Which of the following firms should concentrate its production in a centralized
location?
A.Jupiter Inc. operates in an industry where the fixed costs are high and services of
supporting industries are of prime importance.
B.Star Goal Inc. manufactures consumer products like processed food, apparel, and
cosmetics for which national differences in consumer taste and preference are wide.
C.Uranious Inc. operates in an economy where volatile fluctuations in exchange rates
are frequently expected.
D.Earth Ventures Inc. is a mining company that exports iron orea product with low
value-to-weight ratioto various countries.
E.Silver Times Inc. customizes heavy machines without the use of flexible
manufacturing technologies.
Answer:
According to Christopher Bartlett and Sumantra Ghoshal, how can local companies
differentiate themselves from foreign multinationals?
A.By licensing their core technologies
B.By entering into turnkey projects
C.By standardizing their product offerings
D.By focusing on market niches
E.By raising trade barriers
Answer:
A drawback of countertrade is that:
A.it fails to enable firms to finance an export deal.
B.it is detrimental to the economy of the importing country.
C.developing nations have trouble raising the foreign exchange necessary to pay for
imports.
D.it does not allow firms to invest in an in-house trading department dedicated to
arranging and managing deals.
E.it may involve the exchange of poor-quality goods that cannot be disposed of
profitably.
Answer:
The Maastricht Treaty called for:
A.establishment of the independent European Central Bank (ECB).
B.the abolition of restrictions on cabotage.
C.establishment of the European Parliament.
D.the formation of a single market for the European Union.
E.placing restrictions on foreign exchange transactions between member countries.
Answer:
Which of the following refers to the extent to which the income from individual
transactions is affected by fluctuations in foreign exchange values?
A.Translation exposure
B.Economic exposure
C.Purchasing power parity
D.Transaction exposure
E.Forward exchange rate
Answer:
Who among the following asserted in an article in the Harvard Business Review that
modern transportation and communications technologies are facilitating a convergence
of certain tastes and preferences among consumers in the more advanced countries of
the world?
A.Gary Hamel
B.Theodore Levitt
C.Christopher Bartlett
D.Peter Drucker
E.C.K. Prahalad
Answer:
Which of the following is a function of an export management company?
A.It starts exporting operations for a firm with the understanding that the firm will take
over operations after they are well established.
B.It coordinates the Export Legal Assistance Network, a nationwide group of
international trade attorneys.
C.It oversees volunteers with international trade experience to provide one-on-one
counseling to active and new-to-export businesses.
D.It collects duties on exported products and sets interest rates for charging foreign
investors.
E.It gives novice exporters the names and addresses of potential distributors in foreign
markets along with businesses they are in.
Answer:
The veil of ignorance, a conceptual device designed by John Rawls, supports:
A.impartiality in justice.
B.oppression of people by totalitarian governments.
C.economic suppression of people.
D.apartheid laws.
E.cultural relativism.
Answer:
In the context of international labor relations, a labor union concern arises when an
international business:
A.keeps low-skilled tasks in its home country.
B.signs a reciprocal tax treaty with the host country.
C.increases the bargaining power of organized labor.
D.faces difficulty in switching production from one location to another.
E.attempts to import employment practices and contractual agreements from its home
country.
Answer:
Which of the following statements best indicates Samuelson’s criticism of free trade?
A.Dynamic gains lead to a universally beneficial outcome for all countries.
B.Offshoring service jobs that were traditionally mobile will increase the market
clearing wage rate.
C.Free trade has historically been beneficial only to developing countries.
D.By importing cheap goods from a poor country a rich country may not be able to
produce a net gain if the dynamic effect of free trade is to lower real wage rates in the
rich country.
E.Trade changes a country’s stock of resources and the efficiency with which it utilizes
those resources.
Answer:
In terms of using a third party in international trade, title to the products is given to a
bank by the exporter in the form of a document known as a:
A.merchandise bill.
B.bill of lading.
C.bill of exchange.
D.draft.
E.letter of credit.
Answer:
Which view argues that international production should be distributed among countries
according to the theory of comparative advantage?
A.Conservative
B.Pragmatic nationalism
C.Free market
D.Radical
E.Keynesian economic
Answer:
Similarities in the underlying structure of economic activity make it feasible to adopt a
single currency and use a single exchange rate as an instrument of macroeconomic
policy in a(n):
A.managed currency zone.
B.open exchange regime.
C.optimal currency area.
D.free trade area.
E.advanced monetary zone.
Answer:
Which of the following statements is true about the Universal Declaration of Human
Rights?
A.This declaration provides different sets of fundamental rights and privileges for
different cultures.
B.According to this declaration, it is unethical to employ child labor in sweatshops even
if that happens to be common in some countries.
C.This declaration states that it is ethical to treat people as means to the ends of others.
D.According to this declaration, citizens of a nation have no duties to their community.
E.According to this declaration, people do not have a right to join trade unions for the
protection of their interests.
Answer:
Australia is a major producer of agricultural and dairy products and exports coffee, tea,
spices, and milk products to the United States. United States is the world’s third largest
supplier of machinery and exports heavy machinery to Australia. What explains the
trade equation between Australia and the United States?
A.Tariff barriers determine the flow of goods and services between nations.
B.Countries are simultaneously encouraging exports and discouraging imports.
C.First entrants to the industry ensure their nations have the first-mover advantages.
D.Nations with an absolute advantage in producing certain goods trade them for goods
produced by other countries.
E.Gold and silver are the mainstays of national wealth and essential to vigorous
commerce.
Answer:
Which of the following involves producing goods at home and then shipping them to
the receiving country for sale?
A.Outsourcing
B.Licensing
C.Franchising
D.Exporting
E.Diversifying
Answer:
One common measure of economic development is a country’s:
A.gender ratio.
B.gross national income.
C.infant mortality rate.
D.population density.
E.total geographical area.
Answer:
Which of the following is one of the four factors included in Porter’s diamond?
A.Purchasing power parity
B.Gross national income
C.Economies of scale
D.Firm strategy, structure, and rivalry
E.Gross domestic product
Answer:
Which of the following is true about the three main types of legal systems?
A.Judges under a civil law system have more flexibility than those under a common law
system.
B.The common law system evolved in the United States over hundreds of years.
C.Although Islamic law is primarily concerned with moral behavior, it has been
extended to cover certain commercial activities.
D.A theocratic law system is based on a detailed set of laws organized into codes.
E.Common law cannot be altered, clarified, or amended to deal with new situations.
Answer:
If a country wants to improve its attractiveness as a place for doing business and as an
investment site, it should:
A.oppose the rule of law.
B.ensure that the economic activity is heavily regulated by the state.
C.move toward a market-based system.
D.extensively restrict property rights.
E.avoid enforcing intellectual property laws.
Answer:
Which of the following factors is taken into consideration by David Ricardo’s theory of
comparative advantage in order to explain the pattern of international trade?
A.Absolute advantage of a country with reference to natural resources
B.The proportions in which the factors of production are available
C.International differences in labor productivity
D.The ability of firms to cope with late-mover disadvantages
E.The ability of firms to capture first-mover advantages
Answer:
Which of the following is true of the political case for regional economic integration?
A.Linking neighboring economies increases the potential for violent conflict.
B.Free trade stimulates economic growth, which creates dynamic gains from trade.
C.Making neighboring economies increasingly dependent on each other fails to create
incentives for political cooperation.
D.Countries can enhance their political weight in the world by grouping their
economies.
E.Those who have sought a united Europe have always had a desire to make another
war in Europe imminent.
Answer:
Which of the following statements is true about performing a manufacturing activity in
several locations at once?
A.A manufacturing activity must be performed at multiple locations when the fixed
costs of setting up a production plant are high.
B.Performing a manufacturing activity in several locations makes it difficult for a firm
to accommodate demands for local responsiveness.
C.Producing in multiple locations reduces the bargaining power of a firm against
manufacturers.
D.The larger the minimum efficient scale of a plant relative to total global demand, the
greater the need for decentralizing production to multiple locations.
E.Many firms disperse their manufacturing plants to different locations as a “real
hedge” against potentially adverse moves in currencies.
Answer:
What is the common aspect of the teachings of Hinduism and Buddhism?
A.Both stress the afterlife and spiritual achievement rather than material progress.
B.Both support the existence of a caste system.
C.Both advocate the same kind of extreme ascetic behavior.
D.Both propagate the Noble Eightfold Path as a route for transformation.
E.Both condemn the payment or the receipt of interest on loans and deposits.
Answer:
Which of the following is a religion that prohibits the payment or receipt of interest, as
it is considered to be usury?
A.Hinduism
B.Buddhism
C.Christianity
D.Confucianism
E.Islam
Answer:
Which of the following is true of high value-to-weight ratio products?
A.They tend to have greater weight than other products in the segment.
B.Their transportation costs account for a very small percentage of total costs.
C.They tend to be inexpensive.
D.There is great pressure to produce these products in multiple locations close to major
markets.
E.These products gain weight as raw materials get processed during transportation.
Answer:
In terms of training and management development, which of the following is aimed at
helping the expatriate manager and family ease themselves into day-to-day life in the
host country?
A.Cognitive training
B.Practical training
C.House training
D.Cultural training
E.Perceptual ability training
Answer:
Which of the following levels of economic integration involves the use of a common
currency, harmonization of members’ tax rates, and a common monetary and fiscal
policy?
A.Free trade area
B.Customs union
C.Common market
D.Economic union
E.Command economy
Answer:
Which of the following creates an unfavorable environment for innovations and
entrepreneurship?
A.Market economy
B.Economic freedom
C.State monopoly in production
D.Privatization
E.Strong legal protection of property rights
Answer:
Which of the following is a reason for diminishing rather than constant returns to
specialization?
A.All resources are of the same quality.
B.Resources can shift from the production of one good to another seamlessly.
C.Each country has a fixed stock of resources.
D.Different goods use different resources in different proportions.
E.Trade does not affect the distribution of income within a country.
Answer:
Describe the arguments for the North American Free Trade Agreement (NAFTA).
Answer:
In the context of international labor relations, which of the following is a concern of
organized labor?
A.An international business increases the bargaining power of organized labor.
B.An international business keeps highly skilled tasks in its home country and farms
out only low-skilled tasks to foreign plants.
C.An international business faces difficulty in switching production from one location
to another.
D.An international business does not import employment practices and contractual
agreements from its home country.
E.An international business signs a reciprocal tax treaty with the host country.
Answer:
The absence of a legal system that protects property rights and the lack of machinery to
enforce that system in a market economy usually results in:
A.an improvement in the operating efficiency of newly privatized firms.
B.reduced barriers to foreign direct investment and international trade.
C.an increase in the incentives to engage in economic activity.
D.deregulation and privatization of the economy.
E.the lack of incentive to engage in economic activity.
Answer:
MedPlus Incorporated, based in the United States, hesitates to enter into a joint venture
with Azpak Limited, a Sri Lankan company, due to inadequate protection of intellectual
property rights. MedPlus is trying to avoid what type of risk?
A.Political
B.Legal
C.Ethical
D.Economic
E.Ethnographic
Answer:
Which of the following conditions is most favorable to reap gains from global scale
economies?
A.Low demand for local responsiveness
B.High pressures for cost reduction
C.Lack of universal needs
D.National differences in accepted business practices
E.High pressure to delegate production to domestic subsidiaries
Answer: