International Business Practice Test #1

1) The economic system based upon the profit motive is the:
A) socialist economy
B) command economy
C) market economy
D) mixed economy

C) market economy

2) Global dependency exists when:
A) countries count on financial aid from other parts of the world
B) items that consumers need and want are created in other countries
C) countries ban foreign trade
D) a citizen from a country gives birth to a child in a foreign country

B) items that consumers need and want are created in other countries

3) \___ are products sold in other countries.
A) Domestic goods
B) Imports
C) Exports
D) Foreign goods

C) Exports

4) Which is not a cultural and social factor that affects the international business environment?
A) education
B) language
C) values and customs
D) type of government

D) type of government

5) The host country
A) is the country in which a multinational enterprise is headquartered
B) is the country in which a multinational enterprise is a guest
C) does not have influence on the operation of the international business
D) is a democracy that allows the entrance of international businesses

B) is the country in which a multinational enterprise is a guest

6) Which country would have the greatest number of extended families?
A) Mexico
B) Canada
C) Australia
D) United States

A) Mexico

7. ____ are people who live and work outside of their native countries.
A) Parentcountry nationals

B) foreign employees

C) Expatriates

D) Third

Expatriates

8) The \__ uses managers from various countries with the geographic region of a business.
A) polycentric approach
B) geocentric approach
C) regiocentric approach
D) ethnocentric approach

C) regiocentric approach

9) Employers for multinational companies do not hire employees based on
A) adaptability
B) competence
C) ethnocentrism
D) personal characteristics

C) ethnocentrism

10) Managers and families moving to other parts of the world take part in \___ to understand the local culture.
A) repatriation training
B) spousal employment counseling
C) global orientation
D) cross

cultural training

11) Which of the following is an international firm?
A) Sunrise Computer Systems
B) Gary's Gas Station
C) Buer's Brewers
D) Walmart Inc.

D) Walmart Inc.

12) Of the following statements, the one that does not describe a multinational company is that
A) it maintains both an international and local perspective.
B) it maintains only a local perspective to simplify processes.
C) its strength is that it offers a different product in each market.
D) coordination between international and local representation is crucial.

C) its strength is that it offers a different product in each market.

13) An economy that allows an individual to personally own a business with little or no interference from the government is a:
A) command economy
B) mixed economy
C) market economy
D) communist economy

C) market economy

14) One of the most troubled economies in the world is:
A) Japan
B) Greenland
C) Australia
D) Germany

A) Japan

15) The United States is\__________ percent of the world's population.
A) 10
B) 3
C) 5
D) 7

C) 5

16) A U.S. toy company allows a Chinese company to create clothing and school supplies with one of the U.S. company's doll characters on the products. This is an example of:
A) direct exporting
B) franchising
C) licensing
D) indirect exporting

C) licensing

17) The \___ brings together resources for a company to get started and operate successfully.
A) wholesaler
B) entrepreneur
C) CEO
D) retailer

B) entrepreneur

18. Global corporations focus on:
A) product and pricing sameness worldwide.
B) creating products that are universally accepted or standardized.
C) cultural diversity in all company

owned enterprises. D) ethnocentricity for all employees.

\

19) \___ is when a company buys land or other resources in another country.
A) A wholly

owned subsidiary
B) Foreign direct investment
C) Management contracting
D) A joint venture

20) Which of the following is not advantage of operating a business as a sole proprietorship?
A) limited risks
B) owner is the boss
C) freedom to make business decisions
D) ease of starting

A) limited risks

21) Owners of a \____ do not have unlimited liability.
A) sole proprietorship
B) partnership
C) cooperative
D) corporation

D) corporation

22) \____ occurs when the engine of an automobile is produced in Germany and the rest of the automobile is produced in the United States.
A) Foreign direct investment
B) Management contracting
C) Licensing
D) Franchising

B) Management contracting

23) \____ is an agreement between two or more companies from different countries to share a business project.
A) Joint venture
B) Licensed agreement
C) Franchise
D) Independent contract

A) Joint venture

24) The United States has many sellers offering blue jeans. This is an example of
A) an oligopoly
B) a monopoly
C) restricted imports
D) pure competition

D) pure competition

25) \___ refers to when a company avoids the risks related to international business by only selling products in its home country.
A) Risk avoidance
B) Risk sharing
C) Risk assumption
D) Risk reduction

A) Risk avoidance

26) Self insurance of \___ occurs when a company takes responsibility for losses from certain risks.
A) Risk avoidance
B) Risk reduction
C) Risk assumption
D) Risk sharing

C) Risk assumption

27) Property or risks not covered by an insurance policy are called
A) endorsements
B) deductions
C) declarations
D) exclusions

D) exclusions

28) The \____ is a certificate that adds to or changes the coverage of an insurance policy.
A) exclusion
B) rider
C) condition
D) endorsement

D) endorsement

29) When purchasing insurance, the first step is to
A) implement a risk management program
B) select a risk management method
C) identify potential risks
D) evaluate risks

C) identify potential risks

30) The multinational company does not have to comply with the home country's \___ mandates.
A) social
B) religious
C) economic
D) legal

B) religious

31) The only western European country that did not develop a comprehensive set of rules at one time is:
A) Germany
B) England
C) Sweden
D) France

B) England

32) A tax holiday is sometimes given to companies that invest in foreign countries. This means the corporation does not pay corporate income taxes if it invests in their country. These tax holidays may last for as long as \______ years.
A) 20
B) 15
C) 10
D) 5

C) 10

33) When using the term "consideration" in regards to a contract, what does this generally mean?
A) Something of value must be given by both parties.
B) One party agrees to be considerate of each others' needs.
C) Something of value must be given by only one party.
D) One of the party offers valid terms, and the other party accepts them.

A) Something of value must be given by both parties.

34) \___ is a legal system that relies on the accumulation of decisions made in prior cases.
A) Precedent
B) Corporate law
C) Civil law
D) Common law

D) Common law

35) \____ protect the rights to inventions in the United States but may not be honored in other parts of the world.
A) Copyrights
B) Trademarks
C) Patents
D) Trade secrets

C) Patents

36) \___ means that individuals carry their beliefs, values, and assumptions with them at all times.
A) Subculture
B) Ethnocentrism
C) Egocentrism
D) Cultural baggage

D) Cultural baggage

37) The language that has the greatest number of speakers throughout the world is
A) Spanish
B) English
C) Chinese Mandarin
D) Hindi

C) Chinese Mandarin

38) While white teeth are valued in the United States, blackened teeth are valued in
A) Southeast Asia
B) the Middle East
C) Western Europe
D) Canada

A) Southeast Asia

39) Wearing a cross

shaped necklace is illegal in
A) China
B) India
C) Saudi Arabia
D) Japan

40) Which of the following is not a positive impact of technology on global marketing?
A) better distribution
B) expanded communication
C) faster production
D) breached security

D) breached security

41) Changing demographics for a country
A) diminishes the marketing opportunities
B) increase production costs for businesses
C) do not impact domestic trade
D) open new marketing opportunities

D) open new marketing opportunities

42) Attitudes affect consumer behavior. Attitudes are classified as \___ factors.
A) demographic
B) psychographic
C) geographic
D) cultural

B) psychographic

43) \_________________ is a term used to describe a policy which encourages exports, discourages imports, controls capital movement and centralizes currency decisions in the hands of a central government.
A) Neomercantilism
B) Mercantilism
C) Factor proportions
D) State sovereignty

A) Neomercantilism

44) When comparing countries for market potential, one can generally say that:
A) per capita income is the best indicator to use
B) labor costs are the most important
C) population size is the best indicator
D) companies must consider variables other than income and population when estimating potential demand

D) companies must consider variables other than income and population when estimating potential demand

45) The \____ ships goods to customers in other countries.
A) export trading company
B) wholesaler
C) freight forwarder
D) customs broker

C) freight forwarder

46) \___ is not a service provided by retailers.
A) Sales staff assistance
B) Product selection
C) Consumer convenience
D) Storing and transportation of goods

D) Storing and transportation of goods

47) Slogans and trademarks
A) may not have the same translation in different countries.
B) stay the same for company recognition.
C) should always stay the same for ease in marketing products.
D) have no specific international purpose.

A) may not have the same translation in different countries.

48) Changing demographics for a country will:
A) not impact domestic trade
B) open new marketing opportunities
C) increase production costs for businesses
D) diminish the marketing opportunities

B) open new marketing opportunities

49) The same marketing functions must be completed by businesses whether marketing nationally or internationally and include but aren't limited to:
A) product/service management, selling, promotion, investment
B) distribution, selling, financing, promotion
C) culture, financing, subsidies, investments
D) investments, manufacturing, culture, management

B) distribution, selling, financing, promotion

50) Which one of the following is not a positive impact of technology on global marketing?
A) faster production
B) expanded communication
C) breached security
D) better distribution

C) breached security

51) E

commerce
A) has increased Wal

52) Marketing includes each of the following activities except
A) manufacturing.
B) advertising.
C) packaging.
D) promotion.

A) manufacturing.

53) \____ are called intermediaries because they are links between products and sellers of products.
A) Service companies
B) Retailers
C) Manufacturing companies
D) Wholesalers

D) Wholesalers

54) \____ involves buyers who purchase items for resale or additional production
A) Consumer market
B) Retail market
C) Expanded market
D) B2B

D) B2B

55) \___ is not part of the marketing mix.
A) Place
B) Product
C) Distribution
D) Entrepreneurship

D) Entrepreneurship

56) Economic conditions and the currency for a country do not affect
A) population trends
B) profits on a product
C) consumer demand
D) selling price for a product

A) population trends

57) \__ causes people to believe that a higher priced item is better quality than the exact same item at a lower price.
A) Price lining
B) Psychological pricing
C) Prestige pricing
D) Penetration pricing

C) Prestige pricing

58) \____ is a duty that a government places on imported products.
A) Tariff
B) Sanction
C) Quota
D) Restriction

A) Tariff

59) \____ occurs when the government takes control and ownership of foreign

owned assets and companies.
A) Civil unrest
B) Economic nationalism
C) Trade sanctions
D) Expropriation

60) Some countries offer companies a \____, meaning the corporation does not pay corporate income taxes if its invests in their country.
A) tax hike
B) tax break
C) tax holiday
D) tax incentive

C) tax holiday

61) The World Trade Organization has more than
A) 200 members.
B) 140 members.
C) 240 members.
D) 100 members.

B) 140 members.

62) Which of the following is not a method for a business to get involved in international business?
A) franchising
B) indirect importing
C) licensing
D) joint venture

B) indirect importing

63) The \____ allows a company to file a single patent application in which it names the countries in which it seeks patent coverage.
A) World Trade Organization
B) International Copyright Agreement
C) World Intellectual Property Organization
D) Patent Cooperation Treaty

D) Patent Cooperation Treaty

64) A \___ exists when a country buys more foreign goods than the number of goods they sell.
A) trade surplus
B) trade advantage
C) balance of trade
D) trade deficit

D) trade deficit

65) Individuals who want to export products to Japan, should not contact the \____.
A) U.S. Department of Commerce International Trade Administration
B) U.S. Small Business Administration
C) Federal Trade Commission
D) U.S. Customs Service

C) Federal Trade Commission

66) \____ status allows a country to export into the granting country under the lowest customs duty rates.
A) Common market
B) Free

trade zone
C) Free

67) The \___ provides capital and technical assistance to businesses in nations with limited resources.
A) International Monetary Fund
B) International Finance Corporation
C) World Bank
D) International Development Association

B) International Finance Corporation

68) The \___ is the currency used in Japan.
A) pound
B) yuan
C) yen
D) euro

C) yen

69) Money is not
A) measure of value
B) store of value
C) political stability
D) a medium of exchange

C) political stability

70) Travelers visiting other countries may pay more when using a credit card instead of cash or traveler's checks because
A) interest rates on credit cards are high
B) the foreign exchange rate on credit cards is not calculated until the charges reach the credit card office
C) credit cards have annual fees
D) credit cards always charge additional handling fees

B) the foreign exchange rate on credit cards is not calculated until the charges reach the credit card office

71) A \___ is a debt certificate issued by a multinational company or another corporate enterprise.
A) over

the

72) Tax deferred investment means:
A) income earned on the investment will be taxed at a later date
B) tax breaks for foreign investors
C) no taxes charged for the income earned on the investment
D) double taxation on earnings from a foreign investment

A) income earned on the investment will be taxed at a later date

73) The \____ is a certificate that adds to or changes the coverage of an insurance policy.
A) rider
B) endorsement
C) condition
D) exclusion

B) endorsement

74) The annual earnings for an international investment are measured by the yield or annual:
A) depreciation
B) fluctuation
C) rate of return
D) appreciation

C) rate of return

75) \____ capital is provided by a company's owners.
A) Equity
B) Unsecured
C) Credit
D) Debt

A) Equity

76) Which is not true about an insurable risk?
A) common to many people
B) able to calculate
C) excessive in magnitude
D) definite

C) excessive in magnitude

77) Governments can impose \___ against another country to protest that country's behavior.
A) fines
B) civil action
C) trade sanctions
D) penalties

C) trade sanctions

78) The \___ is a financial document issued by a bank for an importer in which the bank guarantees payment.
A) letter of credit
B) promissory note
C) bill of exchange
D) commercial invoice

A) letter of credit

79) \____ capital is provided by a company's owners.
A) Equity
B) Unsecured
C) Credit
D) Debt

A) Equity

80) The \___ Stock Exchange is the largest in the world.
A) Tokyo
B) New York
C) London
D) Euronext

B) New York

81) A \___ is a debt certificate issued by a multinational company or another corporate enterprise.
A) municipal bond
B) corporate bond
C) over

the

82) The annual earnings for an international investment are measured by the yield or annual \_____.
A) depreciation
B) appreciation
C) rate of return
D) fluctuation

C) rate of return

83) Information on the current performance and the future of stocks and bonds is not published in
A) Value Line
B) Moody's Investors Service
C) Standard and Poor's Reports
D) American Bankers Association

D) American Bankers Association

84) Tax deferred investment means
A) income earned on the investment will be taxed at a later date.
B) tax breaks for foreign investors.
C) no taxes charged for the income earned on the investment.
D) double taxation on earnings from a foreign investment.

A) income earned on the investment will be taxed at a later date.

85) Which of the following is not true about an insurable risk?
A) excessive in magnitude
B) able to calculate
C) common to many people
D) definite

A) excessive in magnitude

86) Primary components of an expatriate's compensation package can include all of the following except:
A) tax differentials
B) extraordinary leisure allowances
C) service premium
D) base salary

B) extraordinary leisure allowances

87) The \____ uses natives of the parent country of a business to fill key positions at home and abroad.
A) ethnocentric approach
B) polycentric approach
C) regiocentric approach
D) geocentric approach

A) ethnocentric approach

88) The type of human resources approach that uses natives of the host country to manager operations within their country and parent

country natives to manage at headquarters is the:
A) geocentric approach
B) regional approach
C) polycentric approach
D) regioncentric approach

89) Employers for multinational companies do not hire employees based on which one of the following?
A) adaptability
B) ethnocentrism
C) personal characteristics
D) competence

B) ethnocentrism

90) Parent

country nationals do not fail due to which one of the following?
A) increase non

91) Ethical Issues facing global corporations today include all of the following except:
A) ecosystems
B) natural disasters
C) stock dividends
D) global warming

C) stock dividends

92) Political instability of a country may cause the number of questionable ethic transactions to
A) remain the same
B) disappear
C) decline
D) rise

D) rise

93) When a farm ships fresh vegetables to the local supermarket, \___ has occurred.
A) indirect distribution
B) direct distribution
C) exporting
D) intermediate distribution

B) direct distribution

94) Which of the following is not a function of a wholesaler?
A) maintaining warehouses and shipping capabilities
B) communicating between manufacturers and retailers
C) advertising and selling to retailers to help with retailer promotions
D) selling directly to consumers

D) selling directly to consumers

95) The \___ brand is used worldwide and is recognized by people in many geographic areas.
A) National
B) Global
C) Private
D) Manufacturer

B) Global

96) Making, buying, and selling goods and services within a country is called
A) global dependency
B) international business
C) domestic business
D) foreign trade

C) domestic business

97) \____ includes all business activities needed to create, ship, and sell goods and services across national borders.
A) Domestic business
B) International business
C) Regional business
D) Trade intervention

B) International business

98) Which of the following is not a geographic condition that affects the international business environment?
A) language
B) climate
C) terrain
D) natural resources

A) language

99) Individuals taking jobs in other parts of the world
A) should wait to receive medical vaccinations when they arrive to their final destination
B) do not have to worry about medical plagues since their company is insulated from the rest of the public
C) should count on their employers to pay for required medical procedures
D) should make sure that all medical vaccinations are up to date

D) should make sure that all medical vaccinations are up to date

100) The resume should not include
A) experience
B) a personal picture
C) career objective
D) education

B) a personal picture