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WorksheetsInternational Business Quiz
Total questions: 68
Worksheet time: 42mins
Vertical integration refers to instances in which multinational corporations internalize (i.e., bring under their ownership and control) their transactions for intermediate goods
Suppose that Mexico has previously had restrictions on inflows of foreign direct investment from all sources, including the United States. Then suppose that they remove those restrictions on flows from the United States in a particular industry, say hammocks. As a result, several hammock producers in the U.S. move production to Mexico via FDI. Indicate for each of the groups below whether you expect them to gain or to lose from this flow of investment. a) Workers previously employed in hammock production in the U.S. Gain / Lose b) Workers previously employed in hammock production in Mexico. Gain / Lose c) Owners of firms that move production to Mexico. Gain / Lose d) Owners of U.S. hammock firms that do not move production to Mexico. Gain / Lose e) Owners of firms in Mexico that previously produced hammocks. Gain / Lose f) Consumers of hammocks (assume that there already was free trade in hammocks). Gain / Lose
Geocentric staffing policy ensures best qualified people at suitable positions irrespective of their national and cultural differences.
The Heckscher- Ohlin model is principally focused on what aspect of economics?
International trade
Supply and demand
Normative economics
Production possibility frontier
A no-trade world will have which of the following characteristics:
Countries will have same relative endowments of production factors
Consumers across countries will have identical and homogenous tastes
There will be no distortions or externalities
all of the above
How is comparative advantage defined?
You produce the things you are especially good at, and buy from others, the goods you are less efficient in producing.
To produce and consume all goods without trade.
How the world actually works.
Globalization, growing economic linkages among countries.
International Trade is most likely to generate short-term unemployment in:
Industries in which there are neither imports nor exports
Import-competing industries
Industries that sell to domestic and foreign buyers.
Industries that sell to only foreign buyers
Comparative Cost Trade Theory is given by
Adam Smith
David Ricardo
Gottfried Haberle
Heckscher Ohlin
Country A has an absolute advantage in
Product X
Product Y
Neither X nor Y
Both X and Y
The Theory of Relative Factor Endowments is given by
David Ricardo
Adam Smith
F W Taussig
Ohlin and Hecksher
Immobility of labor among nations is
Absolute.
Relatively of a higher degree than among regions in the same country.
Relatively easier than movement within the country.
Of the same degree as within the country.
In which year did the government decide to remove barriers on foreign trade and investment in India?
1993
1992
1991
1990
Which of the following trade policies limits specified quantity of goods to be imported at one tariff rate?
Quota
Import tariff
Specific tariff
All of the above
The —————-company produces, markets, invests and operates across the world
Global
International
Transnational
Multinational
Key controllable factors in global marketing are:
Government policy and legislation
social and technical changes
marketing activities and plans
all of the above
...............is the application of knowledge which redefines the boundaries of global business
Cultural Values
Society
Technology
Economy
The Theory of Absolute Cost Advantage is given by
David Ricardo
Adam Smith
F W Taylor
Ohlin and Heckscher
A company that invests in a controlling interest in a foreign company is best described as engaging in which of the following?
International investment
Foreign portfolio investment
Foreign indirect investment
Foreign direct investment
None of the answers are correct
Locational advantages are based on which combination of the following specific country characteristics
A large reserve of natural resources, a large local market and efficiency opportunities
A small reserve of natural resources, a large local market and efficiency opportunities
A small reserve of natural resources, a small local market and efficiency opportunities
A large reserve of natural resources, a small local market and efficiency opportunities
A small reserve of natural resources, a large local market but few efficiency opportunities
Which is not an Indian Multinational Company?
Unilever
Asian Paints
Piramal
Wipro
..................is the payment method most often used in International Trade which offers the exporter best assurance of being paid for the products sold internationally.
Bill of Lading
Letter of Credit
Open Account
Drafts
Globalization refers to:
Lower incomes worldwide
Less foreign trade and investment
Global warming and their effects
A more integrated and interdependent world
Rapid integration or interconnection between countries is known as:
Privatisation
Globalisation
Liberalisation
Socialisation
The theory of comparative cost advantage is given by
David Ricardo
Adam Smith
F W Taussig
Ohlin and Heckscher
Which is the right sequence of stages of Internationalization
Domestic, Transnational, Global, International, Multinational
Domestic, International, Multinational, Global, Transnational
Domestic, Multinational, International, Transnational, Global
Subsidiaries consider the regional environment for policy / Strategy formulation is known as
Polycentric Approach
Regionocentric Approach
Ethnocentric Approach
Geocentric Approach
Mercantilists believed that a country could increase the amount of wealth it had by _____.
Promoting exports and discouraging imports
Discouraging exports and promoting imports
Controlling imports and exports
Increasing both imports and exports
Country B has an absolute advantage in
Product X
Product Y
Neither X nor Y
Both X and Y
In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in
Military capabilities
labor productivities
relative availabilities of factors of production
tastes
Removing barriers or restrictions set by the government is called:
Liberalisation
Investment
Favorable trade
Free trade
According to Adam Smith, the trade between countries should happen _____.
Naturally according to the market forces
Under government regulation
Using factors that are available
Only when a country has an absolute advantage
What was the first economic theory of international trade to be developed?
The theory of mercantilism
The theory of comparative advantage
The theory of absolute advantage
The Heckscher-Ohlin theory
The following factor does not differentiate international business from domestic business
different currencies
product quality
product mobility
trade policies
The opportunity cost of one DVD in South Korea is:
One-half ton of steel
One ton of steel
One and one-half tons of steel
Two tons of steel
Horizontal integration occurs when
Firm creates singular country production facilities, each of which produces different good or goods
Firm creates multiple production facilities, each of which produces the same good or goods.
Firm creates multiple production facilities, each of which produces different good or goods
Firm creates singular country facilities, each of which produces the same good or goods
Firm creates multiple production facilities, in multiple countries but with different technologies
The first phase of globalization started around 1870 and ended with .....
World War I
World War II
The Establishment of GATT
In 1913 when GDP was High
What are the four factor endowments?
National resources, labor, physical capital and human capital
Types of technology
Material inputs used up in the process of production
International differences in climate
Transportation cost of trade affects:
pattern of trade
boundaries between tradable and non-tradable goods
Global supply chains
all of the above
Select example of Indian Multinational Company
Hindustan Unilever
Videocon
Cargill
Tesco
Theory of Mercantilism propagates
Encourage exports and imports
Encourage exports and discourage imports
Discourage exports and imports
Discourage exports and encourage imports
The movement to free international trade is most likely to generate short-term unemployment in which industries
Industries in which there are neither imports nor exports
Import-competing industries.
Industries that sell to domestic and foreign buyers
Industries that sell to only foreign buyers
Which of the following is a definition of multinational enterprises?
A company employing foreign nationals.
A company headquartered in one country but having operations in other countries.
A company operating in emerging economies.
None of the above.
International trade forces domestic firms to become more competitive in terms of
The introduction of new products
Product design and quality
Product price
All of the above
According to this theory, the holdings of a country’s treasure primarily in the form of gold constituted its wealth.
Gold Theory
Ricardo Theory
Mercantilism
Hecksher Theory
Which of the following was created in an effort to promote free trade?
World Trade Organization
the Sarbanes-Oxley Act
multilateral development banks
the Organization for Economic Cooperation and Development
IBRD (International Bank for Reconstruction and Development) also known as
Exim Bank
World Bank
International Monetary fund
International Bank
If the countries were to trade along the lines of absolute advantage:
A would export X to B
B would import Y from A
Neither country would want to trade
If a German manufacturer of household appliances wants to take advantage of the cheaper labor available in the Czech Republic, which of the following actions will not serve that purpose?
Build a manufacturing subsidiary there and employ Czech workers.
Build a plant in the Czech Republic and send all German workers to operate it.
License a Czech firm to produce its products under its own label.
Contract for a Czech firm to do some of the processing for it.
Which of the following would be an example of foreign direct investment from the United States to Taiwan?
A U.S. bank buys bonds issued by a Taiwan computer manufacturer.
A U.S. car manufacturer enters into a contract with a Taiwan firm to make and sell it spark plugs.
Microsoft hires a Taiwanese computer programmer to debug some software for it.
The state of California rents space in Taipei for one of its employees to use promoting tourism in California.
What is the connection, if any, between comparative advantage (CA) and foreign direct investment (FDI)?
Nothing. CA has nothing to do with FDI.
Countries often engage in FDI in industries where the country they invest in has a comparative advantage.
When a country’s firms invest abroad, this helps to create CA in the same industry at home.
When a country’s firms invest abroad, this helps to create CA in the same industry in the country where they undertake the investment.
The opportunity cost of one DVD in Japan:
One ton of steel
Two tons of steel
Three tons of steel
Four tons of steel
International business does not result in the following
Innovation is encouraged.
International cooperation is encouraged.
Imports are rendered cheap.
Consumption is minimized.
By entering into international business, a firm expects improvement in
Marketing.
All spheres of marketing, operation and finance simultaneously.
Any or all spheres of marketing, operation and finance.
Finance only
The OECD stands for:
Organization for Economic Co-operation and Development
Organization for Economic Coordination and Development
Organization for Environmental Cooperation and Development.
Organization for Environmental Control and Development
By having business in different countries, a firm reduces
credit risk.
political risk.
financial risk.
business risk.
If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with
international monetary credits.
dollars.
yuan, the Chinese currency.
euros, or any other third currency.
Business across several countries with some decentralization of management decision making to subsidiaries is
Global business.
Multinational business.
Transnational business.
Multi-regional business.
_______ is the first step in the internationalization process.
License
Foreign Investment
Sales
Export
Free international trade maximizes world output through
Countries specializing in production of goods they are best suited for.
Reduction in taxes.
Increased factor income.
Encouraging competition.
If countries were to trade along the lines of comparative advantage:
A would export X to B
A would export Y to B
Neither country would want to trade
Increased foreign competition tend to
Intensify inflationary pressure at home
Induce falling output per worker-hour for domestic workers
Place constraints on the wages of domestic workers
Increase profits of domestic import-competing industries
According to the principle of comparative advantage:
South Korea should export steel
South Korea should export steel and DVDs
Japan should export steel
Japan should export steel and DVDs
Ultimately ..................was replaced by the ................on 1st Jan 1995
GATS, WTO
WTO, GATT
GATT, WTO
IMF, GATT
Nations conduct international trade because:
Some nations prefer to produce one thing while others produce other things.
Resources are not equally distributed among all trading nations.
Trade enhances opportunities to accumulate profits.
Interest rates are not identical in all trading nations
If a nation has an open economy it means that the nation:
Allows private ownership of capital.
Has flexible exchange rates
Has fixed exchange rates
Conducts trade with other countries
By entering into international business, a firm expects improvement in
Marketing.
All spheres of marketing, operation and finance simultaneously.
Any or all spheres of marketing, operation
SMEs stands for:
Small and Medium Entrepreneurs
Small Management of Enterprises
Small and Medium-sized Enterprises.
Societies for Managing Exports
The world trade organization was formed in the year _________ with GATT as its basis.
1993
1994
1995
1996
