International Trade Exam Materials
Course Introduction
International Trade explores the fundamental theories, policies, and real-world practices that govern the exchange of goods and services across national boundaries. The course delves into concepts such as comparative advantage, trade patterns, and the impacts of globalization, while examining the roles of international organizations, tariffs, quotas, and regulatory environments. Students will analyze the economic, political, and social effects of trade on both developed and developing countries, gaining insights into trade agreements, current global trends, and the emerging challenges in a rapidly evolving economic landscape.
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International Business 15th Edition by John Daniels
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Page 2
Chapter 1: Globalization and International Business
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Q1) In terms of international business,it is most accurate to say that ________.
A) there is a universal "best way" to conduct business
B) global competition affects large companies but not small ones
C) most firms depend either on foreign markets and supplies or compete against companies that do
D) government regulation of international business has little effect on a company's profits
Answer: C
Q2) The process of shifting production from a domestic to a foreign location is best known as ________.
A) offshoring
B) outsourcing
C) licensing
D) joint venturing
Answer: A
Q3) The ownership of foreign bonds is an example of a portfolio investment.
A)True
B)False
Answer: True
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Page 3
Chapter 2: The Cultural Environments Facing Business
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Q1) In societies where trust is high,there tends to be a lower cost of doing business.
A)True
B)False
Answer: True
Q2) The term "cultural distance" refers to the ________.
A) physical space between people during communication
B) time it takes people to adjust to the language, traditions, and norms of a foreign culture
C) degree to which countries differ on cultural dimensions
D) preferred relationship between superiors and subordinates in a given culture
Answer: C
Q3) The specific learned norms based on attitudes,values,and beliefs of a group of people are known as ethnology.
A)True
B)False
Answer: False
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Chapter 3: The Political and Legal Environments Facing Business
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Q1) In a brief essay,describe the political and legal systems in China and their effect on MNEs doing business in China.
Answer: China applies state capitalism whereby the government manipulates market activities to achieve political goals.Consequently,MNEs doing business in China often find themselves at a disadvantage.Incorporating in China requires telling the government-in excruciating detail-who you are,what you want to do,how you plan to do it,how much you intend to invest,and how many jobs you will create.China's political and legal systems impose many time-consuming tasks on MNEs.Moreover,China tends to stack the odds against foreigners who are bold enough to forge ahead in the face of an elaborate government bureaucracy and a fledgling legal system.
Q2) In a totalitarian political system,________.
A) political power resides with the citizens of the country
B) governments direct most economic activity but few social ones
C) an individualistic outlook shapes political debate and policy formation
D) one agent monopolizes political power
Answer: D
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Chapter 4: The Economic Environments Facing Businesses
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Q1) What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist?
A) difficulties of identifying a definitive set of predictive economic indicators
B) a lack of reliable economic data from most developed economies
C) the isolation of most markets from each other
D) static nature of the marketplace
Q2) The ________ starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality,population health,livelihood security,equity,free time,and educational attainment.
A) Gross National Index
B) Net National Product
C) Genuine Progress Indicator
D) Human Development Index
Q3) There is a positive correlation between economic freedom and economic growth.
A)True
B)False
Q4) What issues complicate international economic analysis?
Q5) What is inflation? How does inflation affect international business?
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Chapter 5: International Trade and Factor-Mobility Theory
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Q1) Under mercantilism,colonial powers sought to run trade surpluses with their colonies by preventing the colonies from manufacturing.
A)True
B)False
Q2) Trade occurs more between culturally dissimilar countries than between culturally similar countries.
A)True
B)False
Q3) From an economic standpoint,why do production factors move from one country to another? How does factor movement affect international trade?
Q4) Neomercantilism describes the approach of countries that try to run a favorable balance of trade to ________.
A) build up gold reserves
B) achieve a social or political objective
C) lower their rates of inflation
D) buy raw materials more cheaply
Q5) In a short essay,discuss the four stages of the international product life cycle.
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Chapter 6: Governmental Influence on Trade
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Q1) Tied aid requires a recipient to ________.
A) donate a portion of the funds to the donor country's infrastructure needs
B) use the capital in any way as long as donor country approval is granted
C) employ local workers in management positions
D) spend the funds in the donor country
Q2) The relationship between import substitution policies and export-led development policies is best characterized by which of the following?
A) Import-substitution policies are more likely to lead to production of mature products, whereas export-led development policies result in production of growth products.
B) The two are hard to distinguish because production under import substitution may eventually be exported.
C) Production under import substitution policies, as opposed to export-led development policies, is more likely to be located in urban areas.
D) Production under import substitution policies, as opposed to export-led development policies, is likely to be more labor-intensive.
Q3) Explain the rationale for and problems with making the infant-industry argument work as intended.
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8
Chapter 7: Cross-National Cooperation and Agreements
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Q1) According to regional content rules,at least ________ of the net cost of most products must come from the NAFTA region in order to get access to the tariff reductions of NAFTA.
A) 62.5%
B) 50%
C) 45%
D) 40.5%
Q2) The ________ is the common currency of the European Union.
A) franc
B) pound
C) euro
D) mark
Q3) Most trade groups contain countries in the same area of the world,even though neighboring countries usually lack a common history and interests.
A)True
B)False
Q4) What is the difference between a free trade agreement and a customs union? Provide examples of each in your answer.
Q5) What has been the impact of NAFTA on trade and employment in NAFTA nations?
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Chapter 8: Global Foreign-Exchange Markets
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Q1) The bid is the price at which the trader is willing to sell foreign currency.
A)True
B)False
Q2) What are the two major segments of the foreign-exchange market? What types of foreign-exchange instruments are traded within these markets?
Q3) The relationship between the value of the Brazilian and Chinese currencies is known as the ________.
A) stock price
B) exchange rate
C) foreign-exchange market
D) purchasing power parity
Q4) What is currency speculation? Why is it risky?
Q5) An investor sells Japanese yen which is yielding a low interest rate and uses the proceeds to buy Swiss francs that yield a higher interest rate.Which term best describes the investor's actions?
A) forward discount spread
B) interbank transaction
C) strike price option
D) carry trade
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Chapter 9: The Determination of Exchange Rates
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Q1) The IMF uses the quota system to determine how much a country may borrow from the Fund.
A)True
B)False
Q2) The primary result of the Jamaica Agreement was to ________.
A) allow greater exchange-rate flexibility
B) set austerity measures for debt control
C) establish a system based on par values
D) implement fixed exchange rates
Q3) In order to join the IMF,a country must contribute a certain sum of money,called a
A) special drawing right
B) trade balance
C) monetary reserve
D) quota
Q4) The IMF's primary role is to identify exchange rate regimes.
A)True
B)False
Q5) What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?
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Chapter 10: Global Capital Markets
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Q1) Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the ________.
A) accounting function of the firm
B) external auditors
C) CFO
D) financial marketing manager
Q2) Tax law variations around the world affect an MNE's capital budgeting,financing,and method of setting transfer prices.
A)True
B)False
Q3) According to U.S.tax law,if a foreign subsidiary earns income,________.
A) its income is immediately taxable to the parent, irrespective of the type of income earned
B) that income is not taxable to the parent company as long as the subsidiary pays income taxes in the country where it is earned
C) passive income is taxable to the parent unless the parent company is a controlled foreign corporation
D) active income is taxable to the parent when it is remitted as a dividend
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12
Chapter 11: Globalization and Society
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Q1) A 1998 U.S.law that outlaws bribery payments by U.S.firms to foreign government officials is known as the ________.
A) Anti-Bribery Act of 2004
B) Foreign Corrupt Practices Act
C) Zero Tolerance Initiative
D) Sarbanes-Oxley Act
Q2) An internal code of conduct is a set of guidelines,recommendations,and rules issued by entities within society but outside the firm with the intent of affecting the behavior of international business entities in order to enhance corporate responsibility.
A)True
B)False
Q3) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as sustainability.
A)True
B)False
Q4) )What types of payments are legal and illegal under the Foreign Corrupt Practices Act (FCPA)of the United States? Provide an example.
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13
Chapter 12: The Strategy of International Business
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Q1) A company's value chain is best described as the ________.
A) variable sequence of converting product ideas into value for shareholders
B) mixture of activities taken to define product value standards and price points
C) discrete series of steps taken to move a product from conception to end-users
D) blueprint that must be followed to leverage the core capabilities of a global firm
Q2) A disadvantage of the ________ strategy is that firms that adopt this strategy can decentralize too much autonomy to national subsidiaries.
A) multidomestic
B) continental
C) international
D) transnational
Q3) In a brief essay,discuss the strategy used by Zara,the firm described in the opening case.Also discuss the features of Zara's value chain.
Q4) What are core competencies? How do firms that adopt an international strategy utilize their core competencies? How do firms that adopt a transnational strategy utilize their core competencies?
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Page 14
Chapter 13: Country Evaluation and Selection
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Q1) Which of the following reasons most compels companies to make location decisions on one international opportunity at a time rather than comparing among two or more?
A) The lack of comparability in data among countries renders comparison unfeasible.
B) The information on some countries is so unreliable that companies must deal with these countries separately.
C) Decisions are made by teams, and it is usually not feasible to give so many people time away from their usual duties to examine multiple proposals.
D) If an important customer develops opportunities in a foreign country, a company may have little alternative except to follow that customer's lead.
Q2) Why do companies often treat foreign reinvestment decisions differently than new foreign investment decisions?
Q3) Comparability of economic information among countries is hampered by countries' use of different definitions for similar terms.
A)True
B)False
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15
Chapter 14: Export and Import
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Q1) Which of the following is NOT one of the three main types of importers?
A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the lowest possible price
D) importers using foreign sourcing to optimize their supply chains
Q2) The CEO of Coffman Enterprises wants to export products to foreign markets.However,top executives at Coffman are concerned that the firm will face fierce competition from foreign rivals because Coffman lacks significant core competencies.The executives are most likely worried that Coffman lacks ________.
A) capital advantages
B) internalization advantages
C) location advantages
D) ownership advantages
Q3) Export intensity,the percentage of total revenues coming from exports,is not always correlated with company size.
A)True
B)False
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Page 16
Chapter 15: Direct Investment and Collaborative Strategies
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Q1) When a large company and a small company enter a collaborative arrangement,________.
A) the large company is expected to contribute more to the arrangement
B) the large company is likely to be more active in the venture
C) the small company is more likely to view the collaboration's expansion as competition to itself
D) the small company is likely to be disadvantaged if legal action is necessary to solve a dispute
Q2) Explain how franchising agreements differ from licensing agreements.
Q3) Tom,a manager at an MNE,has been given the task of identifying a pool of companies with which the firm might form collaborative arrangements.Which of the following activities would be LEAST useful for Tom?
A) attending technical conferences
B) monitoring industry journals
C) attending trade fairs
D) constructing turnkey facilities
Q4) What is the difference between licensing and cross-licensing? What factors do firms need to consider before entering into licensing agreements?
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Chapter 16: The Organization of International Business
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Q1) Martin Manufacturing is an MNE that centralizes authority to implement an extensive set of rules and procedures to govern a broad range of activities.Martin Manufacturing is most likely applying a system of ________.
A) market control
B) adjustment control
C) bureaucratic control
D) clan control
Q2) A hyperarchy is ________.
A) a form of structure with precise superior and subordinate relationships
B) a form of structure that relies on extensive centralization
C) a large-scale, self-organizing community
D) analogous to a hierarchy
Q3) MNEs typically design their control systems in terms of either market control,bureaucratic control,or adaptation control.
A)True
B)False
Q4) Why do you think corporate universities are becoming more popular among MNEs? How do both MNEs and employees benefit from corporate universities?
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Chapter 17: Marketing Globally
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Q1) Executives at Apex decided to use a production orientation in the firm's international marketing efforts.Which of the following statements best supports this decision?
A) Top management at Apex is committed to the concept of social responsibility.
B) Apex is willing to alter its products to fit mass-market needs in foreign countries offering growth potential.
C) Apex will produce in each country where it sells.
D) Apex will aim sales at foreign-market segments that resemble segments to which it aims domestically.
Q2) All of the following are true about distribution concerns when marketing internationally EXCEPT which one?
A) Geographic barriers may divide countries into very distinct markets.
B) In some countries, few potential sales lie outside the large metropolitan areas.
C) Each country has its own distribution system, making standardization of distribution difficult.
D) Because most foreign consumers are easily presold by advertising messages, it is difficult to convince retailers to offer good service.
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Chapter 18: Global Manufacturing and Supply-Chain Management
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Q1) Centralized manufacturing is most widely used when customers have widely varying localized needs.
A)True
B)False
Q2) How has technology altered supply chain management? Discuss some of the available tools.
Q3) All of the following tend to be more expensive when sourcing abroad,EXCEPT
A) transportation costs
B) inventory holding costs
C) brokers and agents fees
D) labor rates
Q4) A company would most likely outsource abroad in order to gain access to more domestic products.
A)True
B)False
Q5) A company may use outsourcing as an implied threat to underperforming employees.
A)True
B)False
Q6) What are foreign trade zones? How are they used? Page 20
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Page 21
Chapter 19: International Accounting and Finance Issues
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Q1) German companies like Deutsche Bank and Daimler Chrysler have been relatively optimistic and transparent in their financial reporting compared with many Germanic companies because ________.
A) German accounting standards have always been optimistic and transparent
B) they adopted U.S. Generally Accepted Accounting Standards
C) they do not have to adopt International Accounting Standards
D) most of their revenues are from the United States and United Kingdom
Q2) ________ is an approach to performance measurement that closely links the strategic and financial perspectives of a business.
A) Transfer pricing
B) Budget to actual
C) The balanced scorecard
D) Return on investment
Q3) Gavin Pharmaceuticals is a U.S.-based MNE.Which of the following is probably Gavin's most important metric when evaluating the firm's performance?
A) foreign sales
B) market share
C) return on investment
D) sales revenue budget
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Page 22
Chapter 20: International Human Resource Management
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Q1) Watson Electronics,an MNE based in Canada,tends to follow an ethnocentric staffing model.From which group will it most likely hire for upper-level management positions in its new facility in Germany?
A) home-country nationals
B) third-country nationals
C) host-country nationals
D) local citizens
Q2) Companies find it challenging to judge a potential expatriate's adaptability to foreign places,people,and processes.
A)True
B)False
Q3) The past few years have seen fewer females sent on international assignments.
A)True
B)False
Q4) Studies of repatriated employees regularly report that most knew what their company position would be when they returned home but were uncertain about their likely new workplace practices.
A)True
B)False
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