Business in the World Economy
Final Test Solutions
Course Introduction
Business in the World Economy explores the dynamics of international business within the context of an increasingly interconnected global marketplace. This course examines how economic, political, social, and cultural factors influence business strategies, operations, and decision-making at both the firm and government level. Students will analyze topics such as international trade and investment, global supply chains, cross-cultural management, and the impact of international economic institutions. Emphasis is placed on understanding the challenges and opportunities facing businesses operating across national borders, as well as the role of globalization in shaping business environments.
Recommended Textbook
International Business Competing in the Global Marketplace 12th Edition by Charles W. L. Hill
Available Study Resources on Quizplus
20 Chapters
2122 Verified Questions
2122 Flashcards
Source URL: https://quizplus.com/study-set/231 Page 2
Chapter 1: Globalization
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/3547
Sample Questions
Q1) To be classified as an MNE, a company must have productive activities in at least ________ countries.
A) two
B) three
C) four
D) twenty
Answer: A
Q2) The average tariff rates for manufactured goods have fallen significantly since 1950, and now stand at about
A) 18 percent.
B) 5.9 percent.
C) 4.8 percent.
D) 1.6 percent.
Answer: D
Q3) The World Trade Organization promotes
A) the lowering of barriers to cross-border trade and investment.
B) the development of poor nations through low-interest loans.
C) state ownership of major enterprises.
D) the regulation of national economies.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: National Differences in Political, Economic, and Legal Systems
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/3548
Sample Questions
Q1) Interdependent political, economic, and legal systems of a country make up its A) administrative agenda.
B) socioeconomic fabric.
C) cultural environment.
D) political economy.
Answer: D
Q2) Private action refers to
A) public officials extorting income, resources, or the property itself from property holders.
B) bribing government officials in foreign countries in an attempt to win lucrative contracts.
C) theft, piracy, blackmail, and the like by private individuals or groups.
D) violations of intellectual property rights.
Answer: C
Q3) Patents discourage companies from committing themselves to extensive basic research.
A)True
B)False
Answer: False
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: National Differences in Economic Development
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/3549
Sample Questions
Q1) ________ are the advantages gained by early entrants into a market.
A) Early-investor advantages
B) First-mover advantages
C) First-to-market advantages
D) Late-mover advantages
Answer: B
Q2) Many states in Asia, Latin America, and Western Europe have shifted away from a mixed economy to a market-based economy. Which of the following measures is most likely to be promoted by such states?
A) state-ownership of enterprises
B) fixing of prices by the government
C) deregulation of the economy
D) lowering competition
Answer: C
Q3) In Sen's view, development is an economic process that should be assessed primarily by material output measures such as GNI per capita.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Differences in Culture
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/3550
Sample Questions
Q1) Which of the following statements is true about a class system?
A) A class system is a more rigid form of social stratification, compared to a caste system.
B) A class system is a closed form of stratification.
C) Social mobility within a class system varies from society to society.
D) In a class system, social position is determined at birth and cannot be changed during an individual's lifetime.
Q2) Social rules and guidelines that prescribe appropriate behavior in particular situations are best described as
A) norms.
B) values.
C) culture.
D) society.
Q3) The convergence hypothesis states that there is a slow but steady merging occurring across different cultures toward some universally accepted values and norms.
A)True
B)False
Q4) Explain how the Koran views business.
Q5) Discuss why the stratification of a society is important to business.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/3551
Sample Questions
Q1) The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as
A) moral relativism.
B) noblesse oblige.
C) ethical dilemma.
D) social responsibility.
Q2) ________ recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.
A) Rights theories
B) Utilitarians
C) Cultural relativists
D) Kantian ethics
Q3) Which of the following is an example of an external stakeholder?
A) employees
B) customers
C) stockholders
D) the board of directors
Q4) Should a multinational feel free to pollute in a developing nation?
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: International Trade Theory
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/3552
Sample Questions
Q1) Diminishing returns to specialization occur when
A) each additional unit is produced with lesser number of laborers.
B) a nation's gross domestic product declines for a few years.
C) production possibility frontier appears as a rectangle.
D) more units of resources are required to produce each additional unit.
Q2) A key assumption in the Heckscher-Ohlin theory is that technologies are the same across countries.
A)True
B)False
Q3) What will happen, according to Paul Samuelson's critique, if a rich country enters into a free trade agreement with a poor country?
A) Both the countries will incur losses due to the exchanges between them.
B) The productivity of the poor country will decline rapidly.
C) The poor country will rapidly improve its productivity.
D) Both the countries will garner benefits from the exchanges between them.
Q4) Identify a major disadvantage of the product life-cycle theory.
Q5) How does the Heckscher-Ohlin theory explain international trade?
Q6) Explain how the theories of trade differ in terms of their support to governmental intervention.
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Government Policy and International Trade
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/3553
Sample Questions
Q1) Governments use ________ to boost exports and restrict imports.
A) subsidies
B) local content requirements
C) administrative trade policies
D) formal instruments of trade policy
Q2) Tariff barriers lower the costs of exporting products to a country.
A)True
B)False
Q3) Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them.
A)True
B)False
Q4) A key goal of the 1986 Uruguay Round was to
A) extend GATT to cover trade in commodities.
B) extend GATT rules to cover trade in services.
C) increase agricultural subsidies.
D) loosen the GATT's monitoring and enforcement mechanisms.
Q5) Summarize Paul Krugman's arguments against adopting a trade policy that benefits domestic firms at the expense of other countries.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Foreign Direct Investment
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/3554
Sample Questions
Q1) Describe the situations when licensing is not a good option for a firm.
Q2) Which view of FDI traces its roots to classical economics and the international trade theories of Adam Smith and David Ricardo?
A) imperialist
B) conservative
C) free market
D) radical
Q3) Tax concessions, low-interest loans, and grants or subsidies are all incentives that governments offer to foreign firms to invest in their countries.
A)True
B)False
Q4) What is double taxation in the context of FDI?
A) taxation at twice the normal rate for foreign companies
B) taxing the producers as well as suppliers
C) taxation of income in both home and host country
D) taxation of both income as well as dividends paid
Q5) John Dunning pioneered the eclectic paradigm.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Regional Economic Integration
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/3555
Sample Questions
Q1) A central reason for the establishment of the EU was the devastation of Western Europe during two world wars and the desire for a lasting peace.
A)True
B)False
Q2) The United States, Canada, and Mexico are member nations of
A) CAFTA.
B) Mercosur.
C) the Andean Pact.
D) NAFTA.
Q3) ________ may also occur when higher-cost external producers are replaced by lower-cost external producers within the free trade area.
A) Trade creation
B) A customs union
C) Trade diversion
D) A common market
Q4) What prompted the formation of the European Union?
Q5) Describe the state of economic integration in Africa. What factors have hindered the process?
Q6) What is ASEAN? What is its basic goal? How successful is ASEAN?
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: The Foreign Exchange Market
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/3556
Sample Questions
Q1) Assume that the current exchange rate is 1 = $1.50. If you exchange 1,000 euros for dollars, you will receive
A) $1,000.
B) $750.
C) $1,500.
D) $667.
Q2) The efficient market school argues that investing in exchange rate forecasting services would be a waste of money.
A)True
B)False
Q3) Which of the following is the most important foreign exchange trading center?
A) London
B) New York
C) Tokyo
D) Singapore
Q4) With the help of an example, explain how a tourist participates in the foreign exchange market.
Q5) Compare and contrast currencies that are freely convertible, externally convertible, and nonconvertible.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: The International Monetary System
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/3557
Sample Questions
Q1) The great virtue claimed for a ________ is that it imposes monetary discipline on a country and leads to low inflation.
A) fixed exchange rate
B) managed-float system
C) pegged exchange rate
D) floating exchange rate
Q2) A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.
A)True
B)False
Q3) It is difficult if not impossible to get adequate insurance coverage for exchange rate changes that
A) will occur in the next few weeks.
B) might occur in the next few months.
C) might occur several years in the future.
D) might occur in the coming days.
Q4) How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: The Global Capital Market
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/3558
Sample Questions
Q1) How can a borrower hedge against unpredictable movements in exchange rates?
Q2) If the international capital market continues to grow, financial intermediaries likely will provide less quality information about foreign investment opportunities.
A)True
B)False
Q3) The global capital market often lacks information about the fundamental quality of foreign investments.
A)True
B)False
Q4) A Eurocurrency is
A) the currency used by the countries of the European Union.
B) the currency formerly used in many European countries before the formation of the European Union and the institution of the euro.
C) any currency banked outside of its country of origin.
D) any currency banked within a European country.
Q5) Explain the changes observed in the risk of investments when an investor increases the number of stocks in his or her portfolio.
Q6) Describe a fixed-rate bond.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: The Strategy of International Business
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/3559
Sample Questions
Q1) When consumer tastes and preferences differ significantly between countries, there is low pressure for local responsiveness.
A)True
B)False
Q2) When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow ________ strategy.
A) a global standardization
B) a localization
C) an international
D) a customization
Q3) ________ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product.
A) Experience curve
B) Economies of scale
C) Location economies
D) Production possibility
Q4) What are learning effects? When are learning effects most significant?
Q5) Discuss the efficiency frontier. How does strategic positioning relate to the efficiency frontier?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: The Organization of International Business
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/3560
Sample Questions
Q1) A firm that needs greater flexibility should choose ________ for its decision making.
A) horizontal differentiation
B) decentralization
C) localization strategy
D) control systems
Q2) The establishment of integrating mechanisms that coordinate subunits is a dimension of
A) horizontal differentiation.
B) organizational culture.
C) vertical differentiation.
D) organizational structure.
Q3) The ________ tends to be favored by firms with a low level of diversification whose domestic structures are based on functions.
A) global matrix structure
B) worldwide product division structure
C) performance structure
D) worldwide area structure
Q4) What are the basic principles for successful organizational change?
Q5) Explain the five reasons a firm should decentralize its decision making.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Entry Strategy and Strategic Alliances
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/3561
Sample Questions
Q1) The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as ________ costs.
A) switching
B) market development
C) pioneering
D) promotional development
Q2) Firms pursuing global standardization or transnational strategies tend to prefer ________ arrangements.
A) wholly owned subsidiary
B) franchising
C) joint-venture
D) licensing
Q3) ________ allow a firm to rapidly build its presence in the target foreign market.
A) Joint ventures
B) Acquisitions
C) Subsidiaries
D) Turnkey contracts
Q4) Why should a firm be cautious about entering a licensing agreement?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Exporting, Importing, and Countertrade
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/3562
Sample Questions
Q1) A ________ allows for a delay in payment.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
Q2) ________ occurs when a firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.
A) A buyback
B) A barter
C) An offset
D) A switch trade
Q3) A counterpurchase gives exporters more flexibility than an offset.
A)True
B)False
Q4) Lack of knowledge is one of the biggest impediments to a company becoming a successful exporter.
A)True
B)False
Q5) Compare and contrast time drafts and sight drafts.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Global Production and Supply Chain Management
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/3563
Sample Questions
Q1) Which of the following statements is true of cloud-based EDI systems?
A) Cloud-based EDI systems are more expensive than proprietary solutions.
B) Small firms will not be able to make use of cloud-based EDI systems.
C) Cloud-based systems are much easier to install compared to proprietary solutions.
D) Most cloud-based systems are implemented to support proprietary solutions.
Q2) In global purchasing, Level I involves domestic purchasing activities only.
A)True
B)False
Q3) ________ can be viewed as the decision-making process regarding the raw materials, work-in-process (component parts), and finished goods inventory for a multinational corporation.
A) Global supply chain management
B) Global inventory management
C) Global corporate management
D) Global sourcing arrangements
Q4) Concentration of production should be avoided when important exchange rates are expected to remain relatively stable.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Global Marketing and R&D
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/3564
Sample Questions
Q1) ________ occurs whenever a firm sells a product for a price that is less than the cost of producing it.
A) Resale
B) Plunging
C) Bootlegging
D) Dumping
Q2) Concentrated retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens channels.
A)True
B)False
Q3) The entry of large discount superstores such as Tesco and Carrefour has shortened channel length in some countries.
A)True
B)False
Q4) What is Theodore Levitt's contribution to international business?
Q5) In a concentrated retail system, there are many retailers, none of which has a significant share of the market.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Global Human Resource Management
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/3565
Sample Questions
Q1) How can firms reduce the bias in performance appraisals of expatriate managers?
Q2) Historically, most international businesses have been
A) more concerned with training than with management development.
B) focused on smoothly transitioning their home-country nationals back from foreign postings to home postings.
C) more concerned with management development than with training.
D) less focused on training their home-country nationals for foreign postings than with training home-country managers.
Q3) In an ethnocentric staffing policy,
A) all key management positions are filled by host-country nationals.
B) host-country nationals are recruited to manage subsidiaries.
C) all key management positions are filled by parent-country nationals.
D) the best people are recruited for key jobs throughout the organization, regardless of nationality.
Q4) Labor unions generally prefer it if an international business keeps highly skilled tasks in its home country and farms out only low-skilled tasks to foreign plants.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 21
Chapter 20: Accounting and Finance in the International Business
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/3566
Sample Questions
Q1) Firms cannot use transfer prices to move funds from a subsidiary to the parent company when financial transfers in the form of dividends are blocked by host-country government policies.
A)True
B)False
Q2) Firms use fronting loans to
A) avoid host-country restrictions on the remittance of funds from a foreign subsidiary.
B) implement a cost-based and fair pricing policy across an international business.
C) increase the profit center revenue of a subsidiary functioning in another country.
D) implement a market-driven and fair pricing policy across an international business.
Q3) The IASB is made up of 24 members, and to issue a new standard, 51 percent of them must agree.
A)True
B)False
Q4) What are the shortcomings of IASB?
Q5) Describe the importance of accounting information in business.
To view all questions and flashcards with answers, click on the resource link above. Page 22