International Business Law
Mock Exam
Course Introduction
International Business Law introduces students to the legal frameworks governing cross-border commercial transactions and the regulation of international businesses. The course explores topics such as international trade agreements, dispute resolution mechanisms, the roles of institutions like the World Trade Organization, contract formation and enforcement across jurisdictions, intellectual property protection, and the impact of ethical and cultural considerations on global business operations. Through case studies and practical scenarios, students gain insight into managing legal risks and compliance in a rapidly evolving global marketplace.
Recommended Textbook
International Business 9th Edition by Charles W. L. Hill
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Chapter 1: Globalization
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Q1) The most global markets currently are markets for consumer products.
A)True
B)False
Answer: False
Q2) Over the past 30 years the flow of FDI has accelerated faster than the growth in world trade and world output.
A)True
B)False
Answer: True
Q3) Since the collapse of communism at the end of the 1980s,the erstwhile communist nations have transformed their economies by globalizing their markets.This involves
A) regulating markets
B) privatizing state-owned enterprises
C) decreasing competition
D) reducing foreign investment
Answer: B
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Page 3
Chapter 2: National Differences in Political Economy, and Legal Systems
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Q1) The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based.
A)True
B)False
Answer: False
Q2) What are the factors that contribute to the attractiveness of a country as a market or investment site?
Answer: The political,economic,and legal environments of a country clearly influence the attractiveness of that country as a market or investment site.The benefits,costs,and risks associated with doing business in a country are a function of that country's political,economic,and legal systems.The overall attractiveness of a country as a market or investment site depends on balancing the likely long-term benefits of doing business in that country against the likely costs and risks.
Q3) The political,economic,and legal environments of a country influence the attractiveness of that country as a market or investment site.
A)True
B)False
Answer: True
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Chapter 3: National Differences in Economic Development
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Q1) Since the late 1980s,there has been a strong move away from a more free market economic model and toward a more centrally planned and mixed economies.
A)True
B)False
Answer: False
Q2) GNI per person figures can be misleading because _____.
A) they also include barter agreements
B) they provide a dynamic picture of development
C) they don't consider differences in the cost of living
D) they don't consider exchange rate
Answer: C
Q3) Economic risks are independent of political risk.
A)True
B)False
Answer: False
Q4) One visible indicator of political risks tends to be a country's inflation rate.
A)True
B)False Answer: False
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Chapter 4: Differences in Culture
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Q1) The most rigid system of stratification is a class system.
A)True
B)False
Q2) Like Christianity and Judaism,Islam is a polytheistic religion.
A)True
B)False
Q3) The social organization of Western society tends to emphasize on:
A) a group orientation.
B) collectivist values.
C) individual achievement.
D) work groups.
Q4) Which of the following observations is correct?
A) The economic principles established in the Koran are against free enterprise.
B) The economic principles of Islam prohibit the payment or receipt of interest.
C) The Koran speaks disapprovingly of earning legitimate profit through trade and commerce.
D) Protection of the right to private property is not embedded within Islam.
Q5) Confucianism is a religion.
A)True
B)False
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Chapter 5: Ethics, corporate Social Responsibility, and Sustainability
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Q1) In its extreme viewpoint,_____ suggests that if a culture supports slavery,it is all right to use slave labor in the country.
A) the Friedman doctrine
B) noblesse oblige
C) righteous moralist
D) cultural relativism
Q2) Most moral philosophers see value in utilitarian and Kantian approaches to business ethics.
A)True
B)False
Q3) Discuss how companies such as Exxon,Kodak,and IBM helped improve human rights in South Africa.
Q4) What is the veil of ignorance? Why is it important to business?
Q5) In your opinion,are bribes ever acceptable? Why or why not?
Q6) Moral courage enables managers to walk away from a decision that is profitable but unethical.
A)True
B)False
Q7) Should a multinational feel free to pollute in a developing nation?
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Chapter 6: International Trade Theory
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Q1) The simple comparative advantage model assumed that trade does not change a country's stock of resources or the efficiency with which it utilizes those resources.
A)True
B)False
Q2) According to the new trade theory,firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.
A)True
B)False
Q3) Explain the concept of free trade.
Q4) The principle of mercantilism views trade as a positive-sum game.
A)True
B)False
Q5) Simple model of free trade assumed away transportation costs between countries.
A)True
B)False
Q6) Explain how the principle of diminishing returns weakens the Ricardian model.
Q7) Explain Smith's theory of absolute advantage.
Q8) What are the four attributes that are discussed in Porter's diamond?
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Chapter 7: Government Policy and International Trade
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Q1) What has been the experience of the WTO to date? What does the future look like for the organization?
Q2) Under a tariff rate quota,a higher tariff rate is applied to imports within the quota than those over the quota.
A)True
B)False
Q3) What is Paul Krugman's position on strategic trade policy?
Q4) _____ are the highest rate that can be charged,which is often,but not always,the rate that is charged.
A) Ad valorem tariff rates
B) Tariff rents
C) Specific tariff rates
D) Bound tariff rates
Q5) Import tariffs:
A) reduce the price of foreign goods.
B) create efficient utilization of resources.
C) reduce the overall efficiency of the world economy.
D) are unambiguously pro-consumer and anti-producer.
Q6) What is dumping? How do governments respond to charges of dumping?
Q7) What is strategic trade policy? Provide an example.
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Chapter 8: Foreign Direct Investment
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Q1) Rivals rarely imitate what a firm does in an oligopoly.
A)True
B)False
Q2) How is the adverse effect of the balance of payments for the home country due to an FDI usually offset?
A) By increased imports to the home country as a result of the FDI
B) By the subsequent inflow of foreign earnings
C) By substituting direct exports made earlier from the home country
D) By further investments usually made to expand foreign operations
Q3) The WTO supports the promotion of international trade in services.
A)True
B)False
Q4) Why is it said that not all the new jobs created by FDI represent net additions in employment?
A) Because of the uncertainty of the overall economic environment
B) Because most of the job creation is indirect in nature
C) Because jobs created by an investment may be offset by the jobs lost in domestic companies
D) Because the unemployment rate more or less remains constant over the short-term
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Chapter 9: Regional Trade Pacts Give the Mexican Auto
Industry an Edge
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Q1) What are the five levels of economic integration? Briefly describe each form.
Q2) Discuss the Maastricht Treaty.What did it accomplish?
Q3) The Andean Pact is a highly successful common market modeled after the EU.
A)True
B)False
Q4) The Council of the European Union is responsible for proposing EU legislation,implementing it,and monitoring compliance with EU laws by member states.
A)True
B)False
Q5) Which of the following occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area?
A) Efficiency gain
B) Trade diversion
C) Trade deficit
D) Trade creation
Q6) Explain how MERCOSUR has changed over time.What are the implications of these changes?
11
Q7) Discuss the economic case for economic integration.How does it relate to trade theory?
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Chapter 10: The Foreign Exchange Market
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Q1) A(n)_____ involves attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate and paying foreign currency payables before they are due when a currency is expected to appreciate.
A) follower strategy
B) interim strategy
C) lead strategy
D) lag strategy
Q2) If the spot exchange rate is £1=$1.50 when the market opens,and £1=$1.48 at the end of the day,the pound has appreciated,and the dollar has depreciated.
A)True
B)False
Q3) Currency fluctuations can make seemingly profitable trade and investment deals unprofitable and vice versa.
A)True
B)False
Q4) Consider the role of investor psychology and bandwagon effects on how well PPP and the International Fisher Effect explain short-term movements in exchange rates.
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Chapter 11: The International Monetary System
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Q1) Identify the multinational institutions that were established at the Bretton Woods agreement.What were their roles in the international monetary system?
Q2) Compare currency crisis,banking crisis,and foreign debt crisis.
Q3) A country that introduces a currency board commits itself to converting its domestic currency on demand into _____.
A) another currency at a fixed exchange rate
B) gold or silver at a fixed exchange rate
C) gold or silver at a floating exchange rate
D) another currency at a floating exchange rate
Q4) Moral hazard arises when people behave recklessly because _____.
A) of the restrictions that exist in a country's monetary policy
B) of the restrictions that IMF has imposed on them
C) they know they will be saved if things go wrong
D) they face financial difficulties arising out of external factors
Q5) Which of the following will help a company hedge against currency fluctuations?
A) Finding a large supplier to supply all the raw materials
B) In-house manufacturing of raw materials
C) Basing business in a single country
D) Dispersing production to different geographic locations
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Chapter 12: The Global Capital Market
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Q1) Systematic risk refers to movements in a stock portfolio's value that are _____.
A) attributable to macroeconomic forces affecting an economy
B) specific to the firm or individuals who invest in a portfolio
C) attributable to factors pertaining to an individual firm
D) specific to the company that facilitates the investment portfolio
Q2) The cost of capital is the difference between cost of inputs and outputs.
A)True
B)False
Q3) The main factor that makes the Eurocurrency market attractive to both depositors and borrowers is that it _____.
A) is separated from the foreign exchange market
B) lacks government regulation
C) is associated with low-risk
D) gives high levels of investor protection
Q4) Briefly describe the trends observed in the global deregulation of financial services.
Q5) Eurobonds fall within the regulatory domain of European Economic Community.
A)True
B)False
Q6) What is a Eurocurrency?
14
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Chapter 13: The Strategy of International Business
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Q1) As competition intensifies,global standardization strategies and transnational strategies tend to become less viable,and managers need to orientate their companies toward either an international strategy or a localization strategy.
A)True
B)False
Q2) For firms that are selling a product that serves universal needs,and that do not face significant competition,a(n)_____ strategy makes sense.
A) localization
B) international
C) transnational
D) global standardization
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) How can the marketing and sales functions of a firm create value?
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Chapter 14: The Organization of International Business
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Q1) There is low interdependence,performance ambiguity,and costs of control in firms pursuing a(n):
A) localization strategy.
B) international strategy.
C) transnational strategy.
D) global strategy.
Q2) Firms pursuing a global standardization strategy are more centralized than enterprises pursuing a localization or international strategy.
A)True
B)False
Q3) Which of the following is an argument favoring centralization?
A) It permits greater flexibility.
B) Motivational research favors it.
C) It can avoid the duplication of activities.
D) It gives top management time to focus on critical issues by delegating routine issues to lower-level managers.
Q4) Explain organizational structure.
Q5) What are the three dimensions of organizational structure?
Q6) Why should a firm centralize its decision-making?
Page 16
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Chapter 15: Entry Strategy and Strategic Alliances
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Q1) Compare and contrast licensing agreements and franchising agreements.
Q2) Franchising enables a firm to quickly build a global presence.
A)True
B)False
Q3) Why should a firm be cautious about entering a licensing agreement?
Q4) Relational capital refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.
A)True
B)False
Q5) How can a firm increase the probability of selecting a good partner?
Q6) What is intangible property? How can intangible property be protected in a licensing agreement?
Q7) McDonald's is an example of a firm that uses a franchising strategy.
A)True
B)False
Q8) A wholly owned subsidiary is appropriate when:
A) the firm wants to share the cost and risk of developing a foreign market.
B) the firm wants 100 percent of the profits generated in a foreign market.
C) the firm wants a plant that is ready to operate.
D) the firm wants to test a market.
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Chapter 16: Exporting, importing, and Countertrade
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Q1) Compare and contrast the export assistance provided to German and Japanese companies with that given to American companies.Discuss the implications of the differences between the countries.
Q2) A banker's acceptance _____.
A) is payable to the drawee immediately on presentation in a bank
B) is a time draft that has been drawn on and accepted by a bank
C) is a sight draft that can be used as a negotiable instrument in banks
D) allows a buyer possession of the merchandise without signing any formal documents
Q3) A draft is simply an order written by an exporter instructing an importer to pay a specified amount of money at a specified time.
A)True
B)False
Q4) Discuss the disadvantages of countertrade.
Q5) A _____ is payable on presentation to the drawee.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
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Chapter 17: Global Production and Supply Chain Management
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Q1) How does the type of technology a firm uses affect its decision of where to locate production?
Q2) A _____ is an asset whose value is contingent upon a particular relationship persisting.
A) specialized asset
B) balanced asset
C) universal asset
D) supplementary asset
Q3) _____ allows the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.
A) Standardization
B) Kaizen
C) Six Sigma
D) Lean production
Q4) What are the three main factors that affect the decision of locating production?
Q5) Explain how the strategic role of foreign factories evolves over time.
Q7) When does concentration of production make sense? Page 19
Q6) Discuss the role of information technology and the Internet in materials management.
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Page 20
Chapter 18: Global Marketing and Rd
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Q1) To overcome cultural barriers,companies should:
A) develop products specifically for each market.
B) focus on universal needs.
C) focus only on international market segments.
D) develop cross-cultural literacy.
Q2) Which of the following is one of the important factors in determining the elasticity of demand for a product in a given country?
A) Personal selling
B) Logistics
C) Operating revenue
D) Income level
Q3) The means a firm chooses for delivering the product to the consumer is its ____.
A) communication strategy
B) segmentation strategy
C) product attributes
D) distribution strategy
Q4) What factors affect the success of a firm's international communications?
Q5) What is Theodore Levitt's contribution to international business?
Q6) Differentiate between multipoint pricing and experience curve pricing strategies.
Page 21
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Chapter 19: Global Human Resource Management
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Q1) If a firm is serious about building an international cadre,it may have to pay its international executives the same basic salary irrespective of their country of origin or assignment.
A)True
B)False
Q2) _____ makes it difficult to evaluate the performance of expatriate managers objectively.
A) Cultural relativism
B) Internal documentation
C) Unintentional bias
D) Others-orientation
Q3) _____ is the ability to understand why people of other countries behave the way they do.
A) Others-orientation
B) Cultural myopia
C) Perceptual ability
D) Cultural toughness
Q4) Should a firm pay executives in different countries according to the prevailing standards in each country,or should it equalize pay on a global basis?
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Chapter 20: Accounting and Finance in the International Business
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Q1) What are the main steps in the control process of a typical firm?
Q2) The projected rate will typically be the forward exchange rate as determined by the foreign exchange market when firms use the projected spot exchange rate to translate both the budget and performance figures into the corporate currency.
A)True
B)False
Q3) The problem of blocked earnings is not as serious now as it once was because _____.
A) fixed exchange rates have become more common now B) governmental intervention in earnings is more frequent now C) there is greater acceptance of free market economics now D) political risk within the economy is very low in modern times
Q4) A tax treaty between two countries is formed to fix the exchange rates between the two countries.
A)True
B)False
Q5) Accounting is shaped by the environment in which it operates.
A)True
B)False
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