Course Introduction
International Business
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International Business explores the complexities and opportunities of conducting commerce across national borders. This course delves into global trade theories, cultural differences, international marketing, foreign direct investment, currency exchange, and the legal and ethical environments affecting multinational enterprises. Students will examine how businesses adapt their strategies to diverse economic, political, and regulatory systems, and gain practical insights through case studies and real-world scenarios. The course prepares students to understand the challenges and drivers of globalization, equipping them with skills necessary to thrive in an increasingly interconnected business landscape.
Recommended Textbook
International Economics 15th Edition by Robert Carbaugh
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17 Chapters
1863 Verified Questions
1863 Flashcards
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Page 2
Chapter 1: The International Economy and Globalization
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48 Verified Questions
48 Flashcards
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Sample Questions
Q1) Human rights activists contend that this organization supports governments that permit sweatshops:
A) The International Organization for Standardization
B) The International Monetary Fund
C) The World Health Organization
D) All of these
Answer: B
Q2) If a nation has an open economy,it means that the nation:
A) Allows private ownership of capital
B) Has flexible exchange rates
C) Has fixed exchange rates
D) Conducts trade with other countries
Answer: D
Q3) Multilateral trade negotiations have led to
A) Continued trade liberalization
B) Financial liberalization
C) Increased investment
D) All of the above
Answer: D
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Page 3
Chapter 2: Foundations of Modern Trade Theory:
Comparative Advantage
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) An improvement in a nation's terms of trade occurs if the prices of its exports rise relative to the prices of its imports over a given time period.
A)True
B)False
Answer: True
Q2) The use of indifference curves helps us determine the point:
A) Along the terms-of-trade line a country will choose
B) Where a country maximizes its resource productivity
C) At which a country ceases to become competitive
D) Where the marginal rate of transformation approaches zero
Answer: A
Q3) When a nation requires fewer resources than another nation to produce a product,the nation is said to have a:
A) Absolute advantage in the production of the product
B) Comparative advantage in the production of the product
C) Lower marginal rate of transformation for the product
D) Lower opportunity cost of producing the product
Answer: A
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Chapter 3: Sources of Comparative Advantage
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) The Leontief paradox provided:
A) Support for the principle of absolute advantage
B) Support for the factor endowment model
C) Evidence against the factor endowment model
D) Evidence against the principle of absolute advantage
Answer: C
Q2) A product will be traded only if the cost of transporting it between nations is less than the pretrade difference between their relative product prices.
A)True
B)False
Answer: True
Q3) Owners of resources specific to export industries tend to lose from international trade,while owners of factors specific to import-competing industries tend to gain.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Tariffs
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124 Flashcards
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Sample Questions
Q1) Arguments for U.S.trade restrictions include all of the following except
A) Job protection
B) Infant industry support
C) Maintenance of domestic living standard
D) Improving incomes for developing countries
Q2) Refer to Exhibit 4.2.As a result of the tariff,the price of imported motorcycles equals $13,000 and imports total 4 cycles.
A)True
B)False
Q3) Referring to Figure 4.2,the tariff's deadweight welfare loss to the United States totals:
A) $450
B) $550
C) $650
D) $750
Q4) A tariff quota is a combination of a specific tariff and an ad valorem tariff.
A)True
B)False
Q5) Can import duties have unintended side effects?
Q6) How can tariffs be justified?
Page 6
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Chapter 5: Nontariff Trade Barriers
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134 Flashcards
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Sample Questions
Q1) A subsidy granted to import-competing producers reduces overall domestic welfare by the same amount as would a tariff or quota that restricts imports by the same amount.
A)True
B)False
Q2) Consider Figure 5.1.Suppose 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>. The quantity of imports equals:
A) 1 ton
B) 2 tons
C) 3 tons
D) 4 tons
Q3) From the perspective of the American public as a whole,export subsidies levied by overseas governments on goods sold to the United States:
A) Help more than they hurt
B) Hurt more than they help
C) Are equivalent to an import quota
D) Are equivalent to an export quota
Q4) What are the intent and impact of domestic content requirements?
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Chapter 6: Trade Regulations and Industrial Policies
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Adjustment assistance is sometimes used to assist:
A) In retraining workers displaced by imports
B) In retraining workers displaced by exports
C) Foreign firms injured by our quotas
D) Foreign firms injured by our tariffs
Q2) Intellectual property refers to holdings of rare books and pieces of art that are traded on the world market.
A)True
B)False
Q3) Has industrial policy contributed significantly to Japan's economic growth?
Q4) Among the codes of conduct addressed at the Tokyo Round of multilateral trade negotiations were customs valuation,product standards,subsidies and countervailing duties,government procurement policies,and import licensing procedures.
A)True
B)False
Q5) What is the essential idea behind strategic trade policy?
Q6) What is the basis for trade adjustment assistance?
Q7) Explain how advocates of strategic trade policy differ from the classical free traders in their treatment of externalities?
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Chapter 7: Trade Policies for the Developing Nations
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) International commodity agreements do not:
A) Consist of consuming and producing nations who desire market stability
B) Levy export cutbacks so as to offset rising commodity prices
C) Utilize buffer stocks to generate commodity price stability
D) Increase the supply of commodities to prevent rising prices
Q2) Prior to the formation of the Organization of Petroleum Exporting Countries,individual oil producing nations,
A) Operated like sellers in a competitive market
B) Behaved like individual sellers in a monopoly market
C) Had considerable control over the price of oil
D) Both b and C
Q3) The majority of developing-nation exports are primary products such as agricultural goods and raw materials; of the manufactured goods exported by developing nations,most are labor-intensive goods.
A)True
B)False
Q4) Most of China's manufactured exports have constituted labor-intensive goods.
A)True
B)False
Q5) What are some major trade problems faced by developing nations?
Page 9
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Chapter 8: Regional Trading Arrangements
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) The gains from having an optimum currency include
A) Price differentiation
B) Lower competition
C) Lower transaction costs
D) Both b and c
Q2) By joining NAFTA,the United States,Canada,and Mexico would find their short-run welfare decreasing due to the:
A) Economies of scale effect
B) Business investment effect
C) Trade creation effect
D) Trade diversion effect
Q3) The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.
A)True
B)False
Q4) If Chile and Mexico abolish all tariffs on each other's products while maintaining their own tariffs against other countries,these two countries have formed a customs union.
A)True
B)False
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Chapter 9: International Factor Movements and Multinational Enterprises
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96 Flashcards
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Sample Questions
Q1) Joint ventures lead to losses in national welfare when the newly established business adds to pre-existing production capacity and fosters additional competition.
A)True
B)False
Q2) International trade in goods and services and flows of productive factors are substitutes for each other.
A)True
B)False
Q3) Consider Figure 9.1.Suppose that Sony Company and American Company jointly form a new firm,Venture Company,whose ball bearings replace the output sold by the parents in the domestic market.Assuming that Venture Company operates as a monopoly and that its costs equal MC<sub>0</sub>=AC<sub>0</sub>,the firm's price,output,and total profit would respectively equal:
A) $6,2 units,$4
B) $4,2 units,$2
C) $6,4 units,$4
D) $4,4 units,$2
Q4) What are guest workers?
Q5) What are the disadvantages of forming joint ventures?
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Chapter 10: The Balance of Payments
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92 Flashcards
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Sample Questions
Q1) Often,countries realizing rapid economic growth rates possess long-run current account deficits.
A)True
B)False
Q2) The capital account of the balance of payments includes private-sector transactions as well as official-settlements transactions of the home country's central bank.
A)True
B)False
Q3) Most economists contend that any reduction in the current account deficit is better achieved through increased national saving than through reduced domestic investment.
A)True
B)False
Q4) To reduce a current account deficit,a country should either decrease the budget deficit of its government or reduce investment spending relative to saving.
A)True
B)False
Q5) What are the components of the current account of the balance of payments?
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Chapter 11: Foreign Exchange
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Sample Questions
Q1) Consider Table 11.1.If one were to sell dollars for immediate delivery,on Tuesday the pound cost of each dollar would be:
A) .7008 pounds per dollar
B) .7037 pounds per dollar
C) 1.4270 pounds per dollar
D) 1.4211 pounds per dollar
Q2) The supply schedule of pesos has a negative-sloping region corresponding to the inelastic region on the Mexican demand schedule for foreign currency.
A)True
B)False
Q3) Which of the following would not induce the U.S.demand curve for foreign exchange to shift backward to the left?
A) Worsening American tastes for goods produced overseas
B) Decreasing interest rates in the U.S.compared to those overseas
C) A fall in the level of U.S.income
D) A depreciation in the U.S.dollar against foreign currencies
Q4) How is the equilibrium rate of exchange determined?
Q5) What foreign exchange transactions do banks typically engage in?
Q6) Where are foreign currency options traded?
Page 13
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Chapter 12: Exchange-Rate Determination
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) Exchange-rate overshooting is based on the notion that the supply schedule of a currency is more elastic in the short run than in the long run.
A)True
B)False
Q2) Given a floating exchange rate system an increase in ____ would cause the dollar to appreciate against the euro.
A) U.S.labor costs
B) The U.S.money supply
C) U.S.prices of goods
D) U.S.real interest rates
Q3) Refer to Figure 12.2.If the Federal Reserve adopts a restrictive monetary policy that leads to relatively high interest rates in the United States,the demand for francs would decrease,the supply of francs would increase,and the dollar's exchange value would appreciate.
A)True
B)False
Q4) In a free market,what determines exchange rates in the long run and the short run?
Q5) What is the purchasing power parity approach to exchange rate determination?
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Chapter 13: Mechanisms of International Adjustment
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107 Flashcards
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Sample Questions
Q1) The "rules of the game" served to reinforce and speed up the interest-rate-adjustment mechanism under a system of fixed exchange rates.
A)True
B)False
Q2) Refer to Figure 13.3.Decreases in U.S.interest rates relative to foreign interest rates would shift U.S.capital and financial account schedule CA<sub>0</sub> downward toward CA<sub>1</sub>,resulting in net financial outflows from the United States.
A)True
B)False
Q3) According to the "rules of the game" of the gold standard era,a country's central bank agreed to react to international gold flows so as to:
A) Officially devalue a currency during eras of payments surpluses
B) Officially revalue a currency during eras of payments deficits
C) Offset the automatic-adjustment mechanism (e.g.,prices)
D) Reinforce the automatic-adjustment mechanism
Q4) Is the monetary approach to the balance-of-payments part of the traditional adjustment theories?
Q5) What is the foreign repercussion effect?
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Chapter 14: Exchange-Rate Adjustments and the Balance of Payments
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) How is the absorption approach used for analyzing the effects of currency devaluation?
Q2) According to the J-curve concept,which of the following is false--that the effects of a currency depreciation on the balance of payments are:
A) Transmitted primarily via the income adjusted mechanism
B) Likely to be adverse or negative in the short run
C) In the long run positive,given favorable elasticity conditions
D) Influenced by offsetting devaluations made by other countries
Q3) The extent to which changing currency values result in changing prices of imports and exports is known as the J-curve effect.
A)True
B)False
Q4) The absorption approach suggests that one of the following causes a trade deficit to decrease following currency depreciation:
A) A decline in domestic interest rates
B) A rise in domestic imports
C) A rise in government spending
D) A decline in domestic absorption
Q5) What is a pass-through relationship?
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Chapter 15: Exchange-Rate Systems and Currency Crises
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) If Uganda devalues its shilling by 10 percent and Burundi devalues its franc by 5 percent,the shilling's exchange value appreciates 10 percent against the franc.
A)True
B)False
Q2) The special drawing right is a currency basket of five major industrial country currencies.
A)True
B)False
Q3) Refer to Table 15.1.Under a system of floating exchange rates,the equilibrium exchange rate equals:
A) $0.15 per franc
B) $0.20 per franc
C) $0.25 per franc
D) $0.30 per franc
Q4) If Mexico fully dollarizes its economy,it agrees to
A) Print pesos only to finance deficits of its national government
B) Use the U.S.dollar alongside its peso to finance transactions
C) Have the U.S.Treasury be in charge of its tax collections
D) Replace pesos with U.S.dollars in its economy
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Chapter 16: Macroeconomic Policy in an Open Economy
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Sample Questions
Q1) The appropriate expenditure-switching policy to correct a current account surplus is:
A) Currency revaluation
B) Currency devaluation
C) Expansionary monetary policy
D) Contractionary fiscal policy
Q2) A nation experiences internal balance if it achieves:
A) Full employment
B) Price stability
C) Full employment and price stability
D) Unemployment and price instability
Q3) Which policy is an expenditure-switching policy?
A) Increase in the money supply
B) Decrease in government expenditures
C) Increase in business and household taxes
D) Decrease in import tariffs
Q4) Economic policymakers have typically adopted expenditure-increasing policies to combat inflation and expenditure-reducing policies to combat recession.
A)True
B)False
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Chapter 17: International Banking: Reserves, Debt, and Risk
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Sample Questions
Q1) Foreign currencies constitute the smallest component of the world's international reserves.
A)True
B)False
Q2) The main purpose of the International Monetary Fund is to grant long-term loans to developing nations to help them finance the development of infrastructure such as roads,dams,and bridges.
A)True
B)False
Q3) To the extent that adjustments in prices,interest rates,and income levels promote balance-of-payments equilibrium,the demand for international reserves decreases.
A)True
B)False
Q4) The U.S.dollar glut of the 1960s was due in part to:
A) An undervalued dollar
B) An overvalued dollar
C) Freely floating exchange rates
D) Crawling pegged exchange rates
Q5) Are international reserve needs different for different exchange rate regimes?
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