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WorksheetsMid Term IB A221
Total questions: 60
Worksheet time: 45mins
All international trade and investment are conducted by large firms.
True
False
The move toward a global economy has strengthened the adoption of conservative economic
policies by developing nations.
True
False
According to many influential economists, the increase in international trade and cross-border
investment will result in an increase in the prices of goods and services.
True
False
It is possible that economic growth in developed nations has offset the fall in the share of
national income enjoyed by unskilled workers, raising their living standards.
True
False
The growing income inequality is a result of the wages for skilled workers being discounted.
True
False
Ryan is the executive general manager of a U.S. multinational and Veronica is a manager in a
similar position, but works for another U.S. company that operates only in its home country. In
this context, which of the following business functions will be most typically exclusive to
Ryan?
Marketing a product or service
Planning on a business strategy
Maintaining healthy relations with the U.S. government
Choosing an appropriate mode for entering a particular foreign country
The minimum that a firm has to do to engage in international business is to:
develop franchises and subsidiaries in other countries.
export or import products from other countries.
export low-wage manufacturing jobs to companies in other countries.
invest directly in operations in another country.
Which of the following is NOT a concern for managers in international businesses?
Cross-border transactions involving currency exchange
Ethical adherence to environmental standards
Perceived distance between home country and operating nations
Government restrictions on international trade
Which of the following is a power of the WTO?
It can make decisions related to international trade without considering the collective
interests of member-states.
It can issue a ruling instructing a member-state to change trade policies that violate GATT
regulations.
It supersedes IMF and has complete authority over IMF's actions.
It can grant loans to cash-strapped governments in poor nations.
Which of the following is the most appropriate solution to the problem of rising carbon dioxide
emissions in developed economies?
Restrict international trade and investment only to services.
Get the nations of the world to agree to policies designed to limit pollutant emissions.
Tie free trade agreements to the implementation of fewer environmental and labor laws in
less developed countries.
Roll back the trade liberalization efforts that have fostered economic growth and
globalization.
Other things being equal, a nation with democratic political institutions is clearly more
attractive as a place in which to do business than a nation that lacks democratic institutions.
True
False
The benefits, costs, and risks associated with doing business in a country are independent of
that country's political, economic, and legal systems.
True
False
When product safety laws are tougher in a firm's home country than in a foreign country, the
ethical thing to do is to adhere to home-country standards.
True
False
Liability laws are typically the least extensive in highly developed nations.
True
False
The term "public action" refers to the exclusive legal rights of authors, composers, playwrights,
artists, and publishers to publish and disperse their work as they see fit.
True
False
If a country wants to improve its attractiveness as a place for doing business and as an
investment site, it should:
oppose the rule of law.
ensure that the economic activity is heavily regulated by the state.
move toward a market-based system.
avoid enforcing intellectual property laws.
Which of the following nations is most likely to be unappealing as a place for doing business?
A nation that has a totalitarian political system
A nation that has a strong legal system
A nation that has a democratic political institution
A nation that enforces strong property rights
Veronica had been getting red patches on her face after using a protein-based lotion
manufactured by Nature Life Research Lab. On consulting a dermatologist, she learned that
the lotion's steroid levels were beyond the standard levels permitted by the government and
the damage caused by the lotion was irreversible. Which of the following will address
Veronica's grievances?
Laws related to property rights
Foreign Corrupt Practices Act
Product liability laws
Intellectual property laws
Who among the following can claim product liability from the offender?
Fred has accused his employer of forcing him and his teammates to work in an unsafe
environment.
The airbags in Brian's car, manufactured by Zigwheels Inc., failed to inflate when his car
met with an accident. This injured Brian and damaged the car.
Samantha claims that her neighbor has stolen valuable ancestral antiques from her house.
Jason wants to sue a multinational company for mass manufacturing one of his inventions
without purchasing the rights.
Which of the following is a typical function of a trademark?
It signifies that a country is a member of the World Trade Organization.
It allows merchants or manufacturers to designate and differentiate their products.
It restrains authors, composers, playwrights, artists, and publishers from trading their
creative work.
It marks the sales territory for which individual salespeople are assigned.
Although countries such as China and India are currently relatively poor, their economies are
already large in absolute terms and growing more rapidly than those of many advanced
nations.
True
False
Entrepreneurial individuals have fewer economic incentives to develop valuable new
innovations in market economies than in planned economies.
True
False
Strong legal protection of property rights is a requirement for a business environment to be
conducive to innovation, entrepreneurial activity, and hence economic growth.
True
False
Five of the fastest growing economies of the past 30 years—China, South Korea, Taiwan,
Singapore, and Hong Kong—had one thing in common at the start of their economic growth:
democratic governments.
True
False
In China, state-owned companies still dominate the banking, energy, telecom, health care, and
technology sectors.
True
False
One common measure of economic development is a country's:
population density.
gender ratio.
gross national income.
total geographical area.
One can adjust GNI per capita by purchasing power to account for differences in the:
population density.
cost of living.
factor endowments.
labor productivity.
Which of the following statements is true about innovations and entrepreneurship?
Innovations in production and business processes lead to an increase in the productivity of
labor and capital.
If a country's economy is to sustain long-run economic growth, the business environment
must restrict entrepreneurial activity.
Strong legal protection of property rights creates an unfavorable environment for innovation
and entrepreneurship.
A high level of entrepreneurial activity leads to a low level of innovation.
Which of the following creates an unfavorable environment for innovations and
entrepreneurship?
Privatization
Economic freedom
State monopoly in production
Market economy
Only a totalitarian regime that is committed to which of the following is capable of promoting
economic growth?
Limiting human freedom
A market system and strong protection of property rights
Limiting individualism and privatization
A dictatorship
The primacy of the value of group identification encourages managers and workers to move
from company to company.
True
False
The least rigid system of social stratification is a caste system.
True
False
Class membership in the United States is determined to a much greater degree by individual
background and schooling, as opposed to economic achievements.
True
False
Buddhism has the highest number of adherents in the world today.
True
False
Islam is not just a religion; it is also the source of law, a guide to statecraft, and an arbiter of
social behavior.
True
False
Which of the following means an understanding of how cultural differences across and within
nations can affect the way business is practiced?
Ethnocentrism
Cultural lag
Cross-cultural literacy
Cultural capitalism
What is the difference between folkways and mores?
Folkways have much greater significance than mores.
Violating mores tends to bring more serious retribution than violating folkways.
Mores cannot be enacted into laws, whereas folkways can.
Folkways exclude rituals and symbolic behaviors included in mores.
Which of the following is the most widely spoken language in the world, and is increasingly
becoming the language of international business?
Chinese
French
Spanish
English
Which of the following statements best defines personal space?
C. In ergonomics, it is the minimum amount of space required by an average employee in
order to work efficiently.
It is a psychological phase wherein a person has free flowing thoughts.
It is the comfortable amount of distance between you and someone you are talking with.
It is the amount of distance to be maintained from the audience in order to be audible to
them.
Managers at the Blue Dragon Inc., an international company with operations in China and the
United States, are often heard complaining about the difficulties in achieving synergy and
cooperation between the employees of both the countries. On extensive research it was
concluded that the cultural differences between these countries, which resulted in different
work-related values, caused the lack of cooperation. In order to effectively tackle this problem,
Blue Dragon Inc. should:
adopt the home country's management processes and practices in both countries.
adopt the host country's management processes and practices in both countries.
vary its management processes and practices to account for these differences.
provide incentives to the employees based only on their individual performance.
The internal stakeholders of a company do not have an exchange relationship with the
company.
True
False
Multinational corporations do not qualify to act as moral agents within the framework of rights
theories.
True
False
The action that produces the greatest good for the greatest number of people can result in the
unjustified treatment of a minority.
True
False
Enterprises headquartered in a country which scores high on masculinity and power distance
measures are more likely to behave ethically than enterprises headquartered in a culture
where individualism and uncertainty avoidance are strong.
True
False
An organizational culture that requires all decisions to be purely economic allows unethical
behavior to flourish and persist.
True
False
Which of the following is most likely to be considered unethical?
C. Capricorn Inc., a multinational company operating in developing nations, pays its labor 30
percent more than what the local competitors pay.
Orion Inc. sends its waste products for disposal to a developing nation because the
pollution control laws in its home country are much more strict than those in the developing
nation.
Galaxy Inc. ceased its operations in some developing nations on account of low
employment standards in those countries.
Centaur Inc. had to close down a production plant as the local management there had
employed child labor.
Due to certain strict environmental and employment standards in its home nation, Taurus Inc.
has shifted its operations to developing nations. Hence, the firm has now been able to gain
competitive advantage by avoiding costly pollution controls. This strategic move of Taurus Inc.
will be considered:
totalitarian.
immoral.
illegal.
ethical.
Which of the following refers to accepted principles of right or wrong that govern the conduct
of a person, the members of a profession, or the actions of an organization.
strategy
ethics
mission
vision
The Foreign Corrupt Practices Act was subsequently amended to allow for speed money or
grease payments, which are payments made to:
secure monopoly rights in less developed countries.
secure contracts that would not otherwise be secured.
ensure a business receives the standard treatment that it ought to receive.
influence foreign bureaucrats in the company's favor.
Which of the following statements is true of facilitating payments?
The concept of facilitating payments was introduced by the UN to put U.S. firms at a
competitive disadvantage.
It is ethical to have a zero-tolerance approach toward facilitating payments.
According to the Foreign Corrupt Practices Act, "facilitating payments" are as illegal as
bribes.
Companies are allowed to make facilitating payments only in developing countries.
Free trade refers to a situation in which a government, through quotas or duties, attempts to
influence what its citizens can buy from another country, or what they can produce and sell to
another country.
True
False
The theories of Smith, Ricardo, and Heckscher-Ohlin failed to identify the specific benefits of
international trade.
True
False
New trade theory stresses that in some cases countries specialize in the production of
particular products because of underlying differences in factor endowments.
True
False
A country has an absolute advantage in the production of a product when it is more efficient
than any other country in producing it.
True
False
The Heckscher-Ohlin theory is the best predictor of real-world international trade patterns.
True
False
According to the Heckscher-Ohlin theory, the pattern of international trade is determined by
differences in:
trade barriers.
labor productivity.
factor endowments.
labor productivity.
Which of the following predicts that countries will export those goods that make intensive use
of factors that are locally abundant, while importing goods that make intensive use of factors
that are locally scarce?
Mercantilism
The theory of comparative advantage
The Heckscher-Ohlin theory
The theory of absolute advantage
According to the product life-cycle theory, the high cost of U.S. labor gave U.S. firms an
incentive to:
import new consumer products and export agricultural products.
invite foreign direct investment in domestic industries.
embrace and promote open market capitalism.
develop cost-saving process innovations.
According to the product life-cycle theory, the locus of global production initially switches from
the United States to other advanced nations and then from those nations to developing
countries. Which of the following is most likely to be a consequence of these trends?
Over time, the United States switches from being an exporter of a product to an importer of
the product.
The pattern of international trade is affected by differences in factor endowments rather
than differences in productivity.
The wage rates in the United States decrease.
U.S. imports become less capital-intensive than U.S. exports.
Which of the following is a result of certain products having small national markets, in the
absence of trade?
The first movers in an industry may get a lock on the world market that discourages
subsequent entry.
Limited demand for such products leads to non-realization of economies of scale.
At low volumes of production, unit costs and prices would be lowered.
Each nation will specialize in producing a narrower range of products than it would in the
presence of trade.
