Multiple choice questions:
Question 1
Which of the following is not characteristic of globalization?
National economies are turning into independent economic systems.
Material culture is starting to look similar the world over.
Perceived distance is shrinking due to advances in transportation and telecommunications.
Barriers to cross-border trade and investment are declining.
Question 2
Globalization has _____ the opportunities for a firm to expand its revenues by selling around the world and _____ its costs by producing in nations where key inputs are cheap.
reduced, reduced
increased, increased
increased, reduced
reduced, increased
Question 3
Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by encouraging all of the following except:
privatizing state-owned enterprises.
regulating markets.
increasing competition.
welcoming investment by foreign businesses.
Question 4
Identify the incorrect statement concerning globalization.
It has been blamed for unemployment in developed nations, environmental degradation and the Americanization of popular culture.
It has created new threats for businesses accustomed to dominating their domestic markets.
It is transforming industries and is highly welcomed by those who believed their jobs were protected from foreign competition.
According to most economists it is a very beneficial process where gains outweigh the losses by a wide margin.
Question 5
In the U.S., _____ percent of firms that export are small companies employing fewer than 100 people.
90
75
50
30
Question 6
Interdependent political, economic, and legal systems of a country make up its:
administrative agenda.
socioeconomic fabric.
economic environment.
political economy.
Question 7
_____ is consistent with the notion that an individual's right to do something may be restricted because it runs counter to "the good of society" or "the common good."
Entrepreneurship
Collectivism
Free enterprise
Capitalism
Question 8
According to _____, socialism can only be achieved through violent revolution.
capitalists
communists
social democrats
democrats
Question 9
_____ is/are best defined as shared assumptions about how things ought to be.
Norms
Values
Society
Culture
Question 10
_____ are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like.
Values
Beliefs
Mores
Folkways
Question 11
Mores are:
the norms that are seen as central to the functioning of a society and its social life.
the routine conventions of everyday life.
abstract ideas about what a group believes to be right, good, and desirable.
the social rules and guidelines that prescribe appropriate behavior in particular situations.
Question 12
The theory of _____, developed by Michael Porter, focuses on the importance of country factors, in addition to factor endowments, such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.
new trade
absolute advantage
comparative advantage
national competitive advantage
Question 13
The theory of _____ makes a crude case for government involvement in promoting exports and limiting imports.
mercantilism
free trade
absolute advantage
comparative advantage
Question 14
By lowering production costs, _____ help domestic producers compete against foreign imports.
tariffs
duties
quotas
subsidies
Question 15
In the United States, the only firms allowed to import cheese are certain trading companies, each of which is allocated the right to import a maximum number of pounds of cheese each year. Identify the trade restriction being imposed by the United States.
Import quota
Subsidy
Ad valorem tariff
Specific tariff
Question 16
A quota rent is:
a quota on trade imposed by the exporting country.
levied as a fixed charge for each unit of a good imported.
levied as a proportion of the value of the imported good.
the extra profit producers make when supply is artificially limited by an import quota.
Question 17
Which of the following is not a reason why firms prefer to acquire existing assets rather than undertake greenfield investments?
Foreign firms are acquired because those firms have valuable strategic assets.
Firms make acquisitions because they believe they can increase the efficiency of the acquired unit by transferring capital, technology, or management skills.
Even though greenfield investments are comparatively less risky for a firm, acquisitions always yield higher profits.
Mergers and acquisitions are quicker to execute than greenfield investments.
Question 18
The rise in FDI in the services sector is a result of all of the following except:
the general move in many developed countries away from manufacturing and toward services.
accelerating regulations of services.
many services cannot be traded internationally.
many countries have liberalized their regimes governing FDI in services.
Question 19
Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.
Internalization theory
Internationalization theory
Perfect markets theory
Small markets theory
Question 20
An agreement between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other is referred to as:
regional economic integration.
socioeconomic integration.
political integration.
economic-political integration.
Question 21
In 1991, Argentina, Brazil, Paraguay, and Uruguay implemented an agreement known as:
NAFTA.
MERCOSUR.
APEC.
FTAA.
Question 22
Which of the following is true of a common market?
All barriers to the trade of goods and services among member countries are removed and each country maintains its own policy toward nonmember countries.
It involves the free flow of products and factors of production between member countries and adoption of individual external trade policies.
It has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members.
It eliminates trade barriers between member countries and adopts a common external trade policy and a common currency.
Question 23
The rate at which one currency is converted into another is the:
replacement percentage.
resale rate.
exchange rate.
interchange ratio.
Question 24
The _____ helps us to compare the relative prices of goods and services in different countries.
interest rate
customs rate
exchange rate
tariff rate
Question 25
When two parties agree to exchange currency and execute the deal immediately, the transaction is a:
point-in-time exchange.
temporal exchange.
spot exchange.
forward exchange.
Question 26
If lots of people want euros and euros are in short supply, and a few people want Japanese yen and yen are in plentiful supply, the euro is likely to _____ against the yen.
depreciate
appreciate
devalue
stabilize
Question 27
If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen?
The dollar will appreciate against the yen
The dollar will depreciate against the yen
The exchange rates will remain the same
The yen will appreciate against the dollar
Question 28
A _____ means the value of the currency is fixed relative to a reference currency.
pegged exchange rate
dynamic exchange rate
floating exchange rate
fixed exchange rate
Question 29
The gold standard had its origin in the use of _____ as a medium of exchange, unit
of account, and store of value.
the U.S. dollar
the British pound
paper currency
gold coins
Question 30
The great strength claimed for the gold standard was that it contained a powerful mechanism for achieving _____ by all countries.
balance-of-trade equilibrium
economic stability
interest rate parity
equal tariff levels
Question 31
Market makers are:
financial service companies that connect investors and borrowers.
those who want to borrow money including individuals, companies, and governments.
nonbank financial institutions who want to invest money.
high net worth individuals with surplus cash to reinvest.
Question 32
All of the following are benefits of global capital markets, except:
they increase the supply of funds available to borrowers.
that the risk to the investment portfolio is reduced to below what could be achieved in a purely domestic capital market.
they provide a wider range of investment opportunities to investors.
they have higher cost of capital as compared to purely domestic capital markets.
Question 33
Which of the following statements is not true?
The way to increase the profitability of a firm is to create more value.
The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
The more value customers place on a firm's products, the higher the price the firm is able to charge for those products.
The price a firm charges for a good or service is typically more than the value the customer places on that good or service.
Question 34
The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because:
the customer's disposable income is significantly higher than what the market demands.
the customer captures some of that value in the form of a consumer surplus.
regulatory mechanisms ensure that the customer is not overcharged for products/services.
marketers implement psychological pricing tactics to ensure that customers perceive the prices to be low.
Question 35
Which of the following is an example of a primary activity in a firm's value chain?
Information systems
Research and development
Logistics
Human relations
Question 36
When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create:
a differentiated organization.
a location economy curve.
economies of scale.
a global web of value creation activities.
Question 37
For U.S. firms, the most comprehensive source of export opportunities information is the:
Small Business Administration.
U.S. Department of Commerce.
Federal Trade Commission.
foreign embassy.
Question 38
A "best prospects" list:
gives the names and addresses of potential distributors in the domestic market.
is provided by the United States and Foreign Commercial Service Agency.
can provide a firm free, customized market research survey on any product.
provides information gathering, technical assistance, and export subsidies.
Question 39
According to Levitt, which of the following statements is true?
Technology drives the world toward a converging commonalty.
There are accustomed differences in national preferences.
The multinational corporation operates in a number of countries at low relative costs.
The global corporation operates with resolute consistency at high relative costs.
Question 40
Which of the following statements is false?
Product reliability may be a more important attribute in most advanced countries.
Consumers in highly developed countries tend to build a lot of extra performance attributes into their products.
Consumers in the most developed countries are often not willing to sacrifice their preferred attributes for lower prices.
Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind.