounting Standards Board
In order for price discrimination to be successful:
A. there must be a strong case for arbitrage.
B. national markets must be kept separate.
C. demand must be very elastic.
D. a large change in demand must be triggered by a small change in price.
A country that introduces a currency board commits itself to converting its domestic
currency on demand into:
A. another currency at a fixed exchange rate.
B. gold or silver at a fixed exchange rate.
C. gold or silver at a floating exchange rate.
D. another currency at a floating exchange rate. A country that introduces a currency
board commits itself to converting its domestic currency on demand into another
currency at a fixed exchange rate. To make this commitment credible, the currency
board holds reserves of foreign currency equal at the fixed exchange rate to at least 100
percent of the domestic currency issued.
Which of the following is true of the IMF?
A. It is often seen as the lender of first choice to nation-states whose economies are in
turmoil.
B. Its loans come with no strings attached.
C. It is the less controversial of the two sister institutions, the IMF and the World Bank.
D. It has emerged as a significant player in the global economy.
If the FDI is a substitute for imports of goods or services, the effect can be to improve
the _____ of the host country’s balance of payments.
A. offshore account
B. currency account
C. market imperfections
D. current account If the FDI is a substitute for imports of goods or services, the effect
can be to improve the current account of the host country’s balance of payments.
The sale of state assets through an auction is most likely to lead to _____.
A. trade certification
B. privatization
C. nationalization
D. market regulation
The emphasis on individualism in the United States results in which of the following
advantages?
A. Managers tend to develop good general skills as well as company-specific
experience.
B. Teams are built within an organization to perform collective tasks.
C. Executives are exposed to different ways of doing business.
D. It is easy to achieve cooperation—both within a company and between companies.
The _____ associated with doing business in a country are a function of that country’s
political, economic, and legal systems.
A. ethical considerations
B. profitability
C. simplicity and ease
D. benefits, costs, and risks
_____ supports the idea that countries should export more than what they import.
A. Absolute advantage
B. Mercantilism
C. The world market theory
D. New trade theory
A _____ benefits investors by providing a wider range of investment opportunities,
thereby allowing them to build portfolios of international investments that diversify
their risks.
A. foreign exchange market
B. global capital market
C. domestic exchange market
D. domestic capital market
When technological know-how constitutes a firm’s core competence, which entry mode
is the optimal choice?
A. Foreign franchises controlled by joint ventures
B. Licensing agreements
C. Wholly owned subsidiaries
D. Turnkey contracts
Three countries agree to remove barriers to trade between member countries and adopt
a common external trade policy toward nonmembers. They also agree to allow people
and other factors of production to move freely across their borders. Which level of
economic integration is this an example of?
A. Bonded market
B. Customs union
C. Free trade area
D. Common market
A(n) _____ is a way to bring together complementary skills and assets that neither
company could easily develop on its own.
A. alliance
B. turnkey contract
C. wholly owned subsidiary
D. licensing agreement
Which of the following is true regarding Porter’s Diamond theory?
A. It predicts that countries should be importing products from those industries where
all four components of the diamond are favorable.
B. Porter’s theory has been proven to be an accurate predictor of the importing and
exporting patterns of countries.
C. It predicts that countries should be exporting products from those industries where
all four components of the diamond those areas where the components are not
favorable.
D. Porter’s theory has not been subjected to detailed empirical testing, so we do not
know if it is correct.