What is the primary advantage of licensing?
A. It helps a firm avoid the development costs associated with opening a foreign
market.
B. It gives a firm the tight control over manufacturing, marketing, and strategy.
C. It helps a firm achieve experience curve and location economies.
D. It increases a firm’s ability to utilize a coordinated strategy.
The monetary autonomy argument holds that:
A. each country should be allowed to choose its own inflation rate.
B. inflation is beneficial to a country’s economy and growth.
C. inflation is detrimental to a country’s economy and growth.
D. countries should restrict inflation based on the global standards.
In firms pursuing a(n) _____, some operating decisions are relatively centralized, while
others are relatively decentralized.
A. global standardization strategy
B. transnational strategy
C. localization strategy
D. international strategy
Country A and Country B entered into a free trade agreement recently. After this,
Country A starts importing heavy machinery from Country B. Country A used to
previously import such machinery at lower rates from another country. Which of the
following has occurred in this scenario?
A. Trade creation
B. Efficiency gain
C. Trade deficit
D. Trade diversion
A _____ means the value of a currency is fixed relative to a reference currency.
A. pegged exchange rate
B. floating exchange rate
C. managed float system
D. fixed exchange rate
Specific tariffs are:
A. levied as a proportion of the value of the imported good.
B. government payment to domestic producers.
C. in the form of manufacturing or production requirements of goods.
D. levied as a fixed charge for each unit of a good imported.
Why do governments limit currency convertibility?
A. To preserve foreign exchange reserves.
B. To spend foreign exchange reserves.
C. To keep domestic companies from investing abroad.
D. To allow nonresidents to convert money to foreign currencies.
According to the law of one price, if the exchange rate between the British pound and
the dollar is £1 = $1.50, a shirt that retails for $120 in New York should sell for _____
in London.
A. £180
B. £50
C. £60
D. £80
Proponents of globalization and reduced trade restrictions would argue that they are
largely responsible for:
A. reducing by half the number of people living in extreme poverty, howbeit, five years
later than the U.N.’s goal.
B. reducing by half the number of people living in extreme poverty five years ahead of
the U.N.’s goal.
C. reducing by two-thirds the under-five mortality rate as scheduled by the U.N.’s goal.
D. reducing by half the number of people living without sustainable access to safe
drinking water five years ahead of the U.N.’s goal.
When two parties agree to exchange currency and execute the deal immediately, the
transaction is a _____.
A. futures exchange
B. carry trade
C. spot exchange
D. forward exchange
One of the advantages of being the first mover in a market is:
A. there is little risk involved.
B. to benefit from a higher cost structure.
C. the ability to capture scale economies ahead of later entrants.
D. local governments are more favorable to the first movers.
Jeffrey Sachs argues that by virtue of _____, certain societies are more likely to engage
in trade than others and are thus more likely to be open to and develop market-based
economic systems, which in turn promotes faster economic growth.
A. friendly political systems
B. favorable economic conditions
C. high gross national incomes
D. favorable geography
_____ occurs whenever a firm sells a product for a price that is less than the cost of
producing it.
A. Resale
B. Plunging
C. Bootlegging
D. Dumping
Which of the following makes being dependent on one location particularly risky?
A. Governmental intervention in exchange rates
B. Floating exchange rates
C. Fixed exchange rates
D. Preferential treatment of domestic industries
The rise of mini-multinationals means that:
A. small businesses are becoming increasingly involved in international trade and
investment.
B. it is increasingly difficult to enter the large multinational market.
C. countries are working together to minimize MNE influence.
D. there is greater state involvement in industry.
Identify the theory that predicts that countries will export those goods that make
intensive use of factors that are locally abundant.
A. Theory of comparative advantage
B. Ricardo theory
C. New trade theory
D. Heckscher-Ohlin theory
GNI per capita can be adjusted by _____ to account for differences in the cost of living.
A. gross domestic product
B. gross values added
C. purchasing power
D. the total value of goods and services produced
Which of the following is one of the four attributes present in Porter’s diamond?
A. Economies of scale
B. Factor endowments
C. Structural innovation
D. Procedural innovation
Countertrade is:
A. most attractive to small, primarily domestic enterprises.
B. least attractive to small, primarily domestic enterprises.
C. most attractive to large, diverse multinational enterprises.
D. least attractive to large, diverse multinational enterprises.
Packaging is intended to achieve a set of multilayered functions, which can be grouped
into (1) perform, (2) protect, and (3) inform. Which of the following is one of the
functions of the “perform” group?
A. The package’s ability to preserve the products to maintain their freshness or newness
B. The package’s ability to provide the necessary security and safety to ensure that the
products reach their end destination in their intended shape
C. The package’s ability to contain the products properly
D. The ability of the product in the package to handle being transported between nodes
in the global supply chain
_____ enables top managers to compare, in a reasonably objective fashion, different
investment alternatives within and across countries so they can make informed choices
about where the firm should invest its scarce financial resources.
A. Auditing
B. Money management
C. Capital budgeting
D. Multilateral accounting
One issue at the forefront of the current agenda of the WTO is the:
A. decrease in antidumping policies.
B. low level of protectionism in agriculture.
C. strong protection for intellectual property rights in many nations.
D. increase in tariff rates on nonagricultural goods and services in many nations.
Which of the following was designed to allow GM to operate ethically in South Africa
as long as the company did not obey the apartheid laws in its own South African
operations?
A. Sullivan principles
B. The righteous moral system
C. Noblesse oblige
D. Cultural relativism
Which of the following is a concern of some economist regarding regional integration?
A. The benefits of regional integration are determined by the extent of trade diversion.
B. The benefits of regional integration may have been oversold, while the costs have
been ignored.
C. A regional free trade agreement will benefit the world only if the amount of trade it
diverts exceeds the amount it creates.
D. The costs of regional integration will be exceedingly high with little chance that the
benefits will outweigh the costs.
A firm’s _____ determines where in its hierarchy the decision-making power is
concentrated.
A. integrating mechanism
B. vertical differentiation
C. knowledge network
D. horizontal differentiation
McDonald’s is an example of a firm that uses _____.
A. wholly owned subsidiaries
B. a franchising strategy
C. turnkey contracts
D. a licensing strategy
Totalitarianism:
A. refers to a political system in which government is by the people, exercised either
directly or through elected representatives.
B. is based on a belief that citizens should be directly involved in decision making.
C. is a form of government in which one person or political party exercises absolute
control over all spheres of human life.
D. is based on the idea that the welfare of society is best served by letting people pursue
their own economic self-interests
A(n) _____ is a grouping of various types of machinery, a common materials handler,
and a centralized cell controller.
A. flexible machine cell
B. Six Sigma
C. assembly line
D. minimum efficient scale
This step in international market research often relates to the cost of collecting primary
data that can address the research problem and objectives directly versus using
available secondary data.
A. Assessing the costs and benefits of the research
B. Collecting the data
C. Defining the research objectives
D. Determining the data sources
_____ are the accepted principles of right or wrong governing the conduct of
businesspeople.
A. Sustainable strategies
B. Business ethics
C. Moral worth of actions
D. Ethical strategies
Tariffs do not benefit _____.
A. consumers
B. domestic producers
C. governments
D. domestic firms
Which of the following statements is true?
A. The way to increase the profitability of a firm is to create a greater number of
products.
B. The amount of value a firm creates is measured by the difference between its costs of
production and the value that consumers perceive in its products.
C. The more value customers place on a firm’s products, the lower the price the firm is
able to charge for those products.
D. The price a firm charges for a good or service is typically more than the value the
customer places on that good or service.
The term used to describe a state in which authoritarian elements have captured some or
much of the machinery of state and use this in an attempt to deny basic political and
civil liberties.
A. Authoritarian dictatorship
B. Right-wing democracies
C. Representative totalitarianism
D. Pseudo-democracies
Which of the following is an example of a greenfield investment?
A. A Chinese sugar maker setting up a sugar crushing facility in Cuba.
B. A Serbian automobile company purchasing a Croatian component manufacturer.
C. A Finnish mobile phone manufacturer expanding its production facility in Finland.
D. An Indian oil exploration company acquiring an oil refining company. A greenfield
investment involves the establishment of a new operation in a foreign country.