AGB 302 final

Interdependent political, economic, and legal systems of a country make up its:

political economy.

Modern socialism has been popularized largely through the work of ________.

Karl Marx

1) In several Western democracies, the poor performance of state-owned enterprises, because of protection from competition and guaranteed government financial support, led to ________.

privatization

1) The tenet of ________ is that the welfare of society is best served by letting people pursue their own economic self-interest.

) individualism

In a pure market economy

production is determined by the interaction of supply and demand

1) In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.

mixed

Which of the following statements about the legal systems of countries is true?

They can affect the attractiveness of a country as an investment site or market

1) Under the ________, cases are judged with reference to three characteristics: tradition, precedent, and custom.

) common law system

1) Which of the following areas of international trade is regulated by the Foreign Corrupt Practices Act?

Preventing bribery and unethical acts in the conduct of international business.

1) Design and names by which merchants or manufacturers designate and differentiate their products are known as ________.

) trademarks

1) One of the reasons for the spread of democracy is the emergence of ________ who have pushed for democratic reforms.

A) increasingly prosperous middle and working classes

1) Anecdotal comparisons suggest that the assertion that nations that invest more in

________ will have higher growth rates is true.

B) education

1) Several of the fastest-growing Asian economies adopted more ________ governments during the past three decades, including South Korea and Taiwan.

D) democratic

1) Which of the following helps in adjusting GNI such that it accounts for the differences in the cost of living?

A) Purchasing power parity (PPP) adjustment

1) Which of the following is a measure that is developed by the United Nations to measure the quality of life in different nations?

Human Development Index

1) ________, a Nobel Prize-winning economist, has argued that development is not just an economic process, but it is a political one as well.

Amartya Sen

A market economy encourages innovation because

economic freedom leads to greater incentives for innovation

1) The state can expropriate the profits from innovation through legal means, such as

________.

excessive taxation

1) A free market economy in which property rights are protected leads to subsequent economic growth, which often leads to the establishment of:

a democratic regime.

1) Which of the following is a step in the shift toward a market-based economic system?

Creation of a legal system to safeguard property rights

1) A Japanese executive's ritual of presenting a business card to a foreign business executive is an example of .

folkways

1) Which of the following statements about values and norms of a culture is true?

A) The values and norms of a society influence social structure.

1) Which of the following is a consequence of the emphasis on individual performance in many Western societies?

A) High degree of managerial mobility

1) Which of the following is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime?

Caste system

1) Which of the following statements is true about a class system?

A) Social mobility within a class system varies from society to society.

1) Ethical systems are:

A) a set of moral principles, or values, that are used to guide and shape behavior.

1) Which of the following sociologists made a connection between Protestant ethics and "the spirit of capitalism"?

) Max Weber

1) According to Islam, those who hold property are regarded as .

trustees

1) There are three values central to the Confucian system of ethics that have very important economic implications. Which of the following is one of these?

rule based law

1) For international businesses, the connection between culture and competitive advantage is important because:

A) a strong connection is likely to produce the most viable competitors.

1) Companies can strengthen the of employees by committing themselves to not retaliate against employees who complain about unethical actions.

moral courage

1) A firm's include customers, suppliers, and lenders.

external stakeholders

1) The approaches to ethics hold that the moral worth of actions or practices is determined by their consequences.

utilitarian

1) The occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation.

D) tragedy of the commons

1) The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:

A) facilitating payments made to expedite routine government action.

1) A situation in which none of the available alternatives seems morally acceptable is called:

) an ethical dilemma.

1) Which of the following refers to the values and norms that the employees of an organization share?

organization culture

1) According to the Friedman doctrine:

A) businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

1) Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?

Cultural relativism

1) The righteous moralist suggests that:

A) a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

1) ________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country.

B) Free trade

2) ________ argued that countries should specialize in the production of goods for which they have an absolute advantage.

B) Adam Smith

3) The theory of comparative advantage suggests that trade is a ________ game in which all countries that participate realize economic gains.

C) positive-sum

4) The ________ argues that a large proportion of the world's new products had been developed by U.S. firms.

A) product life-cycle theory

5) ________ are unit cost reductions associated with a large scale of output.

A) Economies of scale

6) Which of the following refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country?

D) Free trade

7) David Ricardo's theory of comparative advantage explains global trade in terms of the:

D) international differences in labor productivity.

8) Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

C) New trade theory

9) A country has an absolute advantage in the production of a product when it:

D) is more efficient than any other country in producing it.

10) According to Ricardo's theory of comparative advantage, a country should produce goods:

D) that it produces most efficiently.

11) ________ are levied as a proportion of the value of the imported good.

A) Specific tariffs

12) A(n) ________ helps domestic producers to compete against foreign imports.

B) import quota

13) A company that sells its product in a foreign market below the cost of production may be accused of

B) dumping

14) According to the infant industry argument, many developing countries have a potential ________ in manufacturing, but new manufacturing industries cannot initially compete with established industries in developed countries.

C) comparative advantage

15) Strategic trade policy suggests that a government should use ________ to support promising firms that are active in newly emerging industries.

D) subsidies

16) Krugman has suggested that trade policy designed to retaliate against another country's trade policy would:

B) hurt the citizens of both countries.

17) A key issue in the "millennium round" of the WTO was to:

B) further reduce barriers to cross-border trade and investment.

18) WTO rules allow countries to ________ foreign goods that are being sold cheaper than at home, or below their cost of production, even when domestic producers can show that they are being harmed.

B) place countervailing duties on

19) Inadequate protections for intellectual property:

C) reduce the incentive for innovation.

20) Many firms, of all national origins, increasingly depend on ________ for their competitive advantage.

D) globally dispersed production systems

1) A Japanese car manufacturer acquires an Italian producer of car tires. This is an example of a(n) ________.

B) acquisition

2) Developing nations currently account for ________ of FDI in the form of cross-border mergers and acquisitions.

C) about one-third or less

3) The largest source country for FDI has been ________.

A) the United States

4) ________ gives a firm tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability.

A) Foreign direct investment

5) ________ argues that FDI is a benefit to both the source country and to the host country.

A) The free market view

6) An aspect of ________ is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.

A) pragmatic nationalism

7) Recent years have seen a ________ in the number of countries that adhere to a radical ideology regarding FDI.

D) marked decline

8) The two most common methods of restricting inward FDI are ownership restraints and __

D) performance requirements

9) Which of the following is an example of a greenfield investment?

C) A Chinese sugar maker setting up a sugar crushing facility in Cuba.

10) Which of the following factors has made the United States an attractive target for foreign direct investment?

B) Its wealthy domestic markets

11) ________ perform a direct connection function in capital markets.

D) Investment banks

12) A(n) ________ requires a corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit it is making.

D) debt loan

13) The cost of capital is:

D) higher in a purely domestic capital market than in a global market.

14) ________ refers to the movements in a stock portfolio's value that are attributable to macroeconomic forces affecting all firms in an economy.

A) Systematic risk

15) An integrated international capital market is ________ compared to a nonintegrated market.

B) highly volatile

16) ________ deposits are regulated in most industrialized countries.

C) Domestic currency

17) Investors who purchase a fixed-rate bond receive:

C) a fixed set of cash payoffs.

18) Borrowers can hedge against foreign exchange risks by entering into a ________ contract.

C) forward

19) A ________ brings together those who want to invest money and those who want to borrow money.

B) capital market

20) Market makers are:

B) financial service companies that connect investors and borrowers.

The movement toward regional economic integration been most successful in ________.

Africa

A(n) ________ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members.

common market

A(n) ________ entails even closer economic integration and cooperation than a common market.

economic union

Linking neighboring countries economically and making them interdependent:

creates incentives to increase political cooperation as well.

The ________ is primarily a consultative rather than legislative body.

European Parliament

Three long-term EU members, Great Britain, ________, and Sweden, have not adopted the euro.

Denmark

The ________ was established to increase multinational cooperation in view of the economic rise of the Pacific nations and the growing interdependence within the region.

Asia-Pacific Economic Cooperation

The emerging role of the ________ in competition policy suggests the EU is increasingly willing and able to intervene and impose conditions on companies proposing mergers and acquisitions.

European Commission

Country X and Country Y reach an agreement to boost bilateral trade. They agree to remove all barriers to the trade of goods and services. They, however, are free to determine their own trade policies with regard to nonmembers. Which level of economic integration is this an example of?

A Free trade area

Which feature of a common market differentiates it from a customs union?

Ability of factors of production to move freely between members

Assuming the 30-day forward exchange rate was $1 = ×130 and the spot exchange rate was $1 = ×120, the dollar is selling at a ________ on the 30-day forward market.

discount

Which of the following refers to the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates?

Currency swap

________ are exchange rates governing some specific future date foreign exchange transactions.

Forward exchange rates

Assume that the current exchange rate is 1 = $1.50. If you exchange 1,000 euros for dollars, you will receive ________.

$1,500

The ________ is the rate at which a foreign exchange dealer converts one currency into another currency on a particular day.

spot exchange rate

The short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates is known as:

currency speculation.

Assume that an American company today invests some of its spare cash in a Hungarian money market account that will earn 8 percent for a period of two months. Which of the following, if it happens during the next two months, would imply that the company will earn less than 8 percent on its investment?

The dollar appreciates against the Hungarian forint.

Which of the following is the most important foreign exchange trading center?

London

If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen?

The dollar will appreciate against the yen

Assume that the law of one price holds. A shirt that retails for $120 in New York sells for £60 in London. The exchange rate between the British pound and the dollar is £1 = $1.50. Assuming away transportation costs and trade barriers, this creates a profit-making opportunity called ________.

arbitrage