1) Currency is a major issue in financial reporting because companies must decide in
which currency to present their financial information to the general public.
2) Translation of foreign currency financial statements is the process of restating
foreign currency financial statements from one currency into another.
3) The international bond market is much larger and more lucrative than the domestic
bond market.
4) The BRICs are the strongest developed economies in the world.
5) Micro-multinationals are firms that globalize immediately and enter countries with
numerous customers, productive workers, and attractive industries.
6) Export-led development refers to the off-shoring of production.
7) Infant-industry protection requires some segment of the economy to incur the higher
costs when local production is inefficient.
8) Exporting is usually more feasible when transportation costs are high rather than low
in relation to production costs.
9) Governments sometimes prohibit operations of private companies, foreign or
domestic, in some sectors because they feel these services should not be sold at a profit.
10) Adopting a market control system requires that the MNE uses external market
mechanisms to establish internal performance benchmarks and standards.
11) In what is known as direct exporting, the exporter sells goods directly to or through
an independent domestic intermediary in the exporter’s home country that then exports
the products to foreign markets.
12) In a command economy, the goods and services that a country produces, the
quantity in which they are produced, and the prices at which they are sold are all
planned by the government.
13) A market economy is one in which resources are primarily owned and controlled by
individuals and companies.
14) Deciding whether to establish production facilities in many different countries or in
one centralized location is part of the ________.
A) cultural matrix
B) Six Sigma process
C) manufacturing configuration
D) innovation matrix
15) Comparative advantage differs from absolute advantage in that the former
________, whereas the latter ________.
A) holds that countries should specialize their production; does not
B) holds that trade should be kept as nearly in balance as possible; says countries
should seek a favorable balance of trade
C) bases trade on natural advantages; bases trade on acquired advantage
D) states that there is a basis of trade even if one country can produce everything more
efficiently than another country; does not deal with this issue
16) A city or country that provides large amounts of funds in currencies other than its
own is a(n) ________.
A) offshore financial center
B) ADR facilitator
C) interbank market
D) currency regulator
17) Bocce Shoes, an Italian firm, set up a production facility in Vietnam to manufacture
the firm’s line of athletic shoes. Bocce is most likely using a(n) ________ strategy.
A) dependability
B) flexibility
C) innovation
D) efficiency/cost
18) Rockwall Enterprises is planning to expand the firm by establishing operations
outside of the U.S. In which of the following countries would Rockwall most likely be
able to establish operations most quickly?
A) Japan
B) Brazil
C) Germany
D) Australia
19) ________ refers to any one of several different arrangements that business parties
negotiate so that they can trade goods and services with limited or no use of currency.
A) Factoring
B) Offset
C) Countertrade
D) Barter
20) Firms most likely borrow money in the international bond market to ________.
A) guarantee high yields and low rates
B) enable diversification of funding sources
C) protect against costly government regulations
D) allow emerging markets to invest in foreign exchange
21) Managers who are knowledgeable about ________ are better able to identify the
location, quantity, quality, and availability of the world’s natural resources
A) political factors
B) geographic factors
C) competitive factors
D) cultural factors
22) Companies are more likely to gain advantages by locating near competitors for all
the following reasons EXCEPT to ________.
A) take advantage of competitors’ research to pick an ideal location
B) attract multiple suppliers and personnel with specialized skills
C) agree with competitors on production limitations
D) attract buyers who want to compare suppliers
23) The United Nations’ ________ measures life expectancy, educational attainment,
and the standard of living in a given country.
A) Human Development Index
B) Emerging Economic Stability
C) Genuine Progress Indicator
D) Net National Product
24) What is the primary advantage of an MNE using an ethnocentric framework?
A) minimizing relocation costs
B) developing community support
C) transferring core competencies abroad
D) encouraging innovative business practices
25) Which of the following is the most important constraint on the explanatory power
of the IO paradigm?
A) Many industries are imperfectly competitive
B) Many companies are locally but not internationally competitive
C) Most customers have perfect knowledge of the products they select
D) Most industries have many firms that each have small market shares
26) Countries with large land areas are generally less dependent on trade than countries
with small land areas because of ________.
A) highly restricted economic scales
B) self-sufficiency with natural resources
C) higher transportation costs related to foreign trade
D) the development of unique products that have a limited demand
27) Which of the following describes a company’s strategy of moving first to those
countries where local competitors are most likely to catch up to the firm’s innovative
advantage?
A) lead country strategy
B) imitation lag strategy
C) oligopolistic reaction strategy
D) liability of foreignness strategy