1) NGOs must be recognized by the United Nations in order to do humanitarian work in
developing countries.
2) The argument for using import controls to promote exports is partially premised on
the assumption that other countries will remove their import restrictions as a result.
3) According to the Industry Organization perspective, firm performance is determined
by the presence of motivated managers and their ability to identify and develop
innovative products for emerging markets.
4) Multilateral development banks encourage development in risky environments
through financial incentives.
5) U.S. companies generally put earlier and more emphasis on countries where they
perceive it’s easier to operate.
6) The process of shifting production to a foreign country is known as outsourcing
7) Under the theory of absolute advantage, countries hold two types of
advantagesacquired advantages and technological advantages.
8) Very few commodity agreements are successful in bringing together supplier and
consumer countries to stabilize commodity prices.
9) The best way for a Euroequity to get a listing in the United States is to issue a Global
Depositary Receipt.
10) Labor and capital mobility are intertwined because ________.
A) illegal workers sometimes pay large sums to people who smuggle them into another
country
B) people cannot emigrate to another country unless they bring capital with them
C) companies receive tax benefits for hiring immigrants
D) immigrants bring an investment in human capital with them
11) Which of the following is LEAST likely to trigger the standardization of consumer
preferences?
A) intrinsic functions of money
B) global access to common media
C) increasing nationalism
D) improved communications technologies
12) Which of the following most accurately describes the economic situation in El
Salvador?
A) It is facing significant competition from neighboring countries that are not tied to the
dollar
B) It relies exclusively on the United States as a market for its products
C) It now has the same exchange rate as other members of CACM
D) It is putting more resources into industries that have a history of earning profits
13) The most common approach to translate budgets and compare a budget with actual
performance uses the ________.
A) spot rate
B) forecast rate
C) historical exchange rate
D) temporal exchange rate
14) Anita, an employee at ABX Partners, a hedge fund firm, has purchased euros
because she believes that the euro will strengthen against other currencies. Which term
best describes Anita’s activities?
A) arbitrage
B) speculation
C) spot transaction
D) outright forward
15) Which of the following is an indication of the increased globalization of business
since the end of World War II?
A) Foreign trade has largely replaced foreign ownership as a means of conducting
international business
B) World trade has grown more rapidly than world production
C) Globally, consumers now depend on foreign output for more than half their
consumption
D) Countries have increased their import restrictions to counter the rising tide of
imports
16) Fully convertible currencies are also called ________.
A) external currencies
B) hard currencies
C) unlimited currencies
D) soft currencies
17) The OECD is concerned about transfer pricing practices because ________.
A) transfer pricing can help maximize a company’s worldwide tax liability
B) transfer prices tend to be higher in industrial than developing countries
C) governments use transfer prices to manipulate companies’ investment strategies
D) companies use transfer prices to manipulate prices and therefore taxes
18) Which of the following best describes the purpose of using of an opportunity-risk
matrix for comparing countries?
A) narrow alternatives so decision makers can make a detailed analysis of the strongest
candidates
B) eliminate countries that have specific unacceptable conditions
C) determine whether to use a concentration versus diversification strategy for
international expansion
D) estimate where competitors are most likely to globalize
19) Which of the following is NOT a common argument for the slowing of future
globalization?
A) Antiglobalization interests have been successful in electing parties that oppose freer
movement of trade or people
B) Technological, transportation, and communication advances will decline in the near
future
C) Major countries have either ignored certain international treaties or have refused to
sign them
D) The growing split between those who succeed in a global environment and those
who do not will foster greater antiglobalization sentiments
20) Which of the following financing tactics would most likely help an MNE avoid
bankruptcy?
A) integrating e-commerce opportunities with domestic sales in order to maintain a
steady balance of income and expenditures
B) agreeing to forward contracts with customers and hedging purchases and sales on
future currency rates
C) organizing the capital structure so that the amount of debt financing is twice the
level of equity financing
D) keeping the percentage of debt in the capital structure to a level that can be managed
even during difficult business conditions
21) According to the teleological approach, individuals base moral decisions on
________.
A) personal and social responsibilities
B) consequences of an action
C) cultural value systems
D) opinions of peers
22) Which of the following factors increasingly encourages MNEs to install a
geographic division structure?
A) growth of emerging markets
B) diversification of products
C) rise of social networking
D) global recession
23) Which of the following is a condition that powered the worldwide spread of
democracy from 1970 onward?
A) Totalitarian regimes delivered acceptable economic progress to their populations
B) Economic advances caused contentment among the working class and minimized the
need to push for democratic reforms
C) Many groups were able to successfully challenge the legitimacy of democratic
systems
D) Information and communications technologies broke down the ability of the state to
control access to uncensored information, especially that from foreign sources
24) An irrevocable letter of credit ________.
A) is issued by a global credit agency
B) is the basis for multilateral credit netting
C) can be amended only if all parties involved agree
D) obligates the exporter’s bank to pay interest to the importer
25) A speculator is someone who ________.
A) trades foreign exchange illegally
B) deals in the black market in currency
C) takes positions in foreign-exchange markets to earn a profit
D) works for OTC financial institutions rather than nonfinancial corporations
26) Which of the following statements is most likely true?
A) Consumers in most countries believe that imported products are better than locally
made products
B) Brand names have little impact on perceptions about a product’s country-of-origin
C) Consumers in most countries favor locally made products over imported products
D) A positive brand image helps overcome negative perceptions about a product’s
country-of-origin