Peoples’ right to protest on issues of accountability in public expenditure would be
possible in a _____ political set-up.
A. dictatorial
B. democratic
C. totalitarian
D. fascist In a representative democracy, citizens periodically elect individuals to
represent them. These elected representatives then form a government, whose function
is to make decisions on behalf of the electorate.
The _____ writes the generally accepted accounting principles (GAAP) that govern the
financial statements of U.S. firms.
A. U.S. Securities and Exchange Commission
B. Office of Economic Analysis
C. International Accounting Standards Board
D. Financial Accounting Standards Board
The cost of capital is the:
A. interest received on investments made by the company.
B. price of borrowing money.
C. difference between cost of inputs and outputs.
D. total value of raw materials that a company uses.
Which of the following statements is true of turnkey projects?
A. Turnkey projects are most common in industries which use simple, inexpensive
production technologies.
B. A turnkey strategy can be more risky than conventional FDI.
C. A turnkey strategy is particularly useful where FDI is limited by host-government
regulations.
D. Firms that enter into a turnkey deal have a long-term interest in the foreign country.
Which of the following explains why economic integration has never been easy to
achieve or sustain, despite the strong economic and political arguments in support?
A. No country has shown significant improvement because of economic integration.
B. Countries fear a reduction of their political weight in the world because of economic
integration.
C. Linking neighboring economies and making them increasingly dependent on each
other creates little incentives for political cooperation.
D. While a nation as a whole may benefit significantly, certain groups may lose.
Which of the following arguments supports the Paul Samuelson’s critique?
A. A rich country cannot produce net gains by engaging in free trade with a poor
country.
B. Governmental intervention will reduce the likeliness of countries’ economic success.
C. Countries should attempt to specialize in the production of goods and services.
D. Trade is a positive-sum game in which all countries that participate realize economic
gains.
_____ a requirement that some specific fraction of a good be produced domestically.
A. Administrative trade policies are
B. The Buy American Act is
C. A local content requirement is
D. Bureaucratic rules are
Capital budgeting for a foreign project:
A. begins with an audit of the current cash flows.
B. is vastly different from domestic capital budgeting.
C. begins with converting all cash flow to Eurocurrency.
D. uses the same theoretical framework that domestic capital budgeting uses.
The element of risk into investing in foreign assets is more with _____ exchange rates.
A. floating
B. pegged
C. fixed
D. managed
A _____ may be paid to ensure that the expatriate enjoys the same standard of living in
the foreign location as at home.
A. housing allowance
B. hardship allowance
C. cost-of-living allowance
D. differential allowance
Which of the following is a way in which governments increase the attractiveness of
FDI and licensing relative to exporting?
A. By implementing import quotas
B. By imposing FDI limits in industries
C. By increasing tax rates
D. By limiting free flow of capital By limiting imports through quotas, governments
increase the attractiveness of FDI and licensing.
The strategy, operations, and organization of a firm must all be consistent with each
other if the firm is to _____ and achieve superior profitability.
A. exploit core competencies
B. attain a comparative advantage
C. experience a learning curve
D. attain a competitive advantage
According to the _____, even if a manager of a multinational sees that firms from other
nations are not following ethical norms in a host nation, that manager should maintain
the standards of the company’s home country.
A. cultural relativist
B. righteous moralist
C. utilitarian
D. nave immoralist
_____ involves issues such as (1) translation of questionnaires and reports into
appropriate foreign languages and (2) accounting for cultural and environmental
differences in data collection.
A. Product research
B. Communication strategy
C. International market research
D. Product strategy
The _____ outlawed the paying of bribes to foreign government officials to gain
business.
A. Convention on Combating Bribery of Foreign Public Officials
B. Foreign Corrupt Practices Act
C. Convention on International Business Transactions
D. Universal Declaration of Human Rights
Which of the following is true of a strong corporate culture?
A. Almost all managers share a relatively consistent set of values and norms that have a
clear impact on the way work is performed.
B. A strong culture leads to high performance.
C. Outsiders see firms with a strong culture as being autocratic and inflexible.
D. A strong culture is always a good culture.
How does the NAFTA seem to increase the international competitiveness of U.S. and
Canadian firms?
A. It gives them access to scarce natural resource hitherto unavailable.
B. It increases tariff barriers making the North American market less attractive to Asian
companies.
C. It allows them to take advantage of lower labor costs in Mexico.
D. It gives them production bases in South American markets like Brazil and Argentina.
Which of the following is a drawback of a just-in-time system?
A. Transport costs are high when using a just-in-time system.
B. It leaves a firm without a buffer stock of inventory.
C. It increases the warranty costs associated with products.
D. It leaves a firm with high scrap costs associated with defective products.
Restrictions on external convertibility can:
A. hamper foreign companies wishing to do business in that country.
B. allow domestic companies to freely invest abroad.
C. limit the amount of product a foreign company can produce in that country.
D. limit domestic companies from investing abroad.
Which of the following is seen to be a consequence of the expansion of the EU from 15
nations to 27 nations?
A. Delays in the decision-making processes
B. Elimination of the sovereign debt crisis
C. Euro becoming the most traded currency in the world
D. Huge initial impact on the overall economic welfare
Management development programs aim to:
A. facilitate an ethnocentric approach to staffing.
B. reduce job rotations of managers.
C. build a formal management network.
D. build a unifying corporate culture.
To unfreeze the established culture of an organization, the company:
A. must take bold steps such as shaking up the management structure in order to
implement change.
B. is best served by taking incremental steps.
C. should employ the existing structural organization to integrate changes.
D. implement a rewards or incentive program.
Which of the following specifically reduces the viability of an exporting strategy
specifically for products with low value-to-weight ratios?
A. Foreign exchange controls
B. Trade barriers
C. Transportation costs
D. Output quality When transportation costs are added to production costs, it becomes
unprofitable to ship some products over a large distance. This is particularly true of
products that have a low value-to-weight ratio and that can be produced in almost any
location.
In which of the following situations would FDI improve the current account of the host
country’s balance of payments?
A. If the foreign subsidiary imports a substantial number of its inputs from abroad
B. If the FDI reduces existing employment opportunities
C. If the FDI is a substitute for imports of goods or services
D. If the FDI results in substitution of products produced domestically 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. Much of the FDI by Japanese
automobile companies in the United States and Europe, for example, can be seen as
substituting for imports from Japan.
The short-term movement of funds from one currency to another in the hopes of
profiting from shifts in exchange rates is known as:
A. currency arbitrage.
B. currency speculation.
C. currency hedging.
D. currency risk mitigation.
What is Bartlett and Ghoshal’s perspective on how firms from developing countries
should approach international expansion?
A. They suggest joint ventures to improve the firm’s presence in the country while also
growing the business opportunities for companies in the developing country.
B. They suggest that franchising should be used in order to minimize risk and allow for
the maximum expansion in the quickest amount of time.
C. They suggest turnkey operations that allow for a rapid startup.
D. They suggest that companies should use the entry of foreign multinationals as an
opportunity to learn from these competitors by benchmarking their operations and
performance against them.
A country’s trade balance is in surplus when:
A. its exports are more than its imports.
B. it experiences negative inflation.
C. its exports equal the imports.
D. the prices of commodities are low in the country
Inflation occurs when:
A. the quantity of money in circulation rises faster than the stock of goods and services.
B. the stock of goods and services increases and the quantity of money in circulation
decreases.
C. output increases faster than the money supply.
D. the money supply decreases and the output increases.
When a country runs a current account deficit, what happens to the money that flows to
other countries?
A. It is used to buy assets in the deficit country.
B. It is put into the receiving country’s infrastructure.
C. It is converted to securities.
D. It is used to pay for social programs in the receiving country.
Which of the following is true of strategic alliances?
A. Strategic alliances can make entry into a foreign market difficult.
B. Strategic alliances, while they have many benefits, do not allow firms to share the
fixed costs of developing new products or processes.
C. Strategic alliances allow firms to bring together complementary skills and assets that
neither company could easily develop on its own.
D. Strategic alliances, while beneficial to firms, make the establishment of
technological standards for an industry difficult.
Which of the following is a major flaw associated with mercantilism?
A. It viewed trade as a positive-sum game.
B. It relied on government to support trade.
C. It viewed trade as a zero-sum game.
D. It relied on tenuous free trade agreements.
The WTO argues that removing tariff barriers and subsidies in the agricultural sector
could:
A. protect domestic agriculture in developed nations.
B. lower the overall level of agricultural trade.
C. restrict global economic growth.
D. lower prices to consumers.
What is the most common approach to expatriate pay? Explain what comprises this
form of compensation.
Define tax credit and tax treaty.
Discuss the utilitarian approach to business ethics.
Economic risks are independent of political risk.
Countertrade is least attractive to large, diverse multinational enterprises.
What is the Uruguay Round? List the measures implemented in the Uruguay Round?
Discuss the concerns of organized labor.
Discuss the ways in which public action to violate property rights can occur.
How does the type of technology a firm uses affect its decision of where to locate
production?
Explain the Friedman doctrine.
Why does education lead to economic development?
Discuss the effects of private ownership of production in a market economy.
Since the 1980s, there has been a transformation from centrally planned command
economies to market-based economies. What is the rationale for this transformation?
To conform to local content regulations, a firm may have to locate more production
activities in a given market than it would otherwise.
How does the Heckscher-Ohlin theory explain international trade?
Discuss the trade-offs associated with large-scale entry versus small-scale entry.
What are the main strengths and weaknesses of the worldwide product division
structure?