International Trade
Mock Exam
Course Introduction
International Trade explores the fundamental theories, policies, and dynamics governing the exchange of goods, services, and capital across national borders. The course examines key models of trade, such as comparative advantage and the Heckscher-Ohlin framework, and assesses the impact of trade barriers, tariffs, and quotas. Students analyze the roles of international institutions, including the World Trade Organization, and consider the economic, social, and political implications of globalization. Topics also include the effects of trade on economic development, income distribution, and the environment, equipping students with a robust understanding of contemporary issues in the global marketplace.
Recommended Textbook
International Business The Challenge of Global Competition 13th Edition by Donald Ball\
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Chapter 1: The Challenging World of International Business
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Q1) According to opponents of the globalization of trade and investment:
A) globalization has produced uneven results across nations and people.
B) globalization has had harmful effects on labor and labor standards.
C) globalization has contributed to a decline in environmental and health conditions.
D) all of the above.
E) two of A, B, and C.
Answer: D
Q2) A multidomestic company is:
A) none of B, C, D, orE
B) a business whose activities involve crossing national borders.
C) the domestic operations within a foreign country.
D) an organization with multicountry affiliates.
E) an organization that attempts to standardize operations worldwide.
Answer: D
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Chapter 2: International Trade and Foreign Direct Investment
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Q1) Regarding foreign investment:
A) it can be divided into three components: international trade, portfolio investment, and direct investment.
B) portfolio investment involves investors who participate in the management of the firm in addition to receiving a return on their money.
C) deals that result in the foreign investor's obtaining at least 10 percent of the shareholdings are classified as portfolio investments.
D) two of A, B, and C.
E) none of A, B, and C.
Answer: E
Q2) If a Chinese worker earns $1 a day, then goods produced by this worker will cost less than the same goods produced by an American earning $18 an hour.
A)True
B)False
Answer: False
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Chapter 3: International Institutions From an International Business Perspective
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Q1) Although the EU can influence the practices of businesses located in non-EU-member countries, Microsoft has been able to maintain business in the EU much as it conducts business in the United States.
A)True
B)False
Answer: False
Q2) The Chinese concept of guanxi is an example of:
A) an informal, cognitive institution.
B) a regulative, formal institution.
C) a favorite cooking method of Chairman Mao.
D) taken-for-granted approaches to friendship relations.
Answer: A
Q3) Which country does not belong to the OECD?
A) Belgium
B) France
C) Japan
D) China
Answer: D
Page 5
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Chapter 4: Sociocultural Forces
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Q1) Trompenaars' particularist dimension describes a culture in which:
A)people apply the rules equally to everyone.
B)context is considered when rules are applied.
C)relationships rather than rules regulate behaviors.
D) B and C.
Q2) Culture includes everything objective, and religion contains values and is thus not a part of culture.
A)True
B)False
Q3) Individualism-collectivism measures:
A) the degree to which people in the culture are integrated into groups.
B) the tendency to differentiate male roles.
C) the degree to which social inequality is tolerated.
D) A and B
Q4) Referring to Hall's high-and low-context framework, in a high-context culture,
A) communication is explicit.
B) the context carries much of the communication.
C) communication is direct and focused on the topic.
D) the context is irrelevant.
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Chapter 5: Natural Resources and Environmental Sustainability
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Q1) The stakeholder model requires businesses to think about:
A) the stakeholders' interest in profitability.
B) the network of tensions caused by competing demands.
C) strategy in light of sustainability.
D) the frequency of social issues faced by the stakeholders.
Q2) Through 2035, fossil fuels are expected to remain the world's dominant energy source.
A)True
B)False
Q3) Deserts and tropical forests seem opposites, but they have this trait in common:
A) they are good vacation spots, and thus an economic stimulator.
B) they have small populations on their edges.
C) they separate markets, increasing transportation costs.
D) they are hospitable to insects.
Q4) Wind power is sourced:
A) on land only.
B) on land and sea.
C) where altitudes permit.
D) in the Swiss Alps.
Page 7
Q5) Explain the concept of sustainability as applied to business, using examples.
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Chapter 6: Political and Trade Forces
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Q1) Nuisance tariffs require importers to go through the administrative paperwork connected to paying tariffs, even though the payment itself might be quite small.
A)True
B)False
Q2) Subsidies from the United States to its sugar industry have been critical in helping to prevent a loss of jobs from American companies that are high users of sugar.
A)True
B)False
Q3) The national defense argument for trade restrictions suggests that some industries, even if they are not competitive, need protection from imports.
A)True
B)False
Q4) Country risks are increasingly political in nature.
A)True
B)False
Q5) The owners of private companies sometimes complain that government-owned companies have unfair advantages. Discuss some of these complaints.
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Page 8
Chapter 7: Intellectual Property and Other Legal Forces
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Q1) Although arbitration procedures may be confidential, enabling a company to avoid unwelcome publicity accompanying an open court case, arbitration is generally slower than law courts.
A)True
B)False
Q2) The Foreign Corrupt Practices Act (FCPA) clearly stipulates terminology and behavior that is illegal on the part of U.S. businesses and of foreign businesses operating in the United States
A)True
B)False
Q3) Customary international law draws on practices that have been followed often for centuries.
A)True
B)False
Q4) If you are a Westerner and become victim of a miscellaneous law in a foreign country, all you have to do is call your embassy and you'll be released to your government.
A)True
B)False
Q5) How are antitrust laws enforced?
Page 9
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Chapter 8: The International Monetary System and Financial Forces
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Q1) Arbitrage functions to:
A) provide French markets access to other EU markets.
B) exploit price differences between markets, so as to profit with no risk.
C) create wealth through interest rate swaps.
D) create increased trading in commodity markets.
Q2) Taxation is a financial force in that:
A) if the firm can achieve a lower tax burden than its competitors, it can generate higher revenues and then lower its prices or pay higher wages and dividends.
B) governments, which enact taxes, are formal institutions that enforce tax law via force.
C) businesses are compelled by foreign governments to pay taxes.
D) it is not controlled by the firm.
Q3) Exchange rate forecasting is an advanced science; with the correct data, we can predict with accuracy exchange rate movements.
A)True
B)False
Q4) The Bretton Woods system worked until the late 1960s.
A)True
B)False
Page 10
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Chapter 9: International Competitive Strategy
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Q1) Scenario planning helps to emphasize that the business environment is predictable and helps to emphasize the application of traditional perspectives when solving problems.
A)True
B)False
Q2) The goal of international strategy is to achieve and maintain a unique and valuable competitive position both within a nation and globally, a position that has been termed comparative advantage.
A)True
B)False
Q3) Due to developments such as a rapid rise in the level of uncertainty in many areas of international business, many firms have moved toward more structured strategic planning formats and longer planning documents.
A)True
B)False
Q4) Compare and contrast home replication, global, multidomestic, and transnational strategies.
Q5) Explain the purpose of a mission statement, a vision statement, values statements, and objectives.
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Chapter 10: Organizational Design and Control
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Q1) Organizational structure:
A) refers to the way that an organization formally arranges its various domestic and international units and activities and the relationships among these organizational components.
B) helps to determine where formal power and authority will be located within the organization.
C) is primarily created and evolved by senior management.
D) all of the above.
E) two of A, B, and C.
Q2) A structure organized by more than one dimension at the top level is a matrix organization.
A)True
B)False
Q3) The product global corporate form eliminates the duplication of product and area specialists.
A)True
B)False
Q4) What are the four primary dimensions that need to be considered when designing the structure of an international company, and why are they important?
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Chapter 11: Global Leadership Issues and Practices
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Q1) This chapter discusses building a corporate global mindset. What can you do to build an individual global mindset?
Q2) What are the differences between traditional and global teams?
Q3) Global leaders confront more complex contexts than do domestic leaders.
A)True
B)False
Q4) Virtual communication is more effective than face-to-face communication.
A)True
B)False
Q5) Egocentric ruthlessness is a leadership trait admired in some cultures, as suggested by Project GLOBE.
A)True
B)False
Q6) Dalton suggests that moral reasoning is a skill:
A) not needed by global leaders.
B) that belongs in the legal arena, not the business arena.
C) needed by global leaders to confront ethical dilemmas.
D) included in the concept of complexity.
E) needed by global managers who implement, not leaders.
Page 13
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Chapter 12: Assessing International Markets
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Q1) Environmental scanning is mostly used:
A) during the planning process.
B) to gather information on market weaknesses.
C) to obtain information on opportunities and threats.
D) all of the above.
E) A and C.
Q2) Social desirability bias can be seen as a cultural problem when conducting market research.
A)True
B)False
Q3) The Internet may eventually allow any firm to have the opportunity to conduct surveys anywhere in the world.
A)True
B)False
Q4) A low level of literacy in a country makes the use of mail questionnaires more appropriate for market research.
A)True
B)False
Q5) Discuss why imports do not completely measure market potential.
Q6) Discuss cluster analysis as a method of estimating market demand.
Page 14
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Chapter 13: Entry Modes
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Q1) According to a 12-country study conducted by Ernst & Young, _____ percent of U.S. companies are engaged in some form of strategic alliance.
A) 25
B) 50
C) 65
D) 75
E) 90
Q2) It is not possible for foreign investors to control a joint venture if the host country's law prevents foreign investors from having more than 49 percent ownership.
A)True
B)False
Q3) Some evidence suggests that pioneers gain and maintain a competitive advantage in new markets.
A)True
B)False
Q4) What are the reasons that firms, both small and large, may engage in exporting?
Q5) Exports can help to offset cyclical sales in a firm's domestic market.
A)True
B)False
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Chapter 14: Export and Import Practices
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Q1) A disadvantage for companies that insist on less risky transactions, such as a letter of credit, is that they may be losing business to competitors that sell on open accounts.
A)True
B)False
Q2) Incoterms are developed and maintained by:
A) the U.S. Chamber of Commerce.
B) the International Chamber of Commerce.
C) the WTO.
D) the UN.
E) a committee of major global companies.
Q3) One of the most common mistakes made by new exporters is not getting advice.
A)True
B)False
Q4) In a DAP (delivered at named place), the seller assumes risk when the goods leave the seller's factory or warehouse.
A)True
B)False
Q5) How do U.S. nonexporting firms often explain their avoidance of foreign markets?
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Chapter 15: Marketing Internationally
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Q1) Of all the promotional mix elements, __________ is the one with the greatest similarities worldwide.
A) public relations
B) personal selling
C) advertising
D) sales promotion
E) none of the above
Q2) Private brands are responsible for a shift in power from manufacturers to retailers.
A)True
B)False
Q3) The various methods of communicating with the firm's publics to secure a favorable impression are:
A) advertising.
B) promotion.
C) public relations.
D) marketing.
E) none of the above.
Q4) Discuss the programmed-management approach to advertising strategy.
Q5) Why is it often impossible to standardize the marketing mix worldwide?
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Chapter 16: Global Operations and Supply Chain Management
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Q1) According to the text, the process of coordinating and integrating the flow of materials, information, finances, and services within and among companies in the value chain is called operations management.
A)True
B)False
Q2) Activities that are involved in producing a company's products and services and how these activities are linked together are often referred to as:
A) value chains.
B) supply chains.
C) organization design.
D) operations management.
E) none of the above.
Q3) When production equipment is similar, home office control of quality in foreign affiliates is more difficult because management must ensure that all plants adhere to the same standard.
A)True
B)False
Q4) What are the benefits of standardization of global operations?
Page 18
Q5) Discuss the problems associated with global sourcing.
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Chapter 17: Managing Human Resources in an International Context
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Q1) If a company feels that it probably will send parent-country nationals abroad, it will frequently encourage them to study the language and culture of the country to which they are going.
A)True
B)False
Q2) In two-career families, when one spouse accepts a foreign assignment and the other spouse goes along, that other spouse is referred to as a trailing spouse.
A)True
B)False
Q3) For expatriate employees, the salary portion of the compensation package is:
A) usually higher than that for employees at the same level in the home company.
B) usually lower than that for employees at the same level in the home company.
C) usually within the range of that for the employees at the same level in the home company.
D) usually on a separate, expatriate schedule.
E) none of the above.
Q4) Being from another country qualifies expatriates for international status.
A)True
B)False
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Chapter 18: International Accounting and Financial Management
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Q1) What is a controlled foreign corporation?
A) A foreign company with one major stockholder in a foreign country
B) A subsidiary with the parent company having at least 50 percent ownership and control
C) An FDI in which foreign owners own the corporation fully
D) A centralized structure for foreign ownership
Q2) Discuss the risks associated with transaction exposure and how to hedge them.
Q3) In his book Cannibals with Forks, John Elkington puts forward the argument that:
A) capitalism can become civilized.
B) capitalism is not, by its very nature, uncivilized and destructive of natural resources.
C) natural resources are a God-given gift for mankind to use.
D) developing nations will become more competitive with Western nations.
Q4) Many corporations do not hedge translation exposure.
A)True
B)False
Q5) Operating in more than five local currencies is unusual for the international firm.
A)True
B)False
Page 20
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