When serving as collateral, the bill of lading:
A.can be used to advance funds to the exporter by its local bank before or during
shipment.
B.specifies that the carrier is obligated to provide a transportation service in return for a
certain charge.
C.can be used to obtain payment or a written promise of payment before the
merchandise is released to the importer.
D.states that the bank will pay a specified sum of money to a beneficiary, normally the
exporter, on presentation of particular, specified documents.
E.is an order written by an exporter instructing an importer, or an importer’s agent, to
pay a specified amount of money at a specified time.
Answer:
Which of the following caused a decline in the dollar/yen carry trade during
2008-2009?
A.Increase in risk appetite making the carry trade less attractive
B.Decrease in interest rate differentials as the U.S. rates came down
C.Increase in interest rate differentials as Japanese interest rates came down
D.Decrease in interest rate differentials as the U.S. interest rates went up
E.Decrease in interest rate differentials as the Japanese rates went up
Answer:
For an importer, which of the following is a disadvantage of using a letter of credit for
international transactions?
A.It results in the importer losing control over the process of trading.
B.It reduces the exporter’s level of trust in the importer.
C.It reduces the importer’s ability to borrow funds for other purposes.
D.It requires the importer to repay the loan even before the merchandise is sold.
E.It is not issued at the importer’s request.
Answer:
Which of the following is the most common approach to expatriate pay, which
equalizes purchasing power across countries so employees can enjoy the same living
standard in their foreign posting that they enjoyed at home?
A.Merit approach
B.Correspondence approach
C.Balance sheet approach
D.Parity approach
E.Perceptual approach
Answer:
Which of the following is true about the European Commission?
A.The European Union’s competition commissioner has been gaining influence as the
chief regulator of competition policy in the member nations of the European Union.
B.The European Commission has to be approved by the Council of the European Union
before it can begin work.
C.The European Commission does not have a policing role with respect to European
Union laws.
D.The legislation proposed by the European Commission goes directly to the European
Parliament.
E.The European Commission is the ultimate controlling authority within the European
Union.
Answer:
When should a firm concentrate its production facilities in a centralized location?
A.When the production technology has a low minimum efficient scale
B.When the production technology has low fixed costs
C.When important exchange rates are expected to remain relatively stable
D.When flexible manufacturing technologies are unavailable
E.When the product’s value-to-weight ratio is low
Answer:
What kind of demand is seen when a large change in price produces only a small
change in demand?
A.Flexible
B.Consistent
C.Inelastic
D.Elastic
E.Dynamic
Answer:
Which of the following is true about the Islamic banking method the mudarabah?
A.A mudarabah contract is similar to a profit-sharing scheme.
B.Under mudarabah, when an Islamic bank lends money to a business, it charges
interest on the loan.
C.It is the most widely used banking method among the world’s Islamic banks,
primarily because it is the easiest to implement.
D.It has been proven that a mudarabah contract discourages both long-term savings and
long-term investment.
E.A mudarabah contract uses a price markup method to make profits.
Answer:
Which of the following communication strategies relies primarily on personal selling
rather than mass media advertising?
A.Visual merchandising
B.Pull strategy
C.Push strategy
D.Copy testing
E.Standardized advertising
Answer:
When the retail sector is very concentrated:
A.it is more expensive for a firm to make contact with each individual retailer.
B.it makes sense for a firm to deal directly with retailers, cutting out wholesalers.
C.a relatively large sales force is required to deal with the retail sector.
D.the channels of distribution tend to be long.
E.the growth of wholesalers is promoted.
Answer:
Vernon argues that pioneering firms in the United States kept production facilities
closer to the market and centers of decision making because:
A.of the uncertainty and risks inherent in introducing new products.
B.they believed that foreign production facilities were inferior in technical skills.
C.they believed that U.S. labor costs were much lower than those in foreign markets.
D.the U.S. government was critical of outsourcing production to other countries.
E.of the high trade barriers implemented by several Asian and European countries.
Answer:
Which of the following is true of a country that is running a deficit on a
balance-of-payments current account?
A.It is importing fewer goods and services than it is exporting.
B.It may result in depreciation of the country’s currency on the foreign exchange
market.
C.It will lead to very low interest rates in the country.
D.It will lead to a shortage of the country’s currency in the foreign exchange market.
E.It is engaging in neo-mercantilism.
Answer:
Which of the following is a form of government in which one person or political party
exercises absolute control over all spheres of human life and prohibits opposing
political parties?
A.Capitalism
B.Totalitarianism
C.Pure democracy
D.Republicanism
E.Representative democracy
Answer:
According to Porter’s diamond, what are factor endowments?
A.The position of a nation regarding the components of production necessary to
compete in a given industry
B.The presence or absence of related industries that are internationally competitive
C.The conditions governing how companies are created, organized, and managed and
the nature of domestic rivalry
D.The nature of home demand for the industry’s product or service
E.The economic and strategic advantages that accrue to early entrants into an industry
Answer:
The belief that geography can influence economic policy, and hence economic growth
rates, goes back to:
A.Adam Smith.
B.Amartya Sen.
C.Plato.
D.Aristotle.
E.Karl Marx.
Answer:
According to the Fisher effect, if the “real” rate of interest in a country is 4 percent and
the expected annual inflation is 9 percent, what would the “nominal” interest rate be?
A.5 percent
B.13 percent
C.9 percent
D.36 percent
E.2.25 percent
Answer:
A concern voiced by critics of globalization is that today’s increasingly interdependent
global economy shifts economic power toward:
A.supranational organizations such as the World Trade Organization.
B.the communist states of eastern Europe and central Asia.
C.the medium-size and small U.S. multinationals.
D.the national governments of the countries participating in globalization.
E.nations that have authoritarian forms of government.
Answer:
A firm maximizes its profitability when it:
A.creates products similar to the products of its competitors.
B.minimizes the value provided by its products.
C.picks a position on the efficiency frontier that is not viable.
D.strips all the value out of its product offering.
E.configures its internal operations to support the position selected by it on the
efficiency frontier.
Answer:
An aspect of the Bretton Woods agreement was a commitment not to use:
A.the system of fixed exchange rates.
B.devaluation as a weapon of competitive trade policy.
C.gold as a measure to fix the value of currencies.
D.funds from the International Monetary Fund and the World Bank.
E.the U.S. dollar as a reference currency.
Answer:
A major distinction between a conventional bank and an Islamic bank is that Islamic
banks:
A.are allowed to charge higher interest rates on loans.
B.cannot accept private deposits.
C.cannot pay or charge interest.
D.are not subject to any form of law.
E.are supposed to refrain from making a profit through any source.
Answer:
Which of the following statements is true of mores?
A.Mores are actions of little moral significance.
B.Violation of mores is generally not a serious matter.
C.Social conventions regarding eating with the correct utensils is a good example of
mores.
D.Mores do not differ among cultures.
E.Certain mores have been enacted into law.
Answer:
If a firm is seeking to enter a market via a wholly owned subsidiary where there are
already well-established incumbent enterprises, and where global competitors are also
interested in establishing a presence, a suitable mode of entry is a(n):
A.acquisition.
B.licensing deal.
C.greenfield venture.
D.turnkey project.
E.exporting deal.
Answer:
Serving a global market from a single location is consistent with:
A.establishing a high-cost position.
B.taking advantage of location economies.
C.moving down the experience curve.
D.operating from a position which falls inside the efficiency frontier.
E.going up the global web.
Answer:
Argonia and Selenia have specialized in the production of industrial equipment and
pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in
turn exports chemicals and medicines to Argonia. According to the theory of
comparative advantage, this mutually beneficial trade relationship best illustrates:
A.the significance of trade barriers.
B.a positive-sum game.
C.a first-mover advantage.
D.the advantages of mercantilism.
E.a zero-sum game.
Answer:
Free trade alone, some argue, is a necessary but not sufficient prerequisite to help the
world’s poorest countries bootstrap themselves out of poverty. They also recommend:
A.a highly regulated command economy.
B.weaker property rights laws.
C.weaker labor regulations.
D.large-scale debt relief.
E.rapid expansion in population.
Answer:
Describe the Foreign Credit Insurance Association (FCIA). What types of risks does it
cover?
Answer:
Which of the following entails a closer economic integration and cooperation than a
common market?
A.Command economy
B.Customs union
C.Efficient market
D.Free trade area
E.Economic union
Answer:
Gerald bought his son, David, a computer two years ago. Recently, he decided to buy
his daughter, Julian, a computer of her own. In the context of the two-year gap between
the purchase of both the computers and Moore’s law, it is most likely that:
A.Gerald paid a higher price for Julian’s computer.
B.David’s computer will have a microprocessor with better power than that of Julian’s.
C.both David’s and Julian’s computers would cost Gerald the same price.
D.the microprocessor in Julian’s computer will be more advanced in terms of power
than that of David’s.
E.the power of the microprocessors, in both David and Julian’s computers, would be the
same.
Answer:
Xerox had a monopoly on photocopiers for several years as the technology underlying
the photocopier was protected by strong patents. As it served a universal need, this
favorable position led Xerox to pursue a(n):
A.global standardization strategy.
B.localization strategy.
C.international strategy.
D.transnational strategy.
E.nationalization strategy.
Answer:
A(n) expatriate manager refers to:
A.a citizen of one country who is working abroad in one of the firm’s subsidiaries.
B.a parent-country national who works in the parent country.
C.a host-country national who works in the host country.
D.any person who lives in a foreign country.
E.a person willing to work in different departments of a foreign firm.
Answer:
Which of the following is true with regard to the Asia-Pacific Economic Cooperation
(APEC)?
A.The stated aim of APEC is to increase multilateral cooperation in view of the
economic rise of the Pacific nations.
B.The goal of APEC is to reduce import tariffs among the six original members to zero.
C.APEC is the world’s largest free trade area.
D.Collectively, the member-states account for about 85 percent of the world’s GNP, 75
percent of world trade, and much of the growth in the world economy.
E.APEC currently has 25 member-states, including such economic powerhouses as
Germany, India, and Brazil.
Answer:
Which of the following statements is true about most Western societies?
A.In Western societies social groups, rather than individuals, are the basic building
blocks of social organization.
B.The value systems of many Western societies emphasize individual achievement.
C.In Western societies, the social standing of individuals is merely a function of who
they work for.
D.The emphasis on individuals in Western societies has led to a low level of
entrepreneurial activity.
E.It is easier to build and manage teams within organizations in Western societies.
Answer: