1) A licensing agreement is a contract for the granting of rights on tangible property.
2) A current account deficit suggests that a country is importing more than it is
exporting and building up foreign debt.
3) An independently floating exchange rate is adjusted periodically at a fixed
pronounced rate.
4) The SDR is equal in value to the U.S. dollar.
5) The shifting of resources from inefficient to efficient companies as trade barriers fall
produces static effects.
6) According to surveys, the most common concern regarding international trade is a
shortage of working capital to finance exporting activities.
7) Passive exports involve the filling of unsolicited orders from abroad.
8) Keiretsu is one of the two major configurations of sourcing.
9) Organizational challenges are comparatively more difficult for the firm pursuing a
transnational strategy than for the firm pursuing an international strategy.
10) The argument that “anything legal is ethical” is insufficient as a basis for ethical
behavior because the law usually does not apply to everyone and does not have
enforceable rules.
11) The government considers itself a better judge of resource allocation than
businesses or citizens in a market economy.
12) The rule of man, a practice that has been in play for millennia, presumes that the
law is the will of the ruler, whether the king, czar, raj, or emperor.
13) Small economies are sometimes less successful than large countries in attracting
FDI by raising import restrictions. What is the most likely reason for this?
A) Large economies impose higher trade restrictions
B) Transportation costs are generally higher in small economies
C) People in small economies are more nationalistic in their purchases
D) Small economies frequently lack sufficient markets for large-scale production
14) A 1998 U.S. law that outlaws bribery payments by U.S. firms to foreign
government officials is known as the ________.
A) Anti-Bribery Act of 2004
B) Foreign Corrupt Practices Act
C) Zero Tolerance Initiative
D) Sarbanes-Oxley Act
15) In the foreign-exchange market, the bid is the rate at which ________.
A) the trader is willing to sell foreign exchange
B) the buyer is willing to swap foreign exchange
C) the trader is willing to buy foreign exchange
D) the trader earns a profit
16) Under the WTO agreement, ________.
A) a dispute resolution mechanism allows countries to bring grievances to the WTO
against countries that levy inappropriate trade discrimination measures
B) there is no dispute resolution mechanism except for trade involving environmental
products
C) countries are allowed to place trade barriers on member countries with no particular
justification, because like GATT the WTO has no enforcement mechanism
D) tariffs are permitted to be levied by developed countries against developing
countries but not against each other
17) If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a
Big Mac in Argentine pesos converted into dollars at the spot exchange rate), which of
the following is most likely true?
A) The peso is overvalued against the dollar
B) The dollar is overvalued against the peso
C) It should be harder for a U.S. tourist to buy a leather coat in Buenos Aires because
the dollar won’t go very far
D) It will be cheap for Argentine companies to invest in the United States because the
dollar is relatively weak
18) People who argue for lifting the U.S. trade embargo with Cuba claim all of the
following EXCEPT which one?
A) The embargo has not achieved its purpose of changing Cuba’s economic and
political system
B) U.S. companies lose Cuban sales to competitors from other countries
C) Increased exposure to the United States would be a more effective force of change
D) Cuba has largely become a market economy already
19) Which of the following would most likely pressure an MNE to globally integrate its
value activities?
A) costs of producing in separate facilities exceeding those of producing in a single
facility
B) variability in consumers’ tastes and preferences shifting across countries
C) market pressures to add new product features continually
D) demands imposed by host country governments
20) Which of the following was most responsible for the early success of Tommy
Hilfiger clothing?
A) The products were mass-marketed through discount stores
B) Internet mail-order sales were developed when people had less time to shop
C) Products were developed to fit the specific needs of different country markets
D) Brand awareness was developed through advertising
21) According to regional content rules, at least ________ of the net cost of most
products must come from the NAFTA region in order to get access to the tariff
reductions of NAFTA.
A) 62.5%
B) 50%
C) 45%
D) 40.5%
22) The premise that there will be more finely tuned specialization of production among
countries is most likely based on the idea that companies will ________.
A) depend more on production of nontradable goods and services
B) encourage urbanization in emerging countries that lack infrastructure
C) establish facilities in dispersed locations to hinder domestic competition
D) take advantage of wage and skill differences among countries
23) Many NGOs, including Africa Now, Quaker Peace and Social Witness, and Save
the Children, are members of the ________.
A) Ethical Trading Initiative
B) International Red Cross Council
C) United Nations Global Compact
D) United Nations Economic and Social Council
24) Japanese ________ are groups of independent companies that work together to
manage the flow of goods and services along an entire value chain.
A) chaebol
B) keiretsus
C) sigmas
D) kaizen
25) Ethnocentrism in international business refers to the ________.
A) study of group ethics and approaches to corporate social responsibility
B) comparison of the Protestant ethic with other religious views
C) belief that what works best at home should work best everywhere
D) ethnic segmentation of marketing programs within countries
26) What is remittance income? What institutions in Mexico can handle remittance
accounts? Why are some institutions used more frequently than others?
27) Why is it essential for MNEs to consider coordination systems when implementing
an organizational structure? Briefly describe each approach to coordination.
28) What are the rules of origin and regional content provisions of NAFTA?
29) In a short essay, discuss purchasing power parity and the short-run problems that
affect PPP.
30) Contrast common law, civil law, customary law, and theocratic law.
31) What issues complicate international economic analysis?