Quiz Chapter 1

(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 A global company is an organization with multicountry affiliates, each of which formulates its own
CORRECT business strategy based on perceived market differences.

A) True

B) False

2 One variable commonly used to measure where and how fast internationalization takes place is the
CORRECT increase in total foreign direct investment.

A) True

B) False

3 The forces in the foreign environment operate the same way as those in the domestic environment
CORRECT except that they occur in foreign nations.

A) True

B) False

4 An international manager has two choices on what to do with a concept or technique employed in
CORRECT domestic operations: (1) transfer it intact or (2) adapt it to local conditions.

A) True

B) False

5 Financial, economic, and distributive forces are examples of controllable forces influencing the life
CORRECT and development of a firm.

A) True

B) False

6 All the following are true about a global company except that it:
CORRECT
A) maintains a presence in key markets around the world.

B) looks for differences among markets.

C) integrates its operations worldwide.

D) standardizes operations worldwide in one or more of the firm's functional areas.

7 The major globalization drivers include all of the following except:

CORRECT
A) political.
 B) social.

C) technological.

D) market.

8 Due to the expanding importance of foreign-owned firms in local economies, host governments
CORRECT have made their policies toward these companies _____.

A) more strict

B) more liberal

C) less powerless

D) more confronting

9 Management has no direct control over the external environment of the firm but can exert influence
CORRECT by:

A) heavy promotion of new products to change cultural attitudes.

B) focusing on the strategic plan.

C) increasing the number of people.

D) exerting control over the inventory.

10 Unconscious reference to one's own cultural values when judging behavioral actions of others in a
CORRECT new and different cultural environment is called:

A) self-reference culture.

B) self-reference values.

C) self-reference criterion.

D) self-reference environment.

Quiz Chapter 2
(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 The extensive distribution system is one reason Japan sells more to developing nations than most
CORRECT developed nations do.

A) True
 B) False

2 The distinction between portfolio investment and direct investment has begun to increase in recent
CORRECT years due to the growing number of international mergers, acquisitions, and alliances.

A) True

B) False

3 Engaging in foreign trade is typically less costly and less risky than making a direct investment into
CORRECT foreign markets.

A) True

B) False

4 Simultaneously introducing products in foreign markets and in the domestic markets reduces sales
CORRECT volume while also increasing the cost of goods sold.

A) True

B) False

5 Export processing zones and in-bond plants are bound by taxation and regulation of materials
CORRECT brought into the zones for processing and subsequent re-export.

A) True

B) False

6 The annual outflows of foreign direct investment means:

CORRECT
A) level of state-owned investment funds.

B) value of the total outstanding stock of all foreign direct investment.

C) the amount invested each year into other nations.

D) bamboo network in the level of worldwide FDI.

7 In using GDP per capita as a basis for making comparisons of nations' economies, all of the
CORRECT following statements hold true except:

A) extreme care must be exercised to avoid drawing unwarranted conclusions.

B) the statistical systems in many developing countries are deficient.

C) the reliability of the data provided is often questionable.

D) GDP per capita is an arithmetic mean obtained by dividing GDP by the total income.

8 Preferential trading arrangement is:

CORRECT
an agreement by a small group of nations to establish free trade among themselves while
A) maintaining trade restrictions with all other nations.
 an agreement by a small group of nations to establish free trade with all other nations
B) while maintaining trade restrictions among themselves.
an agreement by a small group of nations to study the direction of trade and analyze
C) major trading partners.
an agreement that allows government designated zones to make their initial market entry
D) with local manufacturing facilities.

9 In-bond plants (maquiladoras):

CORRECT
are government designated zones where parts and processed materials can be imported
A) without import duties.

B) requires import duty to be paid only on the value added on the finished product.

C) do not require the imported items to be re-exported.

D) are located on the border between Mexico and the U.S.

10 Increasing wage rates in Mexico have affected maquiladoras in which of the following ways?
CORRECT
They have encouraged Mexican firms to establish U. S. plants to supply the Mexican
A) market.

B) They have encouraged higher value added work in the Mexican maquiladoras plants.

C) They have encouraged high labor intensive work in the Mexican maquiladoras plants.

D) They have encouraged low skill production in the Mexican maquiladoras plants.

Quiz Chapter 3
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Your Results:
The correct answer for each question is indicated by a .
1 The Heckscher-Ohlin theory states that differences in production costs occur because of differences
CORRECT in the supply of production factors.

A) True

B) False

2 An important outcome of Leontief's work was recognizing the potential for differences in the kinds
CORRECT of labor as well as differences in natural and capital resources.

A) True

B) False

3 Recent research on the first mover theory also confirms that firms moving first into a market soon
CORRECT dominate it.
 A) True

B) False

4 Internalization theory suggests that to obtain a higher return on its investment, a firm should
CORRECT transfer its superior knowledge in the open market rather than selling it to a foreign subsidiary.

A) True

B) False

5 The eclectic theory of international production is sometimes referred to as the OLI model.
CORRECT
A) True

B) False

6 Adam Smith claimed that:

CORRECT
government, not market forces, should determine the direction, volume, and composition
A) of international trade.

B) a nation could trade advantageously if it had a comparative advantage.

market forces, not government controls, should determine the direction, volume, and
C) composition of international trade.

D) customers' tastes are affected by income levels.

7 Which of the following is not true about the international product life cycle?
CORRECT
A) Concerns the role of innovation in trade patterns.

B) Can be applied to new product introduction by firms in any of the industrialized nations.
Views a product as going through a full life cycle from the standardization stage to
C) internationalization.

D) The initial innovation stage of the cycle borrows from the Linder theory.

8 Economies of scale and the experience curve effect are important for international trade because:
CORRECT
most manufacturing, mining, and transportation industries are subject to economies of
A) scale.
they allow a nation's industries to become low-cost producers without requiring that the
B) nation have an abundance of a certain class of production factors.

C) they justify efforts at being a first-mover in order to become an international leader.

they do not allow the spread of very high fixed costs over sales within foreign and home
D) markets.

9 To sum up international trade theory, we can say that the primary reason for trade is:
CORRECT
A) similarities in endowments of the factors of production.

B) differences in interest rates for investments.

 C) the existence of price differentials among nations.

D) effective utilization of factor intensities.

10 Dunning's Eclectic Theory of International Production states that if a firm is going to invest in
CORRECT production facilities abroad, it must have the following kinds of advantages:

A) ownership-specific, location-specific, and internationalization.

B) strategic, location-specific, and technological.

C) ownership-specific, location-specific, and internalization.

D) technological, financial, and ownership-specific.

Quiz Chapter 4
(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 The United Nations institution addresses issues that require global or regional solutions.
CORRECT
A) True

B) False

2 The GATT and the WTO work in tandem to support trade liberalization.
CORRECT
A) True

B) False

3 The OECD, the "rich man's club," was formed to keep trade within the developed nation markets.
CORRECT
A) True

B) False

4 The North American Free Trade Agreement integrates the nations of North America to ensure free
CORRECT trade and free movement of labor.

A) True

B) False
5 On EU matters, the European Court of Justice has authority that supersedes that of the member-
CORRECT nations' national courts.

A) True

B) False

6 The IMF has had many successes. Which of the following point to one of the current IMF
CORRECT challenges?

A) Develop a way for global financial markets to spread risks.

B) Develop and maintain a system of currency exchange that makes global trade possible.

C) Support governments in their noninflationary monetary management.

D) Help the world trading system avoid financial disasters.

7 All of the following are fundamental principles of ASEAN except:

CORRECT
A) noninterference by members in the internal affairs of one another.

B) renunciation of the threat or use of force.

C) enlargement of the organization's activities to include a peacekeeping force.

D) effective cooperation among members.

8 OAS focuses on:

CORRECT
A) opening government procurements to transnational bids.

B) including protectionist barriers in all sectors that protect domestic products.

fostering democracy, protecting human rights, strengthening security, and fighting
C) corruption.

D) serving as a regional vehicle for promoting open trade and practical economic cooperation.

9 Which of the following is not included in the membership criteria for the European Union?
CORRECT
A) Adherence to principles of liberty.

B) The country must show evidence of respect for democracy.

C) The country must show respect for human rights and fundamental freedoms.

D) The country must have a rising GDP.

10 What is the role of the Council of the European Union?

CORRECT
A) Pass European laws.

B) Administer the daily operations of the EU.

C) Act as a policy-setting institution of the EU and the voice of the member-states.

 D) Focus on financial and social issues.

Quiz Chapter 5
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Your Results:
The correct answer for each question is indicated by a .
1 CORRECT The national culture is a key determinant for the evaluation of managers.

A) True

B) False

2 Legal characteristics and political structures are components of culture.

INCORRECT
A) True

B) False

3 CORRECT The demonstration effect is a result of the backward-bending labor supply curve.

A) True

B) False

4 CORRECT Generally, the greater the difference between an old and a new method or product, the easier it
is for the firm to gain acceptance of a change.

A) True

B) False

5 CORRECT According to Hofstede, power distance is the extent to which members of a society accept the
unequal distribution of power among individuals.

A) True

B) False

6 CORRECT The first step international business managers can take in order to learn to live with other
cultures is to:
 A) learn the language.

B) visit the country.

C) realize that other cultures exist which are different from their own.

D) make friends with natives of the country.

7 CORRECT All of the following indicate the importance of technological superiority to international
companies except:

A) it can be embodied in the company's products.

it gives a firm confidence to enter a foreign market even when other companies are
B) already established there.
it enables the firm to obtain better-than-usual conditions for a foreign market
C) investment.

D) it keeps the international division of labor constant.

8 CORRECT Strategic technology leveraging is:

A) using external technology to complement rather than substitute for internal technology.

B) obtaining more efficiency from technology by increasing capital investment.

C) using technology to improve a firm's strategy.

D) forming blocs to prevent the poaching of technological ideas and innovations.

9 CORRECT Social units based on free associations may be formed by all of the following except:

A) Age.

B) Family.

C) Common interest.

D) Gender.

10 ____ is the degree to which the members of a society feel threatened by ambiguity and are
CORRECT rule-oriented.

A) Uncertainty avoidance

B) Power distance

C) Individualism

D) Short-term orientation
Quiz Chapter 6
(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 CORRECT Factor conditions are a combination of natural resources that a country inherits, and resources a
country can mold, such as labor force and infrastructure.

A) True

B) False

2 CORRECT The differences in climatic conditions among a firm's markets have limited impact on its product
mix.

A) True

B) False

3 CORRECT The principal nonrenewable energy sources are the fossil fuels and nuclear power.

A) True

B) False

4 CORRECT Environmental sustainability is an economic state in which the demands placed on the
environment can be met without reducing the environment's ability to provide for future
generations.

A) True

B) False

5 CORRECT The traditional input-process-output economic business model provides a helpful framework for
thinking about environmental sustainability as it relates to business.

A) True

B) False

6 CORRECT Porter's diamond model considers four aspects of a country's economic environment that affect
its competitive position. Which of the following is not one of them?

A) Factor conditions

B) Related and supporting industries

C) Demand conditions and firm strategy

D) Ethics

7 CORRECT In more densely populated nations, it is not very costly to market and distribute products.
Which of the following options does not substantiate the reason for such low costs?
 A) Population centers are closer.

B) Communication systems are better.

C) More people are available for employment.

D) Improved prospecting equipment.

8 CORRECT Waterways that provide access to interior regions are ____.

A) rhine waterways

B) inland waterways

C) outlet waterways

D) remote waterways

9 CORRECT Which of the following is a renewable source of energy?

A) Biomass

B) Natural gas

C) Coal

D) Petroleum

10 Which of the following is not one of the characteristics of evolving sustainable business practices
INCORRECT that are widely agreed upon?

A) Limits

B) Interdependence

C) Values and principles

D) Equity in distribution

Quiz Chapter 7
(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 Economic data provide information on the number of people and the socioeconomic data tell us if
CORRECT they have purchasing power.

A) True

B) False
2 A simple calculation based on GNI, total population, and income distribution may indicate that a
CORRECT country is not a good market.

A) True

B) False

3 Changes in wage rates may lead a multinational firm, obtaining products or components from a
CORRECT number of subsidiaries, to change its labor unions.

A) True

B) False

4 Unit labor costs rise in unison with compensation rates if gains in productivity outstrip increases in
CORRECT hourly compensation.

A) True

B) False

5 Total population is the most general indicator of potential market size.

CORRECT
A) True

B) False

6 Economic analyses become more complex when a firm enters overseas markets because:
CORRECT
A) the uncontrollable economic variables must be forecasted.

B) managers must operate in two new environments, foreign and international.

C) economists know less about foreign exchange rates.

analysts must stay informed of the actions taken by components of the international
D) environment.

7 Newly industrialized economies (NIEs) are:

CORRECT
A) four Asian tigers and the middle-income economies.

B) world's lower-income nations, which are less technically developed.

C) fast-growing upper-middle-income and high-income economies.

D) a classification for all industrialized nations, which are the most technically developed.

8 Comparison of income redistribution studies over time indicates that in early stages of
CORRECT development:

A) income inequality decreases.

B) income inequality stays the same.

 C) the upper and lower quintiles families grow at the expense of the middle quintile.

D) income inequality increases.

9 Since _____ consumer expenditures eliminate differences in relative prices, marketers use these
CORRECT data to analyze the change in composition consumption with the level of development.

A) GNI-Based

B) capita-based

C) PPP-based

D) calculation-based

10 The population size:

CORRECT
alone provides a basis for estimating the consumption of low-priced products such as
A) cigarettes and soap.
and GNI/capita are necessary for estimating the consumption of low-priced, mass-
B) consumption products such as soap and soft drinks.

C) alone is insufficient for estimating the consumption of any product.

and employment rates are required for estimating the consumption of low-priced products
D) such as soap and economy automobiles.

Quiz Chapter 8
(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 The rules of traditional international law require that the country compensates the foreign owners.
CORRECT In the absence of compensation, confiscation becomes expropriation.

A) True

B) False

2 Politically, in the U.S., the term "conservative," is a person, group, or party that wishes to minimize
CORRECT government activities.

A) True

B) False

3 An advantage that state-owned companies have over privately owned business comes in the form
CORRECT of direct subsidies.

A) True

B) False

4 The WTO defines dumping as selling a product abroad for less than the average cost of production
CORRECT in the exporting nation.

A) True

B) False

5 Ad valorem duty is a combination of specific and compound duties.

CORRECT
A) True

B) False

6 Privatization includes all of the following except:

CORRECT
A) ownership transfer from public to private sector.

B) contracted out services.

C) state-owned activities leased to private entities.

D) government agencies completely funding private owned companies.

7 All the following are true about country risk assessment except:
CORRECT
A) it assesses the country's economic situation and policies.

B) it is impacted by government changes.

C) it determines how much risk exists of losing the asset or not being paid.
the information needed to judge country risks is not dependant on the nature of its
D) business and the length of time required for the investment.

8 Unfair competition caused by a nation's low requirements for bank capital-asset ratios is associated
CORRECT with:

A) financial services dumping.

B) cultural dumping.

C) tax dumping.

D) social dumping.

9 A shipment of flavoring extract invoiced at $15,000 arrives in the United States. The flavoring
CORRECT extracts and fruit flavors contain more than 50 percent alcohol by weight, and have been subjected
to a specific duty of $.15 per pound plus a 5 percent ad valorem. What would be the compound
duty?

A) $1875
 B) $1125

C) $750

D) $2250

10 Orderly marketing arrangements are:

CORRECT
arrangements by which the government of the importing nation assigns quantities to
A) specific countries.

B) permissions to allow a stipulated amount of goods to enter duty-free or at a low rate.

C) limits placed on specific classes of imports.

formal agreements between exporting and importing countries that stipulate the import or
D) export quotas each nation will have for a good.

Quiz Chapter 9
(See related pages)

Your Results:
The correct answer for each question is indicated by a .
1 A capital gains tax is imposed every time assets are purchased.
CORRECT
A) True

B) False

2 In emerging market countries, tax treaties are viewed as a key tool in giving foreign investors
CORRECT confidence in their stability.

A) True

B) False

3 The U.S. focus on antitrust legislation is concerned with the industry's competitive structure and
CORRECT thus pays attention to rivals' objections.

A) True

B) False

4 The product liability standard holds the designer/manufacturer liable for damages caused by a
CORRECT product without the need for a plaintiff to prove negligence in the product's design or manufacture.

A) True
 B) False

5 Facilitating payments for import approvals and the processing of government papers are
CORRECT permissible under the FCPA.

A) True

B) False

6 Extraterritorial application of laws is:

CORRECT
A) legal relations between governments.

B) laws governing transactions of individuals and companies that cross international borders.

C) an agreement between countries, which may be bilateral or multilateral.

a country's attempt to apply its laws to foreigners or nonresidents and to acts and
D) activities that take place outside its borders.

7 A major step toward the harmonization of patent treatment is the:

CORRECT
A) ACTA.

B) OHIM.

C) EPO.

D) WIPO.

8 Under American antitrust laws, illegal per se means illegal:

CORRECT
A) for extraterritorial conspiracies.

B) for conspiring across international boundaries.

C) for conspiracies concerning strategic products.

D) even though no injury or damage has resulted from the conspiracies.

9 Under the rule of strict liability:

CORRECT
a defendant is liable and is subject to fines or imprisonment when their product causes
A) death, injury, or damage.
a defendant can be found liable for damages even though no negligence or fault has been
B) proved by the plaintiff.

C) a lawyer charges the plaintiff no fee to begin representation and action.

D) punitive damages cannot be awarded.

10 The U.S. accounting practice is guided by:

CORRECT
A) Financial Accounting Standards Board.

B) International Accounting Standards Board.

C) International Financial Reporting Standards.

D) Public Company Accounting Oversight Board.