A global car manufacturer wants to start production in China. While catering to local
responsiveness, what can the firm do to get scale economies?
A.Increase costs whenever possible.
B.Use common vehicle platforms and components across many different models.
C.Shorten the production runs for each component.
D.Increase the duplication of functions required for each operation.
E.Manufacture only one type of car and sell it in all the international markets.
Answer:
According to the new trade theory, which of the following is most likely to be a result
of market expansion due to trade?
A.A wide variety of products is produced at greater unit costs than in the absence of
trade.
B.As the variety of products increases, demand for individual products decreases,
leading to non-realization of economies of scale.
C.Each nation may specialize in producing a narrower range of products, importing
goods that it does not make.
D.The ability to capture first-mover advantages is restricted in a world that allows trade.
E.When countries do not differ in their resource endowments or technology, trade does
not offer mutual benefits.
Answer:
U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance
of capital in the country. What is this phenomenon that runs contrary to the prediction
of the Heckscher-Ohlin theory called?
A.A zero-sum game
B.The Leontief paradox
C.A positive-sum game
D.Samuelson’s critique
E.A first-mover advantage
Answer:
A firm pursues an ethnocentric staffing policy because it:
A.believes in providing growth opportunities to host-country nationals.
B.wants to avoid cultural myopia.
C.believes the host country lacks qualified individuals for senior management positions.
D.wants to keep all core competencies within the home country.
E.wants to build strong cultural and informal management networks in all its
subsidiaries.
Answer:
One of the suggestions of the new trade theory is that:
A.differences in technology leads to differences in productivity, which in turn, drives
international trade patterns.
B.nations may benefit from trade irrespective of resource endowments or technology.
C.the demand for most new products tends to be based on nonprice factors.
D.globally dispersed production reduces the production costs of mature products.
E.comparative advantage does not arrive from a difference in factor endowments but
from a difference in productivity.
Answer:
Which of the following identifies an attribute of tariffs?
A.Tariffs reduce the price of foreign goods for domestic consumers.
B.Tariffs reduce the overall efficiency of the world economy.
C.Tariffs increase exports from a sector.
D.Tariffs increase foreign competition for domestic producers.
E.Tariffs increase efficient utilization of resources.
Answer:
Jewish law is an example of what type of law system?
A.Autocratic
B.Civil
C.Common
D.Theocratic
E.Universal
Answer:
Which of the following is NOT a constraint on a firm’s ability to disperse its productive
activities to foreign countries?
A.Tariff barriers raising the costs of exporting products to a country
B.Quotas restricting the quantity of a good that can be imported into a country
C.Local content requirements demanding a specific fraction of domestic production
D.The increasing integration of the world economy
E.Antidumping policies limiting the ability of a firm to use aggressive pricing
Answer:
The purchasing power parity (PPP) theory best predicts exchange rate changes for
countries with:
A.appreciating currencies.
B.stable currencies.
C.underdeveloped capital markets.
D.small differentials in inflation rates.
E.industrialized economies.
Answer:
Which of the staffing policies requires all the expatriates to be home-country nationals
who are transferred abroad?
A.Geocentric
B.Ethnocentric
C.Polycentric
D.International
E.Domestic
Answer:
An argument against the North American Free Trade Agreement centered on the fear
that ratification would result in:
A.low interest rates in the Unites States and Canada.
B.mass exodus of jobs from the United States into Mexico.
C.a move toward a common currency for NAFTA member nations.
D.competition from the members of the European Union.
E.high inflation in the United States and Canada.
Answer:
A firm with a wide product variety will find it:
A.difficult to achieve shorter product runs.
B.difficult to increase its product sales.
C.difficult to reduce its unit costs.
D.easy to realize economies of scale.
E.easy to reach optimum production efficiency.
Answer:
The economic and strategic advantages that accrue to early entrants in an industry are
called:
A.first-mover advantages.
B.comparative advantages.
C.absolute advantages.
D.economies of scale.
E.factor endowments.
Answer:
Which of the following reasons contributed to the Great Depression of the 1930s?
A.Inability to meet the increasing world demand for products
B.Several countries accepting General Agreement on Tariffs and Trade
C.Increasing attack from foreign competitors on domestic industries
D.Privatization of state-owned organizations
E.Countries progressively raising trade barriers against each other
Answer:
Countertrade occurs when the:
A.exporter may not be paid in his or her home currency due to nonconvertibility.
B.exporter can convert the currency only in U.S. dollars.
C.exporter is dealing with a country that has huge foreign reserves.
D.exporter has easy access to export credit to fund its international trade.
E.importer defaults on payment.
Answer:
Poor health care and housing standards and inhospitable climate make it difficult for
expatriates to adjust to a particular posting. According to Mendenhall and Oddou’s four
dimensions that predict success in a foreign posting, which of the following is required
in this situation?
A.Perceptual ability
B.Cultural toughness
C.Self-orientation
D.Others-orientation
E.Self-confidence
Answer:
Which of the following allowances is paid when an expatriate is being sent to a difficult
location?
A.Education
B.Housing
C.Hardship
D.Cost of living
E.Reciprocal
Answer:
According to the agreement reached between the International Monetary Fund and the
South Korean government in 1997, in return for funding, the South Koreans were
required to:
A.adopt communist ideologies.
B.reduce their imports by enforcing restrictive import licensing.
C.open their economy to greater foreign competition.
D.oppose the ideologies of the World Trade Organization.
E.engage in competitive currency devaluation.
Answer:
As per the U.S. law and OECD convention, which of the following is most likely to be
considered as a grease payment?
A.Gold Fire Inc. paid a fine of $2500 for violating the labor laws in a foreign country.
B.Gold Fire Inc. made a small payment of $20 to speed up some paperwork related to
tax returns in a less developed country.
C.The proprietor of Gold Fire Inc. made payments to the Mafia as a protection against
violent retribution.
D.Gold Fire Inc. gave gift vouchers to all its product wholesalers in order to promote
the product.
E.Gold Fire Inc. made an unrecorded payment to one of its accountants in return for
window dressing the company’s accounts.
Answer:
Maverick Stars Inc., a U.S.-based multinational company, applies its home-country
standards of employment and production in its manufacturing facilities located in some
less-developed host nations. In this context, the company is most likely to be criticized
for:
A.applying low standards of business ethics in its host nations.
B.exploiting the national differences in factors of production.
C.opposing ethnocentrism and righteous moralism.
D.nullifying the reasons for investing in those countries.
E.adopting cultural relativism as its approach to ethics.
Answer:
The Human Development Index comes close to Amartya Sen’s conception of how
development should be measured, although which of the following, suggested by Sen in
his thesis, is not included in the index?
A.Basic health care
B.Political freedom
C.Educational attainment
D.Basic average income
E.Life expectancy at birth
Answer:
Which of the following is true of choosing a distribution strategy?
A.The optimal distribution strategy is determined by the relative costs and benefits of
each alternative, which vary from country to country.
B.A choice of distribution strategy does not determine which channel the firm will use
to reach potential consumers.
C.The channel length, the final selling price, and the firm’s profit margin are completely
independent of each other.
D.The longer a distribution channel, the lower the aggregate markup.
E.The longer a distribution channel, the lower the price consumers are charged for the
final product.
Answer:
Both China and India have achieved high growth rates despite relatively weak property
rights regimes and high levels of corruption, because of:
A.the shift toward a communist ideology.
B.their high living standards.
C.their large population.
D.their high consumer purchasing power.
E.the shift toward a market-based economic system.
Answer:
The bank that has a direct lending operation under which it lends dollars to foreign
borrowers for use in purchasing U.S. exports is called the:
A.Department of Commerce.
B.World Bank.
C.Ex-Im Bank.
D.Bank of New York.
E.Small Business Administration.
Answer:
Which of the following is the only way to support a current account deficit in the long
run?
A.Borrowing from the IMF
B.Selling assets to foreigners
C.Divesting stock in domestic corporations
D.Purchasing stocks, bonds, and real estate in other countries
E.Issuing negotiable instruments like the bills of exchange
Answer:
Which of the following factors limits a firm’s ability to use the same marketing
message?
A.Channel exclusivity
B.Channel quality
C.Cultural differences
D.Concentrated retail systems
E.Fragmented retail systems
Answer:
Which of the following identifies the motivation for much of the foreign direct
investment by non-U.S. firms?
A.The desire to disperse production activities to optimal locations
B.The need to suppress emerging economies such as China, India, and Brazil
C.The demand for skilled workers in foreign nations
D.The lack of adequate environmental regulations
E.The establishment of multinational treaties
Answer:
Which of the following exemplifies violation of folkways best?
A.Committing a financial fraud
B.Practicing cannibalism under the belief that it leads to superpowers
C.Failing to greet a person you know
D.Stealing an author’s or an inventor’s intellectual property
E.Murdering a business partner
Answer:
Which of the following suggests that trade is a positive-sum game in which all
participating countries fetch economic gains?
A.The Heckscher-Ohlin theory
B.Mercantilism
C.The theory of comparative advantage
D.Leontief’s paradox
E.The Samuelson critique
Answer:
The government of Beryllia tightly controls the ability of its residents to convert its
currency into other currencies. However, all foreign businesses with deposits in banks
of Beryllia may, at any time, convert all their currency into foreign currency and take
them out of the country. Beryllia’s currency is said to be:
A.leading.
B.nonconvertible.
C.externally convertible.
D.freely convertible.
E.lagging.
Answer:
Which of the following best exemplifies public action?
A.The mafia in Cedia Republic demands “protection money” from successful domestic
business owners.
B.Cedian proprietors in the hospitality industry often complain about protection rackets
by criminal groups.
C.Government bureaucrats demand bribes from international businesses in return for
the rights to operate in Cedia Republic.
D.The Cedian government has been criticized for its inability to curb theft of trade
secrets of international businesses by private domestic owners.
E.To promote the Cedian culture, the government has made Cedian movies, which are
based on Cedian history, tax-free.
Answer:
Which of the following treaties committed European Community members to adopt a
common currency by January 1, 1999?
A.The Maastricht Treaty
B.The Treaty of Rome
C.The Treaty of Lisbon
D.The Montreal Treaty
E.The Treaty of Paris
Answer:
In terms of communication strategy, which of the following refers to the situation when
the receiver of a message evaluates the message based on the status or image of the
sender?
A.Source effects
B.Noise levels
C.Cultural barriers
D.Pull strategy
E.Push strategy
Answer:
Which of the following is true about Dunning’s arguments?
A.Dunning rejects the argument of internalization theory that it is difficult for a firm to
license its own unique capabilities and know-how.
B.Dunning suggests that to exploit foreign resources, such as oil and other minerals, a
firm must undertake licensing rather than FDI.
C.Dunning argues that it makes sense for a firm to locate production facilities in those
countries where the cost and skills of local labor is most suited to its particular
production processes, since labor is not internationally mobile.
D.Dunning’s theory and its extensions help explain the imitative FDI behavior by firms
in oligopolistic industries.
E.Dunning argues that combining location-specific assets or resource endowments with
the firm’s own unique capabilities always requires licensing.
Answer: