Archives: Solution Manual

CHAPTER 28: THE FINANCIAL SECTOR AND THE ECONOMY Questions and Exercises 1. Money doesn’t have to have any inherent value to function as a medium of 2. Money functions as a medium of exchange, a unit of value, and a […]

APPENDIX: A CLOSER LOOK AT FINANCIAL ASSETS AND LIABILITIES 1. Students gain a financial asset and the government incurs a financial liability. 2. It is a financial asset because it has value due to an offsetting liability of the 3. […]

CHAPTER 27: THE CLASSICAL LONG-RUN POLICY MODEL: GROWTH AND SUPPLY-SIDE POLICIES Questions and Exercises 1. Economic growth allows everyone in society, on average, to have more. It generates jobs and increases income and therefore consumption. Costs include 2. Using the […]

CHAPTER 26W: THE MULTIPLIER MODEL Questions and Exercises 1. The multiplier model is more appropriate for large changes in aggregate demand, 2. Since total expenditures are $2,000, induced expenditures are $1,000. Autonomous expenditures are shown by the y-intercept ($1,000). 3. […]

CHAPTER 26W: APPENDIX A: AN ALEBRAIC PRESENTATION OF THE EXPANDED MULTIPLIER MODEL 1. To determine precisely how much we would need to decrease taxes we must 2. We would recommend increasing expenditures by $80 (80 × 5 = 400). 3. […]

CHAPTER 26: THE SHORT-RUN KEYNESIAN POLICY MODEL: DEMAND-SIDE POLICIES Questions and Exercises 1. According to Keynesians the economy could deviate from its potential because if aggregate demand falls for some unexplained reason, firms would respond by 2. When prices are […]

CHAPTER 25: MEASURING AND DESCRIBING THE AGGREGATE ECONOMY Questions and Exercises 1. A stock concept is the amount of something at a given point in time. A flow 2. Consumption spending is the largest expenditure category of production for most […]

CHAPTER 24: ECONOMIC GROWTH, BUSINESS CYCLES, AND UNEMPLOYMENT Questions and Exercises 1. Classicals felt that if the wage level fell, the Depression would end. They saw 2. Classical economics supported laissez-faire policies because they believed business cycles were temporary glitches […]

CHAPTER 10: INTERNATIONAL TRADE POLICY Questions and Exercises 1. Because U.S. trade is a relatively small percent of total output, trade is less 2. The two greatest U.S. trading partners are Canada and Mexico. Trade with China and India is […]

CHAPTER 9: COMPARATIVE ADVANTAGE, EXCHANGE RATES AND GLOBALIZATION Questions and Exercises 1. A country does better exporting a good for which it has a comparative advantage 2. There is a basis for trade because Wadgetland can produce wadgets at a […]

Issues to Ponder 1. a. Airways have value because they produce revenue and there are only a limited b. Television networks have incentives to produce high definition television only to the extent that they would receive more revenue for using […]

CHAPTER 5: USING SUPPLY AND DEMAND Questions and Exercises 1. If the equilibrium price and quantity both rose, the simplest cause would be a shift 2. If price fell and quantity remained constant, a possible cause would be a shift […]

APPENDIX: ALGEBRAIC REPRESENTATION OF SUPPLY, DEMAND, AND EQUILIBRIUM 1. a. The tables are shown below: Price (Dollars per gallon) Quantity Demanded (Gallons per year) Quantity supplied (Gallons per year 0 600 -150 1 500 0 b. See the accompanying graph. […]

CHAPTER 4: SUPPLY AND DEMAND Questions and Exercises 1. The law of demand states that quantity demanded falls as price increases; or that 2. a. Price Market Demand 2 64 4 56 6 44 8 36 10 28 12 20 […]

CHAPTER 3: ECONOMIC INSTITUTIONS Questions and Exercises 1. In a market economy, fluctuations in prices play a role in coordinating 2. In a centrally planned socialist economy, sometimes called a command economy, economic activity is governed by central planning. These […]

CHAPTER 2: THE PRODUCTION POSSIBILITY MODEL, TRADE, AND GLOBALIZATION Questions and Exercises 1. In the figure to the right, wadget production is measured on the vertical axis and widget production is measured on the horizontal axis. If the society becomes […]

CHAPTER 2 APPENDIX: GRAPHISH: THE LANGUAGE OF GRAPHS 1. See the accompanying graph. 2. See the accompanying graph. a. The relationship is nonlinear because it is b. From 0 to 5, cost declines as quantity rises (inverse relationship). From 5 […]

CHAPTER 1: ECONOMICS AND ECONOMIC REASONING Questions and Exercises 1. Coordination refers to how the three central problems facing any economy are solved. Those three problems are what and how much to produce, how to The concept of scarcity has […]

OPENING CASE: Skype Now a Division of Microsoft Summary The opening case describes Microsoft’s acquisition of Internet communications company Skype in an all-cash deal worth $8.5 billion. The company financed the deal using cash stored overseas in countries with low […]

Chapter 20 – Accounting and Finance in the International Business Accounting and Finance in the International Business Learning objectives Discuss the national differences in accounting standards. Explain the implications of the rise of international accounting standards. Explain how accounting systems […]

OPENING CASE: A Global Team at Mary Kay Inc. Summary QUESTION 1: How are Mary Kay’s marketing and human resources strategies related? ANSWER 1: Mary Kay uses a direct-sales approach to marketing, relying upon the interpersonal QUESTION 2: In what […]

Chapter 19 – Global Human Resource Management Global Human Resource Management Learning objectives Summarize the strategic role of human resource management in the international business. Identify the pros and cons of different approaches to staffing policy in the international business. […]

OPENING CASE: Global Branding of Avengers and Iron Man Summary The opening case explores how Marvel movie studios capitalized on the popularity of lead character Tony Stark (and the actor that plays him) in branding its Avengers and Iron Man […]

Chapter 18 – Global Marketing and R&D Global Marketing and R&D Learning objectives Explain why it makes sense to vary the attributes of a product from country to country. Recognize why and how a firm’s distribution strategy might vary among […]

OPENING CASE: Apple: The Best Supply Chains in the World? Summary The opening case explores the supply chain management techniques used by information technology company Apple. Apple is considered to have one of the world’s largest and most efficient supply […]

Chapter 17 – Global Production and Supply Chain Management Global Production and Supply Chain Management Learning objectives Explain why production and logistics decisions are of central importance to many multinational businesses. Explain how country differences, production technology, and product features […]

OPENING CASE: Exporting Desserts Summary The opening case explores the international expansion of LuLu’s Desserts, a company based in Torrance, California, that manufactures and distributes ready-to-eat flavored gelatin desserts inspired by its owner’s Mexican heritage. After a decade of building […]

Chapter 16 – Exporting, Importing, and Countertrade Exporting, Importing and Countertrade Learning objectives Explain the promises and risks associated with exporting. Identify the steps managers can take to improve their firm’s export performance. Identify information sources and government programs that […]

IKEA in 2013: Furniture Retailer to the World 1. By the early 1970s IKEA had established itself as the largest furniture retailer in Sweden. What was the source of its competitive advantage at that time? Answer: Many students will probably […]

OPENING CASE: Starbucks’ Foreign Entry Strategy Summary The opening case describes the strategy used by Starbucks to expand into markets throughout Europe and Asia. Founded in 1971, Starbucks is based in Seattle. The company began its aggressive international expansion in […]

Chapter 15 – Entry Strategy and Strategic Alliances Entry Strategy and Strategic Alliances Learning objectives Explain the three basic decisions that firms contemplating foreign expansion must make: which markets to enter, when to enter those markets, and on what scale. […]

OPENING CASE: P&G—Strength in Architecture Summary The opening case explores the extensive reorganization undertaken in 2014 by Proctor & Gamble, the U.S. household products conglomerate. P&G is one of the world’s largest companies, with customers in more than 180 countries […]

Chapter 14 – The Organization of International Business The Organization of International Business Learning objectives Explain what is meant by organizational architecture. Describe the different organizational choices that can be made in an international business. Explain how organization can be […]

OPENING CASE: IKEA’s Global Strategy Summary The opening case describes IKEA’s global strategy and the way the company tailors its offerings to meet customer demands. When IKEA first expanded to the United States in the 1980s, it saw disappointing sales […]

The Strategy of International Business Learning objectives Explain the concept of strategy. Recognize how firms can profit by expanding globally. Understand how pressures for cost reductions and pressures for local responsiveness influence strategic choice. Identify the different strategies for competing […]

OPENING CASE: Alibaba’s Record-Setting IPO Summary The opening case explores the $231 billion initial public offering of Chinese e-commerce company Alibaba. Initially, Alibaba considered making an IPO in Hong Kong, but concerns over a rule that would cause founder Jack […]

Chapter 12 – The Global Capital Market The Global Capital Learning objectives Describe the benefits of the global capital market. Identify why the global capital market has grown so rapidly. Understand the risks associated with the globalization of capital markets. […]

OPENING CASE: The IMF and Ukraine’s Economic Crisis The opening case explores the economic impact of political unrest in Ukraine and the IMF’s role in restoring stability. In 2013, Ukraine president Viktor Yanukovych pulled the country out of a trade […]

Chapter 11 – The International Monetary System The International Monetary System 11-1 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 11 Chapter 11 – The International Monetary System […]

OPENING CASE: Subaru’s Sales Boom Thanks to the Weaker Yen The opening case explores the implications of changing currency values on the U.S. sales of Japanese automaker Subaru. Prior to 2012, the yen was relatively strong against the U.S. dollar. […]

Chapter 10 – The Foreign Exchange Market The Foreign Exchange Market Learning objectives Describe the functions of the foreign exchange market. Understand what is meant by spot exchange rates. Recognize the role that foreign exchange rates play in insuring against […]

OPENING CASE: Regional Trade Pacts Give the Mexican Auto Industry an Edge Summary The opening case describes the growth of the Mexican auto industry due to a wave of foreign direct investment spurred by regional trade agreements. Beginning with the […]

End of Part Case Notes Part Three Legal Outsourcing 1. What are the benefits to a law firm of outsourcing of legal services to a foreign country? What are the potential costs and risks? 2. What kind of legal services […]

Chapter 09 – Regional Economic Integration Regional Economic Integration Learning objectives Describe the different levels of regional economic integration. Understand the economic and political arguments for regional economic integration. Understand the economic and political arguments against regional economic integration. Explain […]

OPENING CASE: Volkswagen in Russia The opening case considers Volkswagen’s decision to invest over $1 billion in Russia beginning in 2007. The decision was motivated by surging demand in Russia and Volkswagen’s desire to avoid Russian import tariffs. In 2014, […]

Chapter 08 – Foreign Direct Investment Foreign Direct Investment Learning objectives Recognize current trends regarding foreign direct investment (FDI) in the world economy. Explain the different theories of FDI. Understand how political ideology shapes a government’s attitudes towards FDI. Describe […]

OPENING CASE: U.S. Tariffs on Chinese Solar Panels Benefit Malaysia The opening case explores the decision by the United States and the European Union to levy tariffs on solar panels imported from China. The decision stemmed from the fact that […]

Chapter 07 – Government Policy and International Trade Government Policy and International Trade Learning objectives Identify the policy instruments used by governments to influence international trade flows. Understand why governments sometimes intervene in international trade. Summarize and explain the arguments […]

OPENING CASE: China and Australia Enter into a Free Trade Agreement The opening case explores a new free trade agreement between China and Australia. China is Australia’s biggest trading partner, and the agreement is expected to offset declines in Chinese […]

Chapter 06 – International Trade Theory International Trade Theory Learning objectives Understand why nations trade with each other. Summarize the different theories explaining trade flows between nations. Recognize why many economists believe that unrestricted free trade between nations will raise […]