International Business
Mock Exam
Course Introduction
International Business explores the dynamics of conducting commerce across global markets, focusing on the economic, cultural, legal, and political factors that influence international trade and investment. The course examines strategies multinational enterprises use to manage operations, market entry, supply chains, and global partnerships while navigating challenges such as foreign exchange risk, ethical considerations, and regulatory environments. Through case studies and real-world examples, students develop an understanding of how globalization impacts business decisions and the skills necessary to compete effectively in an interconnected world economy.
Recommended Textbook
International Business Competing in the Global Marketplace 12th Edition by Charles W. L. Hill
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20 Chapters
2122 Verified Questions
2122 Flashcards
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Page 2
Chapter 1: Globalization
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) "Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade barriers against each other, which contributed to the Great Depression of the 1930s.
A)True
B)False
Answer: False
Q2) What is the Uruguay Round? List the measures implemented in the Uruguay Round. Answer: Under the umbrella of GATT, eight rounds of negotiations among member states worked to lower barriers to the free flow of goods and services. The first round of negotiations went into effect in 1948. The most recent negotiations to be completed, known as the Uruguay Round, were finalized in December 1993. The Uruguay Round further reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization to police the international trading system.
Q3) A firm needs to become a multinational enterprise to engage in international business.
A)True
B)False
Answer: False
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Page 3
Chapter 2: National Differences in Political, Economic, and Legal Systems
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) Contracts under a civil law system tend to be very detailed with all contingencies spelled out.
A)True
B)False
Answer: False
Q2) Product liability sets certain safety standards to which a product must adhere.
A)True
B)False
Answer: False
Q3) A nation's legal system is usually of very little interest to international business managers, because international businesses are headquartered in different countries. A)True
B)False
Answer: False
Q4) In a totalitarian country, there are safeguards to protect an individual's right to freedom of expression, opinion, and organization.
A)True
B)False
Answer: False
Page 4
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Chapter 3: National Differences in Economic Development
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) In many countries entrepreneurs and other business leaders, eager to protect their property rights and ensure the dispassionate enforcement of contracts, had pushed for ________; this contributed to a wave of democratic revolutions during the late 1980s and early 1990s
A) state ownership of productive resources
B) regulated markets
C) democratic reforms
D) planned economies
Answer: C
Q2) 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
Q3) For privatization to work, it must also be accompanied by a more general deregulation and opening of the economy.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Differences in Culture
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Sample Questions
Q1) The value systems and norms of a country are unrelated to the costs of doing business in that country.
A)True
B)False
Q2) Which of the following statements about the use of spoken language is true?
A) The nature of a language has no effect on the way we perceive the world.
B) The language of a society does not direct the attention of its members to certain features of the world rather than others.
C) Countries with more than one language often only have one culture.
D) Most people prefer to converse in their own language rather than English.
Q3) ________ are the routine conventions of everyday life.
A) Folkways
B) Mores
C) Rites
D) Beliefs
Q4) Hinduism and Buddhism both stress the importance of
A) the caste system.
B) the afterlife.
C) Confucian ethics.
D) life on earth.
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Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) How can companies strengthen the moral courage of employees?
Q2) In a business setting, noblesse oblige is taken to mean benevolent behavior that is the responsibility of successful enterprises.
A)True
B)False
Q3) An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting.
A)True
B)False
Q4) An international U.S.-based company sets up a production unit in a developing country with poor environmental regulations. This contributes to the A) noblesse oblige situation.
B) inequity aversion.
C) global tragedy of the commons.
D) Friedman effect.
Q5) Discuss the naive immoralist's approach to business ethics. What are the criticisms of this approach?
Page 7
Q6) Should a multinational feel free to pollute in a developing nation?
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Chapter 6: International Trade Theory
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Sample Questions
Q1) Explain how the principle of diminishing returns weakens the Ricardian model.
Q2) The theories of international trade claim that promoting free trade is generally in the best interests of
A) a country, although it may not always be in the best interest of an individual firm.
B) all multinational corporations.
C) an individual firm, although it may not always be in the best interest of a country.
D) the World Trade Organization.
Q3) Mercantilist doctrine advocates unrestricted free trade between countries.
A)True
B)False
Q4) 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.
Q5) Explain Ricardo's theory of comparative advantage.
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Page 8
Chapter 7: Government Policy and International Trade
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) According to the ________ argument, governments should temporarily support new industries until they have grown strong enough to meet international competition.
A) retaliatory action
B) human rights
C) infant industry
D) antidumping
Q2) Until 1995, GATT rules applied only to
A) services.
B) industrial goods.
C) textiles.
D) agricultural products.
Q3) A ________ helps domestic producers to compete against foreign imports.
A) An ad valorem tariff
B) A specific tariff
C) An import quota
D) A subsidy
Q4) Discuss the Doha Round of trade talks.
Q5) What has been the experience of the WTO to date? What does the future look like for the organization?
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Chapter 8: Foreign Direct Investment
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108 Flashcards
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Sample Questions
Q1) Which of the following factors has had a positive effect on the volume of foreign trade investments?
A) emerging social democracies
B) fluctuating current rates
C) aging demographics
D) world economy globalization
Q2) Host country citizens that are employed by an MNE following an FDI are an example of
A) an internality.
B) a direct effect.
C) an externality.
D) an indirect effect.
Q3) Recent years have seen a ________ in the number of countries that adhere to a radical ideology regarding FDI.
A) marked decline
B) slight decline
C) marked increase
D) slight increase
Q4) Discuss why firms selling products with low value-to-weight ratios choose FDI over exporting.
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Chapter 9: Regional Economic Integration
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Sample Questions
Q1) In a customs union, trade barriers are eliminated among member countries, and each country maintains its own external trade policies.
A)True
B)False
Q2) In ____, similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy.
A) an optimal currency area
B) a unified economic area
C) a uniform currency zone
D) a monetary zone
Q3) The lowering of barriers to trade and investment among countries has led to ________ throughout the EU.
A) higher costs of borrowing
B) increase prices
C) increase in hedging costs
D) increased price competition
Q4) Compare and contrast a free trade area and a common market. Provide examples.
Q5) Discuss the trend toward increased regional economic integration.
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Chapter 10: The Foreign Exchange Market
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105 Verified Questions
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Sample Questions
Q1) Purchasing power parity theory states that given relatively efficient markets, the price of a "basket of goods" should be
A) much less in industrialized countries.
B) much less in third world countries.
C) variable depending upon the current rate of exchange between the producer and consumer of the products in the "basket."
D) roughly equivalent in each country.
Q2) 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) A follower strategy
B) An interim strategy
C) A lead strategy
D) A lag strategy
Q3) The most important trading centers for currencies are Zurich, Frankfurt, Paris, Hong Kong, and Sydney.
A)True
B)False
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12
Chapter 11: The International Monetary System
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101 Verified Questions
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Sample Questions
Q1) The International Monetary Fund has been criticized for exacerbating moral hazard
A) with its rescue programs.
B) by increasing the probability of debt default.
C) making loans to countries that are trying to reduce national debt by "playing the market."
D) by refusing to bail out banks that made loans to overleveraged Asian companies during the 1990s.
Q2) After World War II, the world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate. This is an example of a ________ system.
A) fixed exchange rate
B) dirty float exchange
C) pegged exchange rate
D) floating exchange rate
Q3) Which of the following is a common underlying cause of financial crises?
A) a narrowing current account deficit
B) excessive expansion of domestic borrowing
C) low relative price inflation rates
D) asset price deflation
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Page 13
Chapter 12: The Global Capital Market
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Sample Questions
Q1) Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include
A) governments.
B) corporations with surplus cash.
C) pension funds.
D) insurance companies.
Q2) An important drawback of a purely domestic capital market is that the A) investment does not receive protection from governments.
B) investments are riskier than in global capital markets.
C) market lacks a strong regulatory mechanism.
D) cost of capital tends to be higher than it is in a global market.
Q3) Historically, regulatory barriers have made national equity markets work together.
A)True
B)False
Q4) The cost of capital is the A) interest received on investments made by the company.
B) price of borrowing money.
C) difference between cost of inputs and outputs.
D) total value of raw materials that a company uses.
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Chapter 13: The Strategy of International Business
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) The ________ refers to systematic reductions in production costs that have been observed to occur over the life of a product.
A) economies of scale
B) value creation
C) location economies
D) experience curve
Q2) How can a firm increase its profitability?
Q3) A firm facing low pressures for cost reductions and low pressures for local responsiveness is most likely to follow ________ strategy.
A) a global standardization
B) a localization
C) an international
D) a transnational
Q4) Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on
A) value creation.
B) economies of scale.
C) location economies.
D) the domestic market.
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Chapter 14: The Organization of International Business
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Describe the situation where an international division makes sense. How common is this structure? What are the disadvantages of the structure?
Q2) Which of the following is one of the four main arguments 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.
Q3) The worldwide product division structure
A) is weak in local responsiveness.
B) inhibits the realization of location economies.
C) inhibits the realization of experience curve economies.
D) limits the transfer of core competencies between areas.
Q4) A manager receives a bonus because the national operating subsidiary that she is in charge of exceeds its performance target. This is an example of an incentive.
A)True
B)False
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16
Chapter 15: Entry Strategy and Strategic Alliances
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111 Verified Questions
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Sample Questions
Q1) Compare and contrast licensing agreements and franchising agreements.
Q2) The main advantage of ________ is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.
A) an acquisition
B) strategic alliances
C) greenfield investment
D) franchising
Q3) The valuable asset of firms, whose competitive advantage is based on management know-how, is their
A) top management staff.
B) USP.
C) advertisements.
D) brand name.
Q4) In a ____, the firm owns 100 percent of the stock.
A) joint venture
B) wholly owned subsidiary
C) turnkey project
D) franchising agreement
Q5) Why should a firm be cautious about entering a licensing agreement?
Q6) Discuss the three advantages of acquiring an enterprise in a target market.
Page 17
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Chapter 16: Exporting, Importing, and Countertrade
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106 Verified Questions
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Sample Questions
Q1) Exporters often face voluminous paperwork and complex formalities.
A)True
B)False
Q2) ________ are export specialists that offer a full menu of services to handle all aspects of exporting, similar to having an internal exporting department within your own firm.
A) Small business development centers (SBDCs)
B) Centers for international business education and research (CIBERs)
C) Export legal assistance networks (ELANs)
D) Export management companies (EMCs)
Q3) Which of the following terms refers to the use of a specialized third-party trading house in a countertrade arrangement?
A) counterpurchase
B) barter
C) offset
D) switch trading
Q4) Nearly every state in the United States maintains active trade commissions to promote exports.
A)True
B)False
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Chapter 17: Global Production and Supply Chain Management
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Sample Questions
Q1) What are the three main factors that affect the decision of where to locate production?
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) ________ refers to the movement of raw material, component parts, and finished goods throughout the global supply chain.
A) Distribution
B) Transportation
C) Sourcing
D) Logistics
Page 19
Q5) Describe the major arguments put forth by Edward Deming.
Q6) Explain how the strategic role of foreign factories evolves over time.
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Page 20
Chapter 18: Global Marketing and R&D
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Sample Questions
Q1) A ________ retail system is one in which there are many retailers, none of which has a major share of the market.
A) concentrated
B) consolidated
C) focused
D) fragmented
Q2) What is Theodore Levitt's contribution to international business?
Q3) Contrary to Levitt's suggestions, consumers in the most developed countries are often
A) willing to sacrifice their preferred attributes for lower prices.
B) not willing to pay more for products that have additional features customized to their tastes.
C) not willing to sacrifice their preferred attributes for lower prices.
D) willing to accept globally standardized products that have been developed with the lowest common denominator in mind.
Q4) Source effects occur when the receiver of the message evaluates the message based on the context of the message.
A)True
B)False
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Chapter 19: Global Human Resource Management
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Sample Questions
Q1) Trade unions around the world
A) developed simultaneously and in coordination with each other.
B) are widely varied in their structure.
C) have virtually the same ideology.
D) employ the same union structure.
Q2) What was the long-term goal of international trade secretariats (ITSs)?
A) to increase the competition between national unions
B) to be able to bargain transnationally with multinational firms
C) to accommodate wide variation in union structure
D) to be able to regulate multinationals with regard to labor policies
Q3) A firm using a polycentric staffing policy will
A) be less likely to suffer from cultural myopia.
B) seek the best people for key jobs throughout the organization, regardless of nationality.
C) most likely follow an ethnocentric strategy.
D) be likely to have improved communication between host-country managers and parent-country managers.
Q4) Base pay in most firms is set with regard to global market conditions.
A)True
B)False
Page 22
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Chapter 20: Accounting and Finance in the International Business
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109 Verified Questions
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Sample Questions
Q1) Most international businesses require all budgets and performance data within the firm to be expressed in the "corporate currency," which is normally
A) a common currency such as the U.S. dollar.
B) the home currency.
C) a foreign currency.
D) the currency of the country where products are sold.
Q2) The ________ writes the generally accepted accounting principles (GAAP) that govern the preparation of U.S. firms' financial statements.
A) U.S. Securities and Exchange Commission
B) Office of Economic Analysis
C) International Accounting Standards Board
D) Financial Accounting Standards Board
Q3) Describe the problem of blocked earnings.
Q4) What are the considerations when seeking external financing for international business?
Q5) What are the advantages of using royalties and fees to move money across borders?
Q6) What are the shortcomings of IASB?
Q7) Briefly differentiate accounting standards and auditing standards.
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