Archives: Quiz

1) in the large-country case, an export tax a. leads to an increase in the price of the good in the importing country b. leads to no change in the price of the good in the importing country c. is […]

1) in the following edgeworth box diagram for a countrys production, a. a movement from point s to point t involves an increase in the capital/labor ratio used in the production of good a b. if the ppf is plotted […]

1) the situation where a country both exports and imports goods in the same product classification category is known as __________ trade, and such a trade situation for countries in the real world is likely to be __________ associated with […]

1) suppose that data are assembled on (1) research and development expenditures as a fraction of industry costs across u.s. industries (ranked from highest to lowest), and (2) the export success of u.s. industries (ranked from highest to lowest). if […]

1) according to recent studies, different national stock markets appear to be only moderately correlated. 2) the term “offshore production” refers to fdi undertaken to serve the home market. Answer: true 3) error! hyperlink reference not valid.error! hyperlink reference not […]

1) according to statement 52, “foreign currency translation,” the functional currency of an integral subsidiary is to be the home currency. 2) regardless of a firm’s domestic structure, its international division tends to be organized on economy. Answer: false 3) […]

1) a firm’s organizational culture refers to the values and norms that are shared among employees of an organization. 2) according to lessard and lorange, the three exchange rates that can be used to translate foreign currencies into the corporate […]

1) the free trade area of the americas that was established in 2005 has thus far proven to be a success. 2) great britain, germany, and france have led the push toward a euro zone in the eu. Answer: false […]

1) a company that depends on mass media advertising to communicate its marketing message to potential consumers is using a push strategy. 2) by 2008, the u.s. had seen its share of exports fall to almost half its share in […]

1) arbitrage opportunities abound in the foreign exchange markets and they tend to be available for long periods of time. 2) when substantial investments in specialized assets are required to manufacture a component, the firm will prefer to contract it […]

1) switch trading is the direct exchange of goods and/or services between parties without a cash transaction. 2) countries with fragmented retail systems tend to have long channels of distribution. Answer: true 3) adverse exchange rate movements can transform otherwise […]

1) economic freedom necessarily equates with political freedom. 2) cultural toughness can be assessed by comparing cultures. Answer: true 3) firms may choose an ethnocentric approach to staffing as opposed to a polycentric approach because of the cost savings it […]

1) according to rawls, inequalities can be just if the system that produces inequalities is to the advantage of everyone. 2) the shift toward a more integrated and interdependent world economy is referred to as globalization. Answer: true 3) gatt […]

1) firms pursuing the global strategy and the transnational strategy disperse each value creation activity to its optimal location in the world. 2) systematic risk refers to movements in a stock portfolio’s value that are attributable to macroeconomic forces affecting […]

1) historically, most international businesses have been more concerned with management development than with training. 2) limits on imports are often in the interests of domestic consumers, but not domestic producers. Answer: false 3) some critics argue that outsourcing has […]

1) it is easier to establish free trade among a limited number of adjacent countries than it is among the world community. 2) deregulation involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and […]

1) one of the sources of economies of scale is the ability to spread fixed costs over a large volume. 2) a common market has no barriers to trade between member countries, includes a common external trade policy, and allows […]

1) the united nations cigs establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations. 2) commercial banks bring […]

1) one criticism of the imf’s policy prescriptions is that its “one-size-fits-all” approach to microeconomic policy is inappropriate for many countries. 2) the sight draft specifies that the bank will pay a specified sum of money to the exporter upon […]

1) core competencies enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible. 2) a class system is a rigid form of social stratification in which […]

1) the tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. 2) a country’s balance of payments accounts keep track of both its […]

1) assembly of electronic components is a relatively labor-intensive process requiring only low-skilled labor, and cost pressures are intense. as a result, final assembly may be carried out in a country such as the united states. 2) critics of globalization […]

1) the single european act committed eu countries to adopting a common currency by january 1, 1999 . 2) the european union is an example of a perfect economic union. Answer: false 3) today, global changes in the political economy […]

1) a central point in vernon’s product life-cycle was that demand for new products tends to be solely based on price factors. 2) beyond the initial functional division of the organization, further horizontal differentiation may be required if the firm […]

1) historically, the product life-cycle theory seems to be an inaccurate explanation of international trade patterns. 2) licensing gives a firm tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability. […]

1) from a profit perspective, it makes sense for a firm to disperse its productive activities to those countries where, according to the theory of international trade, they can be performed most efficiently. 2) the most attractive staffing policy is […]

1) when a firm focuses on increasing profitability by customizing the product or service so that they provide a good match to tastes and preferences in different national markets, the firm is following a localization strategy. 2) barriers to cross-border […]

1) country factors, technological factors, and product factors, all influence the decision of where to produce. 2) a big impediment to exporting is the simple lack of knowledge of the opportunities available. Answer: true 3) in theory, wto rules should […]

1) jobs created in local suppliers as a result of the mne’s investment and jobs created because of increased local spending by employees of the mne are examples of direct employment effects of fdi. 2) pricing decisions around the world […]

1) people who take food or safety for granted tend to be xenophobic, are wary of political activity, have authoritarian tendencies, and believe that men make better political leaders than women. 2) the rate of new-product development seems to be […]

1) unlike their american and japanese counterparts, german firms are at a disadvantage when it comes to assistance in seeking export opportunities. 2) cash balances are typically deposited in liquid accounts. Answer: true 3) the andean pact is a highly […]

1) dunning, in the eclectic paradigm theory, suggests that a firm must establish production facilities where foreign assets or resource endowments necessary to the production of the product exist. 2) the global financial crisis of 2008 and 2009 focused attention […]

1) emcs are experienced specialists who can help the neophyte exporter avoid common pitfalls. 2) transaction exposure is the extent to which the income from individual transactions is affected by fluctuations in foreign exchange values. Answer: true 3) according to […]

1) nearly all developing nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, the use of toxic materials in the workplace, and so on. 2) market makers are the financial service companies that connect investors […]

1) the naive immoralist claims that a multinational’s home country standards of ethics are the appropriate ones for companies to follow in foreign countries. 2) most international businesses require all budgets and performance data within the firm to be expressed […]

1) if the net present value of the discounted cash flows is slightly less than zero, the firm should go ahead with the project. 2) the letter of credit system effectively transfers the issue of trust to the bank. Answer: […]

1) a push strategy is generally favored by consumer goods firms that are trying to sell to a large segment of the market. 2) the international trade secretariats have had tremendous success. Answer: false 3) an export management company is […]

1) there are two main trading blocs in europe, the european union and the european free trade association. 2) the world bank’s initial mission was to lend money to third world nations. Answer: false 3) building an organization culture that […]

1) a benefit to companies of economic integration is the opportunity to centralize their production and reduce costs. 2) the financial crisis that started in the united states and swept around the world in 2008 and 2009 could be attributed […]

1) exporting is advantageous because it avoids the cost of establishing manufacturing operations in the host country and because it may help a firm achieve experience curve and location economies. 2) as compared to exporting and licensing, fdi may be […]

1) rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. 2) licensing increases a firm’s ability to realize experience curve and location economies by producing its product in a centralized location. Answer: […]

1) by diversifying a portfolio internationally, an investor’s level of risk is increased even further because the movements of stock market prices across countries are not perfectly correlated. 2) when a company emphasizes personal selling, the company is probably using […]

1) mnes can hedge against currency fluctuations by dispersing production to different locations around the globe. 2) it is more important to have a common culture in firms employing a localization strategy than a transnational strategy. Answer: false 3) the […]

1) transnational investment occurs when a firm based in one country enters another country’s capital market to raise capital from the sale of stocks or bonds. 2) when a gain by one country results in a loss by another, there […]

1) political risk assessment is more art than science. 2) during the period 1990 – 2000, the volume of total exports was more than twice the world gdp. Answer: true 3) a key disadvantage of the worldwide area structure is […]

1) the long-run benefits of doing business in a country are a function of factors such as the size of the market, the present wealth of consumers in that market, and the likely future wealth of customers. 2) once a […]

1) specific tariffs are levied as a proportion of the value of the imported good. 2) the purpose of consolidated financial statements is to provide accounting information about a group of companies that recognize their economic interdependence. Answer: true 3) […]

1) when a tourist changes one currency into another, the tourist is participating in the foreign exchange market. 2) firms pursuing a global standardization strategy are more centralized than enterprises pursuing a localization or international strategy. Answer: true 3) high […]

1) money market accounts typically offer a relatively high rate of interest. 2) outsourcing decisions pose plenty of problems for international businesses but even more problems for purely domestic businesses. Answer: false 3) the most rigid system of stratification is […]

1) small-scale entry allows a firm to learn about a foreign market while limiting the firm’s exposure to that market. 2) host country citizens that are employed by an mne following an fdi are an example of an indirect effect […]