Financial management in an international business includes three sets of related
decisions. Which of these involves making decisions about what activities to finance?
A. Investment decisions
B. Money management decisions
C. Multilateral decisions
D. Financing decisions
A country is said to be in balance-of-trade equilibrium when:
A. the income its residents earn from exports is equal to the money its residents pay to
other countries for imports.
B. it produces all the goods needed for domestic consumption.
C. the income its residents earn from imports is equal to the money its residents pay to
other countries for exports.
D. it produces all the goods needed for exportation.
Which of the following are more conducive to economic growth?
A. Democratic regimes
B. Totalitarian regimes
C. Dictatorships
D. Benevolent monarchies
In theory, WTO rules should ensure that a free trade agreement:
A. does not result in trade creation.
B. does not result in trade diversion.
C. results in trade creation.
D. results in trade diversion.
The great virtue claimed for a _____ is that it imposes monetary discipline on a country
and leads to low inflation.
A. fixed exchange rate
B. managed-float system
C. pegged exchange rate
D. floating exchange rate
Which of the following is an argument favoring centralization?
A. It permits greater flexibility.
B. Motivational research favors it.
C. It can avoid the duplication of activities.
D. It gives top management time to focus on critical issues by delegating routine issues
to lower-level managers.
A political benefit of economic integration is that it:
A. enables participants to achieve gains from the free flow of trade.
B. enables participants to achieve gains from the free flow of investment.
C. allow countries to specialize in the production of goods and services that they can
produce most efficiently.
D. reduces the potential for violent conflict.
The system of values and norms that are shared among a group of people and that when
taken together constitute a design for living best defines _____.
A. society
B. value systems
C. principles
D. culture
The increasing pace of _____ has resulted in a dramatic shortening of product life
cycles.
A. manufacturing
B. distribution
C. market research
D. technological change
Which political view allows FDI so long as the benefits outweigh the costs?
A. The traditional view
B. The pragmatic nationalist view
C. The radical view
D. The free market view The pragmatic nationalist view is that FDI has both benefits
and costs. According to this view, FDI should be allowed so long as the benefits
outweigh the costs.
Capital flight is most likely to occur when:
A. the value of the domestic currency is depreciating rapidly because of hyperinflation.
B. a country’s economic prospects are solid and promising.
C. the value of the domestic currency is appreciating rapidly.
D. he value of the foreign currencies are depreciating rapidly.
Historically, Unilever measured the performance of national operating subsidiary
companies according to profitability. In this example, profitability is a(n) _____.
A. control system
B. process
C. integrating mechanism
D. incentive
_____ can be used to formalize arrangements to swap skills and technology in a
strategic alliance.
A. Modularization
B. Cross-licensing agreements
C. Structured transfer agreements
D. Contractual safeguards
Cost savings that come from learning by doing are known as _____.
A. learning curves
B. economies of scale
C. learning effects
D. experience curves
Which of the following statements is true of Six Sigma?
A. It is a statistically based philosophy to reduce defects and boost productivity.
B. At Six Sigma, a production process will have 6.6 defects per million units.
C. At Six Sigma, a production process would be 100 percent accurate.
D. A company can achieve Six Sigma perfection by reducing the number of defects to
one in six thousand.
_____ perform a direct connection function in capital markets.
A. Insurance brokers
B. Investment banks
C. Pension fund managers
D. Commercial banks
A company that sells its product in a foreign market below the cost of production may
be accused of _____.
A. pandering
B. profiteering
C. carnivorous behavior
D. dumping
_____ are normally underwritten by an international syndicate of banks.
A. Samurai bonds
B. Eurobonds
C. Yankee bonds
D. Foreign bonds
Several studies have shown the economic advancement and _____ are important factors
in societal change.
A. individualism
B. collectivism
C. improved technology
D. globalization
Often, the code of ethics draws heavily upon documents such as the _____, which itself
is grounded in Kantian and rights-based theories of moral philosophy.
A. Convention on Combating Bribery of Foreign Public Officials
B. Foreign Corrupt Practices Act
C. Convention on International Business Transactions
D. UN Universal Declaration of Human Rights
Skills within the firm that competitors cannot easily match or imitate and that may exist
in the firm’s value creation activities.
A. Experience curves
B. Core competencies
C. Economies of scale
D. Learning effects
The legal rights over the use to which a resource is put and over the use made of any
income that may be derived from that resource.
A. Property rights
B. Public action
C. Intellectual rights
D. Private action
A firm’s organizational culture refers to the:
A. norms and value systems that are shared among the employees of an organization.
B. formal organizational structure of the company.
C. control systems and incentives in place.
D. human resources component.
Which system of government generally permits some individual economic freedom but
restricts individual political freedom, frequently on the grounds that it would lead to the
rise of communism?
A. Tribal totalitarianism
B. Right-wing totalitarianism
C. Democratic totalitarianism
D. Theocratic totalitarianism
Which of the following is associated with firms following the global standardization
strategy?
A. High pressures for local responsiveness
B. Use cost advantage to support aggressive pricing in world markets
C. Low pressures for cost reductions
D. Customize product offering and marketing strategy to local conditions
A firm benefits by basing each value creation activity it performs at that location where
economic, political, and cultural conditions, including relative factor costs, are most
conducive to the performance of that activity. Firms that pursue such a strategy can
realize _____.
A. differentiation
B. location economies
C. vertical integration
D. horizontal integration
Decentralization of production is appropriate when:
A. a product’s value-to-weight ratio is high.
B. the product serves universal needs.
C. barriers to trade are low.
D. volatility in key exchange rates is expected.
In Russia, in the chaotic period following the collapse of communism, an outdated legal
system, coupled with a weak police force and judicial system, allowed the Russian
Mafia to demand “protection money” from business owners. Any business owner who
rebelled had to face violent retribution. This violation of property rights exemplifies
_____.
A. private action
B. copyright violation
C. infrastructural failure
D. public liability
A number of econometric studies have found consistent evidence of a hump-shaped
relationship between income levels and pollution levels. According to this, as an
economy grows and income levels rise:
A. initially the pollution levels remain low.
B. after a while, the pollution levels decrease.
C. the pollution levels also rise in proportion to the economic growth.
D. there is increasing industrialization which leads to greater pollution.
Which of the following arguments is in favor of floating exchange rates?
A. A country’s ability to expand or contract its money supply should be limited by the
need to maintain exchange rate parity.
B. Maintaining balance of trade equilibrium is not in the best interest of a country.
C. Countries can isolate themselves from uncertainties when they trade using a
mutually agreed on exchange rate.
D. Governments can restore monetary control by removing the obligation to maintain
exchange rate parity.
Which of the following theories emphasizes the interplay between the proportions in
which the factors of production are available in different countries and the proportions
in which they are needed for producing particular goods?
A. Porter’s theory
B. Smith’s theory
C. Ricardo’s theory
D. Heckscher-Ohlin theory
The continuing persistence of _____ differences between nations acts as a major brake
on any trend toward global consumer tastes and preferences.
A. technological and industrial
B. institutional and political
C. cultural and economic
D. GNP level and growth rate