International Business
Exam Answer Key
Course Introduction
International Business explores the complexities and opportunities of conducting business across national borders. The course examines the global economic environment, cultural differences, international trade theories, and the impact of political, legal, and technological factors on business operations. Students learn about entry strategies, global marketing, supply chain management, and ethical considerations in an international context. Through case studies and real-world examples, the course prepares students to navigate and succeed in the dynamic world of international commerce.
Recommended Textbook
International Economics 15th Edition by Robert Carbaugh
Available Study Resources on Quizplus
17 Chapters
1863 Verified Questions
1863 Flashcards
Source URL: https://quizplus.com/study-set/3500 Page 2
Chapter 1: The International Economy and Globalization
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/69522
Sample Questions
Q1) In an open trading system,a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost.
A)True
B)False
Answer: False
Q2) A firm's ____,relative to that of other firms,is generally regarded as the most important determinant of competitiveness.
A) Income level
B) Tastes and preferences
C) Governmental regulation
D) Productivity
Answer: D
Q3) Small countries tend to have higher measures of openness than larger countries because:
A) their productivity is higher
B) they are more reliant on international trade
C) they are less reliant on international trade
D) they are more diverse
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Foundations of Modern Trade Theory:
Comparative Advantage
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/69523
Sample Questions
Q1) For the commodity terms of trade to improve,a country's import price index must rise relative to its export price index over a given time period.
A)True
B)False
Answer: False
Q2) If Japan and France have identical production possibilities curves and identical community indifference curves:
A) Japan will enjoy all the gains from trade
B) France will enjoy all the gains from trade
C) Japan and France share equally in the gains from trade
D) Gainful specialization and trade are not possible
Answer: D
Q3) Refer to Table 2.1.If trade opens up between the United States and the United Kingdom,American firms should specialize in producing:
A) Steel
B) Televisions
C) Both steel and televisions
D) Neither steel nor televisions
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Sources of Comparative Advantage
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/69524
Sample Questions
Q1) Stringent governmental regulations (e.g.,air quality standards)imposed on domestic steel manufacturers tend to:
A) Enhance their competitiveness in the international market
B) Detract from their competitiveness in the international market
C) Increase the profitability and productivity of domestic manufacturers
D) Reduce the market share of foreign firms selling steel in the domestic market
Answer: B
Q2) The specific-factors theory analyzes the income distribution effects of trade in the short run when resources are immobile among industries.
A)True
B)False
Answer: True
Q3) Ricardo's theory of comparative advantage is a static theory that does not consider changes in international competitiveness over the long run.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Tariffs
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/69525
Sample Questions
Q1) A nation whose imports constitute a very small portion of the world market supply is a price taker,facing a constant world price for its import commodity.
A)True
B)False
Q2) Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in consumer surplus would be
A) area a + b
B) area a
C) area a + b + c + d + e
D) area a + b + f + g + h
Q3) With a compound duty,its "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials,and the "ad valorem" portion of the duty grants protection to the finished-goods industry.
A)True
B)False
Q4) How can tariffs be justified?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Nontariff Trade Barriers
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/69526
Sample Questions
Q1) A firm that faces problems of falling sales and excess productive capacity might resort to international dumping if it:
A) Can charge higher prices in markets that are elastic to price changes
B) Earns revenues on foreign sales that at least cover variable costs
C) Can sell at that price where domestic and foreign demand elasticities equate
D) Is able to force foreign prices below marginal production costs
Q2) Local content laws stipulate the maximum percentage of a product's total value that must be produced domestically for that product to be sold domestically.
A)True
B)False
Q3) Consider Figure 5.1.Suppose instead that the Mexican government provides a subsidy of $200 per ton to its steel producers,as indicated by the supply schedule S<sub>M (with subsidy)</sub>. As a result of the subsidy,the welfare loss to Mexico due to inefficient domestic production equals:
A) $200
B) $400
C) $600
D) $800
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Trade Regulations and Industrial Policies
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/69527
Sample Questions
Q1) Under U.S.commercial policy,the escape clause results in:
A) Temporary quotas granted to firms injured by import competition
B) Tariffs that offset export subsidies granted to foreign producers
C) Tax advantages extended to minority-owned exporting firms
D) Duties which offset commercial dumping on the part of foreign firms
Q2) Economic sanctions are most effective in causing the target nation to modify its behavior when the:
A) Target nation had negligible economic relationships with the imposing nation prior to the sanctions
B) People of the target nation have weak cultural ties to the people of the imposing nation
C) Sanctions are levied by a large number of nations
D) Target government is supported by the majority of its people
Q3) Under the government procurement policy of the World Trade Organization,federal-state-local governments are prevented from discriminating in favor of the products of domestic suppliers on contracts valued at $1 million and more.
A)True
B)False
Q4) What is the essential idea behind strategic trade policy?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Trade Policies for the Developing Nations
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/69528
Sample Questions
Q1) The developing nations are most of those in Africa,Asia,North America,and Western Europe.
A)True
B)False
Q2) Not only do changes in demand induce relatively wide fluctuations in price when supply is inelastic,but changes in supply induce relatively wide fluctuations in price when demand is inelastic.
A)True
B)False
Q3) For developing countries,a key factor underlying the instability of primary-product prices and export receipts is the high price elasticity of demand for products such as tin and copper.
A)True
B)False
Q4) During periods of weak demand,the Organization of Petroleum Countries has implemented production (export)quotas to ensure that excess oil supplies be kept off the market.
A)True
B)False
Q5) What are some major trade problems faced by developing nations?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Regional Trading Arrangements
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/69529
Sample Questions
Q1) The European Union has achieved all of the following except:
A) Adopted a common fiscal policy for member nations
B) Established a common system of agricultural price supports
C) Disbanded all tariffs among its member countries
D) Levied common tariffs on products imported from nonmembers
Q2) Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:
A) economies of large scale production
B) specialization fostering
C) attracting foreign investment
D) a shorter production time
Q3) Economic integration is the process of eliminating restrictions on international trade,payments,and factor mobility.
A)True
B)False
Q4) The United States serves as an example of:
A) a common market
B) a common union
C) a monetary union
D) a free trade area
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: International Factor Movements and Multinational
Enterprises
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/69530
Sample Questions
Q1) By establishing transplant factories in the United States,Japanese automakers were able to avoid export restrictions imposed by the Japanese government,but not import restrictions imposed by the U.S.government.
A)True
B)False
Q2) Consider Figure 9.2.As the result of the Mexican migration to the United States:
A) U.S.capital owners lose
B) Native U.S.workers lose
C) U.S.capital owners and native U.S.workers lose
D) U.S.capital owners and native U.S.workers gain
Q3) Consider Figure 9.1.Assume Venture Company's formation yields new cost reductions,indicated by MC<sub>1</sub>=AC<sub>1</sub>,which result from changes in work rules by Venture Company employees that led to higher worker productivity.The net effect of Venture Company's formation on the welfare of the domestic economy is:
A) No change
B) Gain of $2
C) Gain of $4
D) Loss of $2
Q4) What are guest workers?
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: The Balance of Payments
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/69531
Sample Questions
Q1) In the balance-of-payments statement,statistical discrepancy is treated as part of the merchandise trade account because merchandise transactions are generally the most frequent source of error.
A)True
B)False
Q2) Reducing a current account surplus requires a country to:
A) Increase the government's deficit and increase private investment relative to saving B) Increase the government's deficit and decrease private investment relative to saving C) Decrease the government's deficit and increase private investment relative to saving D) Decrease the government's deficit and decrease private investment relative to saving
Q3) Concerning the balance of payments,a current-account deficit results in a worsening of a country's net foreign investment position.
A)True
B)False
Q4) What are the components of the current account of the balance of payments?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Foreign Exchange
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/69532
Sample Questions
Q1) Most foreign exchange transactions are conducted between commercial banks and household customers.
A)True B)False
Q2) Referring to Table 11.3,the cross exchange rate between the euro and Swiss franc is approximately:
A) .68 euros per franc
B) .68 francs per euro
C) .64 euros per franc
D) .64 francs per euro
Q3) When short-term interest rates become lower in Tokyo than in New York,interest arbitrage operations will most likely result in a(n):
A) Increase in the spot price of the yen
B) Increase in the forward price of the dollar
C) Sale of dollars in the forward market
D) Purchase of yen in the spot market
Q4) If it takes 113.28 yen to buy $1,it takes $.009624 to buy 1 yen.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Exchange-Rate Determination
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/69533
Sample Questions
Q1) The purchasing-power-parity theory is used to predict exchange-rate movements in the short run.
A)True
B)False
Q2) The purchasing-power parity theory suffers from the problem
A) Of choosing the appropriate price index
B) That it overlooks the influence of capital flows
C) That government policy may modify exchange rates
D) All of the above
Q3) Suppose the exchange rate between the U.S.dollar and the Japanese yen is initially 90 yen per dollar.According to purchasing-power parity,if the price of traded goods rises by 5 percent in the United States and 15 percent in Japan,the exchange rate will become:
A) 72 yen per dollar
B) 81 yen per dollar
C) 99 yen per dollar
D) 108 yen per dollar
Q4) What is the purchasing power parity approach to exchange rate determination?
Q5) What is the asset market approach to exchange rate determination?
Q6) What is exchange rate overshooting?
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Mechanisms of International Adjustment
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69534
Sample Questions
Q1) The value of the foreign trade multiplier equals the reciprocal of the sum of the marginal propensities to:
A) Save plus import
B) Import plus invest
C) Consume plus export
Q2) Referring to Figure 13.4,Canada's foreign-trade multiplier equals 2.0.
A)True
B)False
Q3) Suppose Japan increases its imports from Sweden,leading to a rise in Sweden's exports and income level.With a higher income level,Sweden imports more goods from Japan.Thus a change in imports in Japan results in a feedback effect on its exports.This process is best referred to as the:
A) Monetary approach to balance-of-payments adjustment
B) Discretionary income adjustment process
C) Foreign repercussion effect
D) Price-specie flow mechanism
Q4) Compared to classical economists,how did Keynesian economics change the discussion of trade adjustment?
Q5) What is the foreign repercussion effect?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Exchange-Rate Adjustments and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/69535
Sample Questions
Q1) Assume that Ford Motor Company obtains some of its inputs in Mexico (foreign sourcing).As the peso becomes a larger portion of Ford's total costs,a dollar appreciation leads to a ____ in the peso cost of a Ford vehicle and a ____ in the dollar cost of a Ford compared to the cost changes that occur when all input costs are dollar denominated.
A) Smaller increase,larger decrease
B) Smaller increase,smaller decrease
C) Larger increase,smaller decrease
D) Larger increase,larger decrease
Q2) Suppose the dollar appreciates 10 percent against the Swiss franc.According to the J-curve effect,the U.S.balance of trade will initially worsen,but then improve as time passes.
A)True
B)False
Q3) The elasticity approach to currency depreciation emphasizes the relative price effects of depreciation and suggests that depreciation best improves a country's trade balance when the elasticities of demand for the country's imports and exports are high.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Exchange-Rate Systems and Currency Crises
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69536
Sample Questions
Q1) Small nations,such as Angola and Barbados,peg their currencies to the U.S.dollar since the prices of many of their traded goods are determined in markets in which the dollar is the key currency.
A)True
B)False
Q2) The central bank of the United Kingdom could prevent the pound from appreciating by:
A) Selling pounds on the foreign exchange market
B) Buying pounds on the foreign exchange market
C) Reducing its inflation rate relative to its trading partners
D) Promoting domestic investment and technological development
Q3) Smaller nations with relatively undiversified economies and large trade sectors tend to peg their currencies to one of the world's key currencies.
A)True
B)False
Q4) By the early 1970s,gold had been phased out of the international monetary system.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Macroeconomic Policy in an Open Economy
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/69537
Sample Questions
Q1) Suppose the United States faces domestic inflation and a current account surplus.Should the United States revalue the dollar,one would expect the:
A) Inflation to become more severe--surplus to become less severe
B) Inflation to become less severe--surplus to become less severe
C) Inflation to become less severe--surplus to become more severe
D) Inflation to become more severe--surplus to become more severe
Q2) The appropriate expenditure-switching policy to correct a current account deficit is:
A) Contractionary monetary policy
B) Expansionary fiscal policy
C) Currency devaluation
D) Currency revaluation
Q3) Direct controls may take the form of
A) Tariffs
B) Export subsidies
C) Export quotas
D) All of the above
Q4) What is international economic policy coordination?
Q5) What policy instrument should be used when demand-pull inflation exists?
Q6) Was the Plaza Agreement of 1985 a success?
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: International Banking: Reserves, Debt, and Risk
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/69538
Sample Questions
Q1) Which of the following is not a characteristic of the Eurodollar market? It:
A) Is mainly located in the United Kingdom and continental Europe
B) Operates as a financial intermediary,bringing together lenders and borrowers
C) Deals in interest-bearing time deposits and loans to governments
D) Grew in response to the deregulation of interest rate ceilings on U.S.savings accounts
Q2) Concerning international lending risk of commercial banks,____ is closely related to political developments in a borrowing country,especially the government's views concerning international investments and loans.
A) Economic risk
B) Credit risk
C) Country risk
D) Currency risk
Q3) Concerning international lending risk,country risk refers to the risk that part or all of the interest or principal of a loan will not be repaid.
A)True
B)False
Q4) Why do countries hold international reserves?
Q5) Describe the eurocurrency market.
To view all questions and flashcards with answers, click on the resource link above. Page 19