International Business Midterm Quiz Questions

How has globalization enabled corporations to lower their expenses?

By locating manufacturing where the cost of the factors of production is lowest.

In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the Great Depression, pass the Hawley-Smoot Tariff Act, which raised tariffs, in an effort to collect more revenue for the federal government. What were the effects?

Countries began progressively raising trade barriers against each other

________blank occurs when a firm exports goods or services to consumers in another country

International trade

The volume of world merchandise trade and production is growing faster than world GDP. This implies that

more firms are dispersing their production processes to global locations.

What organization was created in 1993/1994, during the Uruguay round of trade talks?

World Trade Organization

How would economists describe the connection between poverty and globalization?

Globalization has improved the lot of the world's poorer nations which has led to an overall decrease in poverty.

Which factor hinders globalization of consumer goods market?

national and cultural differences in tastes and preferences

Which factor has contributed to the globalization of markets?

global convergence of consumer tastes and preferences

Opponents of globalization argue that falling trade barriers...

Allow firms to move production to countries with low wages

Modern socialists trace their intellectual roots to ..., although socialist though clearly predates this individual

Karl Marx

The common law system is

Based on tradition, precedent, and custom

What safeguard do representative democracies use to ensure their elected officials are held responsible for their actions?

An individual's right to freedom of expression, opinion, and peaceable assembly

Systems that emphasize collectivism have a greater tendency to end up in

Totalitarian

In a ___, the state owns all means of production

Mixed economy

Newly privatized entities often have little incentive to restructure their operations to become more efficient when

They continue to receive subsidies from the state.

Which of the following exemplifies privatization?

A country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding

___ per person figures can be misleading because they don't consider differences in the cost of living

Gross national income

Which of the following is true about the economic risks of doing business in a country?

The inflation rate in a country is an indicator of the economic risks of doing business in a country

When _____ is emphasized, an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society."

Collectivism

Who was the author of "The Wealth of Nations?"

Adam Smith

In which economy would the government be most likely to take into state ownership troubled firms whose continued operation is thought to be vital to national interests?

mixed economies TROUB

________blank are established through patents, copyrights, and trademarks.

Ownership rights over intellectual property

Which is an example of intellectual property?

a music score

The role of the government in a market economy involves

encouraging vigorous free and fair competition among private producers.

GNI per capita can be adjusted by ________blank to account for differences in the cost of living

purchasing power

Which of the following is a disadvantage of a high degree of managerial mobility between companies?

Lack of loyalty and commitment to an individual company

The social organization of Western society tends to emphasize on

Individual achievement

Max Weber was a German sociologist who, in 1904, made the connection between ___ and the "spirit of capitalism"

Protestant ethics

A typical American value is an expectation that people have a right to live the way they want. Values are defined as

Ideas about what a group believes to be good, right, and desirable

Which of the following refers to a set of moral principles, or values, that are used to guide and shape behavior?

Ethical system

One may define religion as

Shared beliefs and rituals that are concerned with the realm of the sacred

According to the findings of the World Values Survey:

as countries get richer, there seems to be a shift from survival values to well-being values.

Martina worried a lot about her job, which she chose specifically because it was very structured with clear rules and regulations. She carefully planned her career to maximize job security and retirement benefits. Martina would rate high on which of Hofstede's four dimensions?

uncertainty avoidance MART

What principle or theory argues that it is in a country's best interests to maintain a trade surplus

Principle of mercantilism

According to Hofstede, an employee concerned about job security, career patterns, and retirement benefits would exhibit a high level of

uncertainty avoidance

The practice of "gift-giving" between the parties in a business negotiation is considered right and proper behavior in many Asian cultures, while some Westerners view the practice as a form of bribery. What is this an example of?

cultural relativism

What principle or theory argues that it is in a country's best interests to maintain a trade surplus?

Mercantalism

If the textile industry in a nation is characterized by vigorous domestic rivalry, which observation of this nation's international competency is most likely to be true?

The nation's textile firms will have a competitive advantage in international trade.

Porter argues that a nation's firms should

adopt policies that promote strong competition within domestic markets.

The ___ theory argues that such advanced nations such as the United States have an incentive to develop consumer products and hence such nations tend to produce newer products.

Product life-cycle

Antonio is an artisan. The country he lives in allows him to sell his goods to people in other countries without any quotas or tariffs. Likewise, he is free to buy materials he needs for his craft from other countries without any restrictions. The country in which Antonio lives practices

Free trade

If Porter's theory is correct, we would expect his model to predict the pattern of international trade that we observe in the real world. For example, countries should be

Exporting products from those industries where all four components of the diamond are favorable

In the 1986 Uruguay Round, GATT negotiations extended global trading rules to cover

trade in services

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.

comparative advantage

The ________ benefits inefficient farmers and the politicians in the EU who rely on the farm vote, but not consumers in the European Union, who end up paying more for their foodstuffs.

Common Agricultural Policy (CAP)

A negative effect of subsidies is to:

protect inefficient domestic producers.

The WTO argues that by removing all tariff barriers and subsidies to agriculture,

global economic growth would rise.

Tariff barriers raise the costs of exporting products to a country (or of exporting partly finished products between countries). Which of the following is a likely consequence of these barriers?

This may put a firm at a competitive disadvantage to indigenous competitors in that country.

The importation of cheese into the United States is limited to a selected group of trading companies. Each company has a maximum total weight of all cheese imports per year. This is an example of a(n)

Import quota

A negative effect of subsidies is to:

Protect inefficient domestic producers

Most economists would probably argue that the best interests of international business are served by

A free trade stance

What is the dominant form of regional economic integration, encompassing approximately 90 percent of regional agreements?

Free trade areas

Initially, the Andean Community struggled, but in the late 1980s, this trend started to reverse when

Governments of Latin American began to adopt free market economic policies

The levels of economic integration, ranging from the least integrated to the most integrated, are as follows:

free trade area, a customs union, a common market, an economic union, and a political union.

The ________ was created in 1944 by 44 nations that met in Bretton Woods, New Hampshire to promote economic development.

world bank

This organization is often seen as the lender of last resort.

International Monetary Fund

______ refers to the shift toward a more integrated and interdependent world economy.

globalization

Which factor hinders globalization of consumer goods market?

national and cultural differences in tastes and preferences

In the reading, French farmers vandalized an under-construction branch of which international franchise in protest of American trade policies?

McDonalds

The volume of world merchandise trade and production is growing faster than world GDP. This implies that

more firms are dispersing their production processes to global locations

Which factor has contributed to the globalization of markets?

global convergence of consumer tastes and preferences

What organization was created in 1993/1994, during the Uruguay round of trade talks?

World Trade Organization

Which of the following statements about globalization is NOT true?

It benefits everyone equally and unconditionally

When ________blank is emphasized, an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society."

collectivism

In a(n) ________ society, the welfare of society is best served by letting people pursue their own economic self-interest.

individualist

The term ________blank stresses that the political, economic, and legal systems of a country are interdependent.

political economy

Which of these is a characteristic of a pure command economy?

all businesses are owned by the state

People's right to protest on issues of accountability in public expenditure would be possible in a ________blank political setup.

democratic

Which statement about the legal systems of countries is true?

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

How does a common law system differ from a civil law system?

In a common law system a judge has the power to interpret the law, while in a civil law system a judge has the power only to apply the law.

One key component of a country's legal system is

defining the rights and obligations of those involved in business transactions

A civil law system tends to be less adversarial than a common law system because the

judges' decisions are based on detailed legal codes.

What might the presence of a black (or shadow) economy in a country mean to that country's economy?

A black economy may indicate that large amounts of economic activity have been unrecorded signaling that the country's economic figures may be unreliable

During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments that were typically ________ than their predecessors had been.

more committed to free market capitalism

________blank, 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

According to Amartya Sen, development should be

seen as a process of expanding the real freedoms that people experience

Innovation and entrepreneurial activity help increase economic activity by

creating new products and markets.

Which of the following is a reason for the spread of democracy?

totalitarian regimes failing to deliver economic progress to the majority of their populations

Investing in ________blank is an important determinant of economic development as it leads to higher growth rates and a more productive population.

education

United Nations has developed the Human Development Index (HDI) to measure the

quality of human life in different nations.

In the case of command economies, deregulation involves

removing price controls

Many of the national markets of Eastern Europe, Latin America, Africa, and Asia may still be underdeveloped, but they are potentially enormous. Which of the following is a risk to businesses moving into these regions?

There is no guarantee that democracy will thrive in many of the world's newer democratic states.

Priyansh grew up in India, where caste systems have become less prevalent. Which of the following statements is true about a caste system?

A caste system is a rigid form of social stratification.

It has been argued that the success of Japanese enterprises in the global economy has been based partly on which of the following?

cooperation between a company and its suppliers on issues such as design, quality control, and inventory reduction

The social rules and guidelines that prescribe appropriate behavior in a particular situation are called

norms

The system of values and norms that are shared among a group of people and that when taken together constitute a design for living best defines

culture

________blank is best defined as shared assumptions about how things ought to be.

values

Cross-cultural literacy refers to

an understanding of how cultural differences can affect the way business is practiced.

Hofstede's cultural dimensions theory uses which of the following metrics to measure the preference for achievement and assertiveness versus cooperation and caring for the weak?

Masculinity vs. femininity (MAS)

Which observation is correct?

The economic principles of Islam prohibit the payment or receipt of interest.

culture is

not static

Max Weber theorized that there was a relationship between Protestantism and the emergence of modern capitalism because

Protestant ethics emphasize the importance of hard work and wealth creation and frugality.

Geert Hofstede added the dimension of indulgence to the World Values Survey to refer to

a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun.

From an international business perspective, some argue that what is ethical

depends on one's cultural perspective.

The term _____ refers to the values and norms that are shared among employees of an organization.

organizational culture

The Foreign Corrupt Practices Act was amended in order to

allow for "facilitating payments."

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of which of the following?

They may be based in a culture that does not place the same value on ethical norms important in the manager's home country.

The All-Emissions Corporation moved its automobile production plant to a country in South America because it could freely dump waste products into the nearby ocean. By doing this, the corporation was contributing to the concept of

the tragedy of the commons.

As a philosophy for business ethics, utilitarianism focuses attention on the need to

weigh carefully all social benefits and costs of a business action.

The practice of "gift-giving" between the parties in a business negotiation is considered right and proper behavior in many Asian cultures, while some Westerners view the practice as a form of bribery. What is this an example of?

cultural relativism