International Economics
Question Bank
Course Introduction
International Economics explores the dynamics of trade and finance among countries, examining how goods, services, and capital flow across borders and how international economic policies influence these exchanges. The course covers core theories such as comparative advantage, trade policy instruments, exchange rate systems, balance of payments, and the impact of globalization on economic development. Students will analyze the roles of international organizations, the consequences of economic integration, and the challenges posed by economic crises and protectionism, developing a thorough understanding of the interdependent global economy.
Recommended Textbook
International Business 7th Edition by
Ricky W. Griffin
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19 Chapters
2470 Verified Questions
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Page 2
Chapter 1: An Overview of International Business
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Sample Questions
Q1) Which of the following is not an international business transaction?
A) purchasing products in one country and assembling them in another
B) building a plant in a foreign country to capitalize on lower labor costs
C) borrowing money from a major bank to finance capital improvements
D) shipping finished products from one country to another for retail sale
Answer: C
Q2) The BRIC countries include Brazil, Russia, India, and China.
A)True
B)False
Answer: True
Q3) International nonprofit organizations are called ________.
A) multinational corporations
B) multinational organizations
C) multinational enterprises
D) multinational nonprofits
Answer: B
Q4) The International Olympic Committee is a multinational enterprise.
A)True
B)False
Answer: False
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Chapter 2: Global Marketplaces and Business Centers
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Sample Questions
Q1) A policy that encourages economic growth through export expansion is called
A) export expansion
B) export substitution
C) export promotion
D) development stimulation
Answer: C
Q2) Asia is a source of both skilled and unskilled labor.
A)True
B)False
Answer: True
Q3) Which of the following markets has the LEAST impact on the world's current economic activity?
A) North America
B) European Union
C) China
D) Japan
Answer: C
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Page 4
Chapter 3: Legal, Technological, Accounting, and Political Environments
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Sample Questions
Q1) Foreign companies doing business in Saudi Arabia must be cautious because of the country's lack of an independent judiciary to protect the foreign company's rights.
A)True
B)False
Answer: True
Q2) Which results in a loss of assets?
A) repatriation
B) confiscation
C) expropriation
D) inflation
Answer: B
Q3) A legal system that lacks due process, lacks appeals procedures, and prohibits banks from charging interest on loans is most likely based on ________.
A) common law
B) civil law
C) religious law
D) bureaucratic law
Answer: C
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Chapter 4: The Role of Culture
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Q1) How are the HR practices of MNEs affected by status systems and religious practices in certain cultures? Illustrate your answer with specific examples.
Q2) Hinduism stresses all of the following except ________.
A) spirituality
B) frugality
C) purity
D) consumption
Q3) ________ is the cultural belief that the person comes first.
A) Social orientation
B) Individualism
C) Uncertainty orientation
D) Goal orientation
Q4) How might the use of lifetime employment practices in Japanese firms serve as a response to the culture of uncertainty avoidance in Japan? What effect do you think these practices will have on Japan's future?
Q5) As a business student, do you think it is important that you learn a second language? Why or why not?
Q6) Explain Hall's approach to characterizing culture.
Q7) What is a culture? What are the basic elements of culture?
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Chapter 5: Ethics and Social Responsibility in International Business
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Sample Questions
Q1) Why is it important for top management to demonstrate ethical behavior?
Q2) According to the model developed by Rob van Tulder and Alex van der Zwart, firms that adhere to the Asian Way are more likely to ________.
A) bargain with labor groups
B) promote social responsibility
C) strive for competitive advantages
D) cooperate closely with the government
Q3) R.J. Reynolds' decision to follow laws regarding the marketing of its products in the United States but market its tobacco aggressively in countries without such regulations is an example of which approach to social responsibility?
A) the obstructionist stance
B) the defensive stance
C) the accommodative stance
D) the proactive stance
Q4) Compare and contrast the stereotypical behaviors of the van Tulder and van der Zwart approach to managing corporate social responsibility.
Q5) What is whistle-blowing? What risks might a whistle-blower face?
Page 7
Q6) What is the purpose of the Foreign Corrupt Practices Act?
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Chapter 6: International Trade and Investment
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Sample Questions
Q1) Who developed the eclectic theory of international investment?
A) Steffan Linder
B) Raymond Vernon
C) Michael Porter
D) John Dunning
Q2) According to mercantilism, what should a country's primary goal be?
A) protecting citizens from unfair labor practices
B) encouraging imports to prevent resource depletion
C) promoting exports to enlarge gold and silver holdings
D) ensuring sufficient labor for low-wage jobs in the textile industry
Q3) The ________ suggests that a firm owning a valuable asset that creates a competitive advantage domestically can use that advantage to penetrate foreign markets through FDI.
A) national competitive advantage
B) comparative advantage
C) relative factor endowments
D) ownership advantage theory
Q4) China is one of the primary recipients of FDI from the United States.
A)True
B)False
Page 8
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Chapter 7: The International Monetary System and the Balance of Payments
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Sample Questions
Q1) During the gold standard, the international monetary system was also called the dollar-based gold standard.
A)True
B)False
Q2) The ________ is a double-entry bookkeeping system designed to measure and record all economic transactions between residents of one country and residents of all countries during a particular time period.
A) managerial accounting
B) international accounting
C) balance of payments
D) global books
Q3) What is the difference between a country's export of services and its imports of services?
Q4) The leader of Country X has decided that the nation should join the IMF and has agreed to the rules and regulations of the IMF. Now Country X must ________.
A) pay a quota to the IMF
B) locate a sponsoring IMF country
C) pay each of the IMF members an entrance fee
D) agree to an IMF investigation of government spending
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Chapter 8: Foreign Exchange and International Financial Markets
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Sample Questions
Q1) What is a Eurodollar?
A) a euro held by an American
B) a U.S. dollar deposited in a European bank
C) a euro deposited in a U.S. bank.
D) any currency deposited in a country other than the country of issue
Q2) Assume that the per capita income in the United States in 2010 was $36,170 while the per capita income in Japan, converted into U.S. dollars, was $38,410. Does this mean that the average Japanese citizen enjoys a higher standard of living than the average American? Why or why not?
Q3) If a foreign currency is selling at a forward premium, the foreign exchange market believes that the currency will depreciate over time.
A)True
B)False
Q4) ________ focus on offering banking and other financial services to nonresident customers.
A) Subsidiary banks
B) Branch banks
C) Affiliated banks
D) Offshore financial centers
Page 10
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Chapter 9: Formulation of National Trade Policies
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Sample Questions
Q1) Country X protects its domestic manufacturers from foreign competition by using a variety of nontariff barriers. Which of the following is NOT one of those nontariff barriers?
A) foreign trade zones
B) product standards
C) regulatory controls
D) local purchase requirements
Q2) The harmonized tariff schedule is a detailed classification of imported goods.
A)True
B)False
Q3) According to strategic trade theory, a national government can make its country better off if it implements trade polices that improve the competitiveness of its firms in oligopolistic industries.
A)True
B)False
Q4) A ________ refers to any factory located in an FTZ in Mexico.
A) maquiladora
B) greenfield operation
C) keiretsu
D) chaebol
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Chapter 10: International Cooperation Among Nations
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Sample Questions
Q1) Which of the following is not a regional trading bloc in Africa?
A) Southern African Development Community
B) Economic Community of Central African States
C) Economic Community of West African States
D) African Development Union
Q2) The Asia-Pacific Economic Cooperation Initiative was developed in response to the growing interdependence of the Asia-Pacific economies.
A)True
B)False
Q3) Why do France and the United Kingdom disagree over the EU's Common Agricultural Policy?
Q4) The GATT rounds focused on decreasing ________.
A) dumping
B) trade tariffs
C) preferential treatment
D) domestic industry subsidies
Q5) A maquiladora is a factory in which very little transformation of a product is undertaken.
A)True
B)False
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Chapter 11: International Strategic Management
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Sample Questions
Q1) ________ occur(s) when firms build factories that serve more than one country and lower their production costs.
A) Multinational flexibility
B) Economies of scale
C) Location efficiencies
D) Economies of scope
Q2) Describe the value chain and how it is used to assess a firm's strengths and weaknesses.
Q3) Firms that use a related diversification strategy are more vulnerable to economic threats than firms using a single-business strategy.
A)True
B)False
Q4) A(n) ________ is a systematic collection of data about all elements of the firm's external and internal environments.
A) environmental scan
B) strategic analysis
C) strategic formulation
D) situation analysis
Q5) What are the three types of corporate strategies an MNC might choose to follow?
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Chapter 12: Strategies for Analyzing and Entering Foreign Markets
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Sample Questions
Q1) ________ are those factors that affect the desirability of host country production relative to home country production.
A) Ownership advantages
B) Location advantages
C) National competitive advantages
D) Internalization advantages
Q2) Bechtel, a construction and engineering firm, has a contract with the Indian government to expand the airport in New Delhi. Bechtel will design, construct, and equip the airport before turning the facility over to the Indian government upon completion. Which entry mode for international business is used by Bechtel?
A) B-O-T project
B) turnkey project
C) contract manufacturing
D) foreign direct investment
Q3) In comparison to licensing, franchising offers a firm ________.
A) less taxation
B) more control
C) higher profit margins
D) fewer financial risks
Page 14
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Chapter 13: International Strategic Alliances
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Sample Questions
Q1) How does an assigned arrangement work?
Q2) Which pitfall of alliances exists when the economic circumstances that motivated the alliance no longer exist?
A) changing circumstances
B) loss of autonomy
C) distribution of earnings
D) information access
Q3) The Japanese company Bandai and the U.S. toymaker Mattel entered into a strategic alliance. Bandai agreed to distribute Mattel products like Barbie dolls in Japan while Mattel agreed to distribute Power Rangers in Latin America. What type of alliance is this an example of?
A) production
B) marketing
C) financial
D) research and development
Q4) How does the party secretary of the Chinese Communist Party affect the management of joint ventures between MNCs and Chinese firms?
Q5) What are the various forms that strategic alliances can take? What are the benefits of strategic alliances?
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Chapter 14: International Organization Design and Control
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Sample Questions
Q1) Area knowledge refers to the idea that managers must ________.
A) understand the cultural, commercial, social, and economic conditions in each host country in which the firm does business
B) be aware of the competitive forces that have implications for global strategy in each market
C) comprehend features such as technological trends, customers needs, and competitive forces affecting the goods the firm produces
D) have access to coworkers with expertise in basic business functions such as production, marketing, finance, accounting, human resources management, and information technology
Q2) The global matrix design is most appropriate for firms that operate in stable environments.
A)True
B)False
Q3) The corollary approach is the final evolution a firm takes to become a global organization.
A)True
B)False
Q4) What elements of performance are relatively easy to measure?
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Chapter 15: Leadership and Employee Behavior in International Business
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Sample Questions
Q1) Satisfied employees tend to be absent less often, make positive contributions, and stay with the organization.
A)True
B)False
Q2) Which of the following refers to what an individual must have or wants to have?
A) beliefs
B) goals
C) needs
D) values
Q3) Discussion concerning the extent to which personality attributes are shaped by the social and cultural environment in which people are raised is commonly called the ________.
A) nurture argument
B) nature argument
C) culture factor
D) biological argument
Q4) What is the difference between an internal and external locus of control? How would this affect employers and employees?
Q5) What is a group? Is it different from a team?
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Chapter 16: International Marketing
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Sample Questions
Q1) Under a ________ price policy, the firm sets one price for all its domestic sales and a second price for all its international sales.
A) standard
B) two-tiered
C) market
D) global
Q2) The ethnocentric approach to standardization versus customization is the most difficult to achieve.
A)True
B)False
Q3) The ________ is the communication channel used by the advertiser to convey a message.
A) medium
B) message
C) copy
D) graphic
Q4) Product is the most culture bound of the four Ps.
A)True
B)False
Q5) Why is the polycentric approach more costly for the firm?
Page 18
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Chapter 17: International Operations Management
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Sample Questions
Q1) Explain benchmarking.
Q2) Firms that have little vertical integration typically make the inputs necessary for manufacturing.
A)True
B)False
Q3) The management of the flow of materials, parts, supplies, and other resources from suppliers to the firm combined with the flow of materials, parts, supplies, and other resources within and between units of the firm itself is called ________.
A) international logistics
B) materials management
C) operations management
D) customized logistics
Q4) What are the guidelines that provide the basis for quality certification called?
A) WTO standards
B) ISO 1000
C) ISO 9000:2000
D) TQM standards
Q5) How does a product's value-to-weight ratio influence the production location decision?
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Chapter 18: International Financial Management
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Sample Questions
Q1) If exchange rates were fixed, translation exposure would not exist.
A)True
B)False
Q2) Financial managers at Parker Computers, an MNC, want to decrease the tariffs paid on components imported from Parker's subsidiaries. Which of the following would most likely accomplish this goal?
A) increasing the internal rate of return offered by the subsidiaries
B) lowering the transfer price charged by the subsidiaries
C) engaging in currency swaps with the subsidiaries
D) raising the transfer prices paid by the subsidiaries
Q3) Which currency do exporters typically prefer to use in transactions?
A) U.S. dollars
B) Japanese yen
C) home country currency
D) host country currency
Q4) What are the three corporate financial goals involved in managing working capital?
Q5) The benefit of a firm going naked is making no capital outlays.
A)True
B)False
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Chapter 19: International Human Resource Management and Labor Relations
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Sample Questions
Q1) Samsung tends to follow an ethnocentric staffing model. From which group will it most likely hire for upper-level management positions?
A) parent country nationals
B) host country nationals
C) third country nationals
D) primary country nationals
Q2) Which type of manager would most likely be employed to promote a global outlook through the firm's operations?
A) parent country national
B) host country national
C) third country national
D) home country national
Q3) Group-oriented cultures emphasize training and motivating the group and place less emphasis on individual efforts.
A)True
B)False
Q4) How are experienced managers recruited by international businesses? What skills in younger managers are attractive to international firms seeking to fill future international assignments?
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