Deck 4: Business in a Global Economy

Question 1

A term that describes the movement of production away from a domestic production site to a foreign location is ________ outsourcing.

A) domestic
B) offshore
C) production
D) onshore
E) in-house

Answer 1

B

Question 2

A country's launching of a government-owned telecommunications satellite is an example of investing in ________.

A) labor
B) natural resources
C) infrastructure
D) private capital
E) entrepreneurialism

Answer 2

C

Question 3

An engineering team has members from Egypt,Malaysia,Australia,Argentina,and the U.S.They communicate by email and videoconferencing.The work of this globalized team is made easier because of ________.

A) technological innovation
B) declines in trade barriers
C) increases in quotas
D) increases in democratization
E) a shrinking role for developing nations

Answer 3

A

Question 4

According to the theory of comparative advantage,if the U.S.and Mexico increase their trade with each other,the two countries will experience ________ standards of living.

A) no change in
B) higher
C) rapidly decreasing
D) slightly lower
E) identical

Question 5

The growing demand for biofuels in the U.S.that has led to a growing supply of soybeans from Brazil is an example of all of the following EXCEPT ________ economies.

A) localized
B) globalized
C) interconnected
D) interdependent
E) international

Question 6

Brazil has experienced rapid economic growth and increased sales of its products to other countries.This is an example of a(n)________.

A) increase in democratization
B) growing role for developing nations
C) rise in non-U.S. multinational enterprises
D) rise in non-U.S. foreign direct investment
E) dramatic decline in trade barriers

Question 7

An example of globalization of ________ is Toyota opening a factory in Kentucky.

A) production
B) markets
C) retailing
D) selling
E) promotion

Question 8

The nation of Baa-Baa raises sheep relatively more efficiently than the nation of Snuggle.Snuggle weaves woolen blankets relatively more efficiently than Baa-Baa.Baa-Baa decides to specialize in sheep raising,to sell wool to Snuggle,and to buy blankets from Snuggle.Snuggle decides to specialize in blanket weaving,to sell blankets to Baa-Baa,and to buy wool from Baa-Baa.This international trade illustrates ________ advantage.

A) international
B) comparative
C) globalization
D) absolute
E) artificial competitive

Question 9

Which of the following is contributing to the acceleration of globalization?

A) increasing democratization
B) a rise in the number of non-U.S. small, local businesses
C) restricting the amount of foreign direct investment
D) the dominance of the U.S. economic system
E) a shrinking role for developing nations

Question 10

As a result of their influence on the quantity,variety,and quality of products,trade barriers ________ domestic consumers.

A) give an absolute advantage to
B) hurt
C) have no effect on
D) help
E) appease

Question 11

If the U.S.has the ability to produce more steel than any other country in the world,the U.S.has a(n)________ advantage in steel production.

A) relative
B) globalized
C) absolute
D) comparative
E) artificial competitive

Question 12

Apple's selling iPhones to customers in Africa,Asia,and Europe is an example of the globalization of ________.

A) production
B) markets
C) offshoring
D) manufacturing
E) outsourcing

Question 13

All of the following contribute to accelerating globalization EXCEPT ________.

A) a growing role for developing nations
B) a rise in non-U.S. foreign direct investment
C) an increase in democratization
D) a rise in multinational enterprises
E) an increase in trade and investment barriers

Question 14

The link between labor costs in China and the price of MP3 music players in the U.S.is an example of ________.

A) localization
B) monetization
C) globalization
D) nationalization
E) multiculturalism

Question 15

If the nation of Epsilon places a tax on all grapes imported from the nation of Zeta,Epsilon has imposed a(n)________.

A) quota
B) subsidy
C) embargo
D) tariff
E) foreign content requirement

Question 16

A business can create a competitive or comparative advantage by doing all of the following EXCEPT ________.

A) shifting funding away from worker training in order to increase profits
B) promoting innovation throughout their organization
C) accessing cheap raw materials
D) purchasing state-of-the-art equipment
E) investing in cutting-edge technology

Question 17

The country of Theta restricts the activities of foreign insurance companies in order to give Theta's insurance industry a chance to grow and develop.Theta's actions are an example of the ________ argument in favor of protectionism.

A) cheap foreign labor
B) national security
C) threat of retaliation
D) infant-industry
E) dumping

Question 18

The developing country of Alpha had a rule that none of its factories could be owned by companies from the developed country of Beta.If Alpha drops this rule,this would be an example of ________.

A) a decline in trade and investment barriers
B) a total embargo
C) technological innovation
D) an increase in tariffs
E) offshore outsourcing

Question 19

A U.S.consumer electronics company has to shut down because it cannot compete against foreign manufacturers.For the U.S.,this is an example of a(n)________ of international trade.

A) benefit
B) cost
C) theory
D) cause
E) incentive

Question 20

U.S.farmers export canned sweet corn to Germany,which lowers the price to a German consumer by a few cents.The benefits to Germany of this international trade deal are ________.

A) concentrated in the hands of a few German farmers
B) nonexistent
C) spread out among millions of German consumers
D) immeasurable
E) borne solely by the government

Question 21

U.S.exporters prefer a(n)________ dollar.

A) strong
B) appreciating
C) exchange
D) weak
E) strengthening

Question 22

The cheap foreign labor argument for protectionism relates to ________.

A) an undeveloped domestic industry's workers
B) a lower wage often earned by many foreign workers
C) a trading partner increasing trade barriers on work done by citizens
D) an industry critical to national security being protected from foreign workers
E) selling a product at a price below the price charged in the producing country

Question 23

A free trade area that includes Canada and the U.S.,but not Japan,is the ________.

A) North American Free Trade Agreement (NAFTA)
B) Association of Southeast Asian Nations (ASEAN)
C) MERCOSUR
D) European Union (EU)
E) The Asia-Pacific Economic Cooperation (APEC)

Question 24

U.S importers prefer a(n)________ dollar.

A) international
B) weak
C) depreciating
D) strong
E) steady

Question 25

If Ecuador has a dispute with France over the importation of bananas,from which agency can Ecuador seek arbitration?

A) GATT
B) NAFTA
C) WTO
D) APEC
E) ASEAN

Question 26

With a global strategy for conducting business internationally,a company competes ________.

A) primarily on the basis of price while selling a standardized product
B) primarily by customizing or differentiating its product to meet unique local needs, tastes, or preferences
C) primarily by offering a customized product while simultaneously selling at the lowest possible price
D) primarily by offering a homogeneous product while simultaneously selling at a high price
E) primarily by selling a product at a price below the price charged in the producing country

Question 27

In order to enter the Spanish market,a Moroccan firm establishes a store that is entirely owned by the Moroccan firm.This is an example of a(n)________.

A) strategic alliance
B) wholly owned subsidiary
C) exporting agreement
D) joint venture
E) contract manufacturing arrangement

Question 28

Cooperative arrangements between actual or potential competitors in which each partner retains its business independence are known as ________.

A) contract manufacturing
B) licensing agreements
C) turnkey projects
D) strategic alliances
E) wholly owned subsidiaries

Question 29

A free trade area that includes 27 independent states is the ________.

A) European Union (EU)
B) MERCOSUR
C) North American Free Trade Agreement (NAFTA)
D) Association of Southeast Asian Nations (ASEAN)
E) The Asia-Pacific Economic Cooperation (APEC)

Question 30

What is the term for the sale of a domestically produced good in a foreign market?

A) exporting
B) turnkey project
C) joint venture
D) licensing
E) franchising

Question 31

An American company enters the Mexican market by sharing ownership of a subsidiary firm with a Mexican company.This is an example of a(n)________.

A) contract manufacturing arrangement
B) joint venture
C) strategic alliance
D) export agreement
E) franchise

Question 32

The country of Kappa sells pizza for $1.00 each within its borders.But Kappa exports pizzas at a price of $0.30.This is an example of ________.

A) dumping
B) an administrative trade barrier
C) an embargo
D) a local content requirement
E) cheap foreign labor

Question 33

GATT stands for ________ on Tariffs and Trade.

A) General Agreement
B) General Argument
C) Global Agreement
D) Global Argument
E) Global Achievement

Question 34

A consumer products company competes around the world primarily by customizing or differentiating its products to meet unique local needs,tastes,or preferences.The company is using a ________ strategy.

A) global
B) multidomestic
C) transnational
D) domestic
E) national

Question 35

An agreement in which a domestic company's intangible property may be sold or made available to a foreign company in exchange for a royalty fee is called a(n)________.

A) strategic alliance
B) franchise
C) license
D) wholly-owned subsidiary
E) turnkey project

Question 36

When Mu Manufacturing Co.exports their technological know-how in exchange for a fee,they are entering foreign markets through a ________.

A) strategic alliance
B) turnkey project
C) franchise
D) wholly-owned subsidiary
E) licensing agreement

Question 37

The nations of Tweedle-dee and Tweedle-dum do not trust each other.Tweedle-dee is convinced that if it lowers its trade barriers,Tweedle-dum will not lower its barriers.Therefore,Tweedle-dee keeps its trade barriers high.This is an example of the ________ argument in favor of protectionism.

A) threat of retaliation
B) infant-industry
C) national security
D) cheap foreign labor
E) absolute advantage

Question 38

American Express competes around the world by offering a customized product while simultaneously selling at the lowest possible price.The company is using a ________ strategy.

A) transnational
B) global
C) multidomestic
D) domestic
E) national

Question 39

Airbus competes on the basis of price while selling a standardized or homogeneous product.The company is using a ________ strategy.

A) transnational
B) global
C) multidomestic
D) domestic
E) national

Question 40

The ratio at which Australian dollars are converted into Indonesian rupiah is known as the ________ rate.

A) interest
B) exchange
C) international
D) export
E) depreciation

Question 41

Aesthetics encompasses all of the following EXCEPT ________.

A) etiquette
B) religion
C) language
D) protocol
E) customs

Question 42

If the value of the nation of Nu's exports is greater than the value of its imports,Nu has a trade ________.

A) balance
B) currency
C) surplus
D) deficit
E) equilibrium

Question 43

Global companies can still do business with countries that have nonconvertible currencies through the use of ________.

A) appreciation
B) countertrade
C) depreciation
D) currency
E) gold bullion

Question 44

If a Turkish company closes its U.S.offices on Easter Sunday,the company is giving PRIMARY consideration to ________.

A) aesthetics
B) language
C) religion
D) attitudes
E) ethnocentrism

Question 45

Localization is the movement toward a more interconnected and interdependent world economy.

Question 46

What is the opposite of nonconvertible currency?

A) countertrade currency
B) freely floating currency
C) gold coin currency
D) unregulated currency
E) barter currency

Question 47

An American executive who studies Italian before making a sales trip to Rome is showing consideration for ________.

A) language
B) attitudes
C) religion
D) aesthetics
E) protocol

Question 48

Socioeconomic factors that must be considered by international companies include all of the following EXCEPT ________.

A) cultural behaviors
B) income distribution
C) birthrates
D) ethnicity
E) unit labor cost

Question 49

An American businessperson who demonstrates sensitivity to and appreciation for Chilean culture possesses ________.

A) cross-cultural detachment
B) cross-cultural awareness
C) ethnocentrism
D) cultural intervention
E) jingoism

Question 50

The nation of North Xi has a ________ currency that cannot be exchanged in a foreign exchange market.

A) countertrade
B) nonconvertible
C) flexible
D) fixed
E) freely floating

Question 51

Which of the following BEST demonstrates that different countries have different attitudes toward work?

A) different religious traditions
B) different aesthetic norms
C) different vacation policies
D) different language standards
E) different cultural customs

Question 52

The nation of South Pi is experiencing rapid increases in business activity,but still lacks sufficient infrastructure and modern communication systems.Which challenge to conducting international business is the PRIMARY one faced by exporters to Pi?

A) nonconvertible currency
B) government economic policies
C) economic growth and development
D) socioeconomic factors
E) cultural behaviors of a community

Question 53

All of the following are legal challenges to conducting business in a foreign country EXCEPT ________.

A) cross-cultural awareness
B) contracts
C) product safety and liability standards
D) property rights
E) patents and copyrights

Question 54

What is a valid explanation as to why some nations retain nonconvertible currency?

A) desire to work with other countries
B) increased academic achievement
C) fear of capital flight
D) reliance on foreign loans
E) to avoid having to countertrade

Question 55

An example of currency ________ would be if the value of the U.S dollar rises against the Malagasy ariary (the currency of Madagascar).

A) internalization
B) globalization
C) appreciation
D) depreciation
E) exchange

Question 56

What would prompt a nation to invest in a sovereign wealth fund (SWF)?

A) trade deficit
B) trade surplus
C) trade balance
D) trade growth
E) trade embargo

Question 57

A U.S.company exports products to Russia.The prices of the U.S.products in Russia are going up because the value of the dollar has ________ against Russia's currency.

A) depreciated
B) stabilized
C) risen
D) fallen
E) equalized

Question 58

International businesses prefer ________ economies to ________ economies because the bureaucratic hassles associated with government intervention drive costs up.

A) state-run; free market
B) free market; state-run
C) socialized; free market
D) state-run; socialized
E) socialized; state-run

Question 59

All of the following are ethical challenges to conducting business in a foreign country EXCEPT ________.

A) conforming to home country environmental standards
B) doing business with repressive totalitarian regimes
C) exceeding product safety standards
D) protecting property rights
E) exceeding workplace standards

Question 60

Most countries operate under a(n)________ exchange rate system.

A) fixed
B) freely floating
C) stable
D) immeasurable
E) inflexible

Question 61

Tariffs are a type of trade barrier.

Question 62

A free trade area is a compact abolishing trade barriers among member countries.

Question 63

When the value of a country's imports exceeds the value of its exports,the country is said to have a trade deficit.

Question 64

The U.S.total ban on importing Cuban cigars is an example of an embargo.

Question 65

Companies that sell a standardized product throughout the entire world follow a transnational strategy.

Question 66

One way for a country to improve its competitiveness is to invest in worker training.

Question 67

The president of the nation of Gamma asks you if the benefits of international trade are greater than the costs.You should answer that it depends on one's perspective.

Question 68

The purchasing of property and businesses in foreign nations is called globalization of markets.

Question 69

The assigning of certain tasks,such as production or accounting,to an outside company or organization is called outsourcing.

Question 70

A measure that divides a worker's wages by the average productivity of that worker is unit labor cost.

Question 71

A quota is a total restriction on an import or export.

Question 72

Even though the nation of Lambda lost in the arbitration of a WTO trade dispute,Lambda can ignore the result because the WTO has no enforcement power.

Question 73

By differentiating its products to meet unique local needs,tastes,or preferences,a company follows a multidomestic strategy.

Question 74

When all countries focus on producing those products for which they have a comparative advantage,collectively,they will produce more products.

Question 75

If a restaurant chain sells the use of its brand name to a Singaporean investor in exchange for a fee and a percentage of sales,the restaurant is entering a foreign market through exporting.

Question 76

Exchange rates are the rates at which currencies are converted into another country's currency.

Question 77

Contract manufacturing occurs when a firm pays another firm to produce part or all of its goods as an alternative to owning and operating its own production facility.

Question 78

The United States is currently the world's largest single market.

Question 79

Exchange rates can be manipulated or fixed by governments.

Question 80

When a country drops its rule preventing the imports of foreign-made cars,it is increasing globalization through technological innovation.