New information and communication technologies have enabled the

spread of democratic ideals.

Contracts under a civil law system tend to be very detailed with all contingencies spelled out.

To facilitate international business, property rights are defined in a consistent way across

countries.

To improve airport security following a major terrorist attack, the

government of a country takes over the airport security industries This is

an example of privatization.

In mixed economies, in certain sectors the state sets prices, owns

businesses, limits private enterprise, restricts investment by foreigners,

and restricts international trade.

In a totalitarian country, there are safeguards to protect an individual's right to freedom of

expression, opinion, and organization.

The communists believed that socialism could be achieved by democratic means and turned

their backs on violent revolution and dictatorship.

GDP allows a more direct comparison of living standards in different

countries than other measures.

When communism collapsed, many of the communist countries lacked the

legal structure required to protect property rights because all the property

was earlier held by the state.

In mixed economies, governments tend to take into state ownership troubled firms whose

continued operation is thought to be vital to national interests

A theocratic law system is one in which the law is

based on religious teachings.

If a country's economy is to sustain long-term economic growth, the

business environment must be conducive to innovations and

entrepreneurial activity.

GDP is one of the measures used by the Human Development Index (HDI)

to measure the quality of human life in different nations.

A market with a large number of consumers with low living standards will

have a relatively large market when measured in economic terms.

Product liability can be much lower if a product does not conform to required safety standards.

The Foreign Corrupt Practices Act does not allow for grease payments.

The political systems of a country raise ethical issues that have implications for the practice o

international business.

Product liability sets certain safety standards to which a product must adhere.

A political system that prioritizes the needs of the society over individual freedoms is called

Systems that emphasize collectivism tend toward

Peter believed that socialism could be achieved only through violent revolution and

totalitarian dictatorship. Peter was likely a

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

________ are established through patents, copyrights, and trademarks.

The tenet of ________ is that the welfare of society is best served by letting people pursue thei

own economic self-interest.

What term is used to describe a state in which authoritarian elements have captured some or

much of the machinery of state and use this in an attempt to deny basic political and civil liberties

In a(n) ________ society, the welfare of society is best served by letting people pursue their

own economic self-interest.

The term ________ stresses that the political, economic, and legal systems of a country are

interdependent.

________ rights refer to the legal rights over the use to which a resource is put and over the use

made of any income that may be derived from that resource.

Which of the following provides exclusive legal rights to authors, composers, playwrights,

artists, and publishers to publish and disperse their work as they see fit?

________ occurs when a political party that represents the interests of a particular tribe (and

not always the majority tribe) monopolizes power.

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."

Ethics officers are hired by many businesses to make sure that all

employees are trained to be ethically aware and that ethical considerations

enter the business decision-making process at all levels of the

organization.

The term social strata refers to the extent to which individuals can move

out of the strata into which they were born.

Islam is a polytheistic religion, like Christianity and Judaism.

Upon meeting a foreign business executive, a Japanese executive will hold

his business card in both hands and bow while presenting the card to the

foreigner. This is an example of ritual behavior.

Folkways include rituals and symbolic behavior.

In countries where the value of group identification is considered to be

primary, managers and workers are discouraged from moving from

company to company.

Norms are abstract ideas about what a group believes to be good, right,

and desirable.

International businesses that are ill-informed about the practices of

another culture are likely to fail.

The ethical obligations of a multinational corporation toward employment

conditions, human rights, environmental pollution, and the use of power are

always clear-cut.

Both Hindus and Buddhists stress the afterlife and spiritual achievement

rather than involvement in this world.

The value systems and norms of a country are unrelated to the costs of

doing business in that country.

Ethical dilemmas are situations in which none of the available alternatives

seems ethically acceptable.

Building an organization culture that places a high value on ethical

behavior requires incentive and reward systems.

Social responsibility refers to the idea that businesspeople should favor

decisions that have both good economic and social consequences.

According to the ________, even if a manager of a multinational sees that

firms from other nations are not following ethical norms in a host nation,

that manager should maintain the standards of the company's home

country.

Identify the incorrect statement about environmental regulations

A caste system differs from a class system because

Ethical systems are

Hinduism and Buddhism both stress the importance of

Which of the following statements about the use of spoken language is true?

Religion may be defined as

Companies can strengthen the ________ of employees by committing

themselves to not retaliate against employees who complain about

unethical actions.

Companies can strengthen the ________ of employees by committing

themselves to not retaliate against employees who complain about

unethical actions.

Culture is

________ are the routine conventions of everyday life.

The idea that businesspeople should consider the social consequences of

economic actions when making business decisions and that there should

be a presumption in favor of decisions that have both good economic and

social consequences is known as

The ________ outlawed the paying of bribes to foreign government officials

to gain business.

According to ________, suffering originates in people's desires for pleasure.

Under a tariff rate quota, a higher tariff rate is applied to imports within the

quota than those over the quota.

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

is more efficient than any other country in producing it.

GATT has not recognized the infant industry argument as a legitimate

reason for protectionism.

Antidumping policies are designed to punish foreign firms that are engaged

in dumping.

Protecting industries deemed important for national security and retaliating

against unfair foreign competition are economic arguments for government

intervention.

From a profit perspective, it makes sense for firms to disperse their

productive activities to those countries where they can be performed most

efficiently.

Apple's iPhone was unique when it first came out, with many features that

no other phones had. As such, it enjoyed great success and dominated the

cell phone market. This demonstrates the first-mover advantage.

The simple model of free trade assumed away transportation costs

between countries.

Factor endowments refer to the extent to which a country is gifted with

such resources as land, labor, and capital.

Export tariffs are far less common than import tariffs.

XYZ Toys manufactures and sells small quantities of each of its products,

but it can still benefit from economies of scale.

Governments do not always act in the national interest when they

intervene in the economy; politically important interest groups often

influence them.

Trade wars benefit countries with interventionist governments.

Unlike other trade policies, local content regulations tend to benefit

consumers and not producers.

Tariffs are generally pro-consumer and anti-producer.

Which of the following is a major benefit of engaging in free trade?

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

________ in agriculture could jump-start economic growth among the

world's poorer nations and alleviate global poverty.

Which of the following observations about tariffs is true?

Identify the true statement about trade barriers.

________ stresses that in some cases countries specialize in the

production and export of particular products because the world market can

support only a limited number of firms.

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

The ________ argues that a large proportion of the world's new products

had been developed by U.S. firms.

A company that sells its product in a foreign market below the cost of

production may be accused of

The theories of international trade claim that promoting free trade is

generally in the best interests of

The variety of goods that a country can produce is limited by the size of the

market in industries where ________ are important.

Which of the following is one of the main instruments of trade policy?

Antidumping duties are often called

Governments use ________ to boost exports and restrict imports.

Company A entered the production of office software before its

competitors. Because of this, the company's products are more familiar

among and favored by customers. This situation exemplifies the

Specific tariffs are

A ________ helps domestic producers to compete against foreign imports.

Tariffs do not benefit

In the United States, the only firms allowed to import cheese are certain

trading companies, each of which is allocated the right to import a

maximum number of pounds of cheese each year. This is an example of

Which of the following theories emphasizes the interplay between the

proportions in which the factors of production are available in different

countries and the proportions in which they are needed for producing

particular goods?

The WTO supports the promotion of international trade in services

A capital market brings together those who want to invest money and

those who want to borrow money.

Offshore production refers to FDI undertaken to serve the host market.

Because licensing is more costly and more risky than FDI, other things

being equal, the theories argue that FDI is preferable to licensing.

FDI has been declining in the last few decades because protectionist

pressures have become less intense.

By using the global capital market, investors have a much wider range of

investment opportunities than in a purely domestic capital market.

The Eurocurrency market has been one cause of a decrease in global

financial regulations.

One way countries have encouraged firms to undertake FDI is through

double taxation.

The cost of capital is the difference between cost of inputs and outputs.

For the home country, the current account of the balance of payments

improves if the purpose of the foreign investment is to serve the home

market from a low-cost production location.

Financial services is an information-intensive industry.

Financial services is an information-intensive industry.By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing.

Only a few countries have adopted the free market view in its pure form.

Licensing involves the establishment of a new operation in a foreign country.

The globalization of capital has been universally seen as a positive development.

Investors can reduce the level of risk by diversifying a portfolio internationally.

The relatively low correlation between the movement of stock markets in

different countries indicates that

An equity loan is made when

The element of risk into investing in foreign assets is greater with ________

exchange rates.

The liquidity of the market is ________ in a purely domestic capital market.

What is a disadvantage of the global capital market?

________ is made when a corporation sells stock to investors.

The cost of capital is

Which of the following statements is true of market makers?

FDI can benefit the home country's ________ if the foreign subsidiary

creates demands for home-country exports of capital equipment,

intermediate goods, complementary products, and the like.

What has made the United States an attractive target for foreign direct

investment?

________ perform a direct connection function in capital markets.

A ________ brings together those who want to invest money and those who

want to borrow money.

The ________ of FDI refers to the amount of FDI undertaken over a year.

The stock of FDI refers to the

A country's ________ accounts keep track of both its payments to and its

receipts from other countries.

A purely domestic capital market faces the problem of

Developing nations currently account for ________ of FDI in the form of

cross-border mergers and acquisitions.

Market makers are

Host country citizens that are employed by an MNE following an FDI are an

example of

An Italian car manufacturer purchases a U.S. producer of car tires. This is

an example of

________ requires a corporation to repay a predetermined portion of the

loan amount at regular intervals regardless of how much profit it is making.

Which of the following statements is true of debt loans?

Which of the following statements is true about the growth of foreign

direct investment in the world economy over the last few decades?

FDI occurs when a firm

Concerns about national sovereignty in the EU have been a major

impediment to economic integration.

In a customs union, trade barriers are eliminated among member

countries, and each country maintains its own external trade policies.

A key benefit resulting from the adoption of the euro is the ability to

compare prices across member markets.

The European Union is an example of a perfect economic union.

Once the barriers to trade and investment are removed, companies are able

to realize cost economies by centralizing production in key locations and

producing a standardized product for a single multiple-country market.

Since its establishment, the euro has had a stable trading history.

Charlyce lives in a country where there are no barriers to the trade of goods

and services. This is called a free trade area.

Because of the fact that everyone benefits from economic integration, it is

easy to achieve and sustain.

A central reason for the establishment of the EU was the devastation of

Western Europe during two world wars and the desire for a lasting peace.

Political turmoil in several African nations has persistently impeded any

meaningful progress in economic integration.

A benefit to companies of economic integration is the opportunity to

centralize their production and reduce costs.

Establishment of the euro created the largest currency zone in the world,

replacing the position the U.S. dollar had held for decades.

A regional free trade agreement will benefit the world only when the

amount of trade it creates exceeds the amount of trade it diverts.

The Council of the European Union is responsible for proposing EU

legislation, implementing it, and monitoring compliance with EU laws by

member states.

Firms outside of trading areas run the risk of being shut out of the single

market by the creation of a

Which is the most enduring free trade area in the world?

From least integrated to most integrated, the levels of economic

integration are a:

Which of the following is a reason Turkey is not yet a member of the EU?

Which level of economic integration eliminates trade barriers between

member countries and adopts a common external trade policy?

________ involves the free flow of products and factors of production

between member countries, the adoption of a common external trade

policy, a common currency, harmonization of members' tax rates, and a

common monetary and fiscal policy.

Which of the following is true of ASEAN?

Which of the following is a reason the European Union is considered an

imperfect economic union?

________ has no barriers to trade between member countries, includes a

common external trade policy, and allows factors of production to move

freely between members.

Which feature of an economic union differentiates it from a common

market?

If $1 bought more yen with a spot exchange than with a 30-day forward

exchange, it indicates the dollar is expected to depreciate against the yen

in the next 30 days. When this occurs, we say the dollar is selling at a

premium on the 30-day forward market.

Governments allow convertibility to preserve their foreign exchange

reserves.

The current system of foreign exchange is a mixed system of government

intervention and speculative activity.

If the spot rate is $1 = 120, and the 30-day forward rate is $1 = ×130, the

dollar is selling at a discount in the forward market.

The gold standard called for fixed exchange rates against the U.S. dollar.

The international monetary system refers to the institutional arrangements

that govern exchange rates.

When Krista traveled from the United States to England, she had to change

her money from dollars into pounds. Krista was participating in the

currency exchange market.

To minimize the risk of an unanticipated change in exchange rates, a

company can protect itself by entering into a forward exchange contract.

The value of a currency is determined by the interaction between the

demand and supply of that currency relative to the demand and supply of

other currencies.

The purchasing power parity (PPP) theory is a strong predictor of short-run

movements in exchange rates covering time spans of five years or less.

A country that introduces a currency board commits itself to converting its

domestic currency on demand into another currency at a fixed exchange

rate.

The foreign exchange market converts the currency of one country into

that of another country.

Fixed exchange rates lead to speculation and uncertainty in the value of currencies.

Implementing a fixed exchange rate regime increases the price inflation in countries.

Carry trade is nonspeculative in nature.

Market forces have produced a stable dollar exchange rate under a floating

exchange rate regime.

The IMF does not expect governments to meet any obligations except to

pay back the money it borrows.

An exchange rate of €1 = $1.30 indicates that

Which of the following is an advantage of using the gold standard?

A pair of shoes costs £40 in Britain. An identical pair costs $50 in the

United States when the exchange rate is £1 = $1.50. Which of the following

is correct?

________ arises from volatile changes in exchange rates.

When a tourist goes to a bank in a foreign country to convert money into

the local currency, the exchange rate used is the

Which of the following arguments is in favor of floating exchange rates?

The ________ helps consumers compare the relative prices of goods and

services in different countries.

The rate at which one currency is converted into another is known as the

________ are reported on a real-time basis on many financial websites and

are continually changing—their value being determined by supply and

demand for that currency relative to others.

International businesses use foreign exchange markets for many reasons.

Which of the following is one of these reasons?

What was the World Bank's initial mission?

What are the two main functions of the foreign exchange market?

Gold par value refers to the

Products sell well when their attributes match consumer needs.

The HRM function, through its staffing, training, compensation, and

performance appraisal activities, has a critical impact upon the people,

culture, incentive, and control system elements of the firm's organization

architecture. Thus, HRM professionals have a critically important strategic role.

The most popular staffing policy is the ethnocentric approach.

Markets can be segmented in only one way—by sociocultural factors.

Labor unions generally prefer it if an international business keeps highly

skilled tasks in its home country and farms out only low-skilled tasks to

foreign plants.

A company that depends on mass media advertising to communicate its

marketing message to potential consumers is using a push strategy.

A citizen of Japan who moves to the United States to work at Microsoft

would be classified as an inpatriate.

The longer the distribution channel, the more intermediaries there are that

must be persuaded to carry the product for it to reach the consumer.

The four main differences between distribution systems worldwide are

retail concentration, channel length, channel exclusivity, and channel

quality.

Firms may choose an ethnocentric approach to staffing as opposed to a

polycentric approach because of the cost savings it promotes.

Cultural toughness refers to the relationship between the country of

assignment and how well an expatriate adjusts to a particular posting.

The set of choices the firm offers to its targeted markets is known as the

marketing mix.

A push strategy makes sense when distribution channels are short.

Four elements comprise the marketing mix: product attributes, distribution

strategy, communication strategy, and pricing strategy.

Base pay in most firms is set with regard to global market conditions.

In highly developed countries, in the context of communication, noise

tends to be low.

The geocentric approach is the most popular because it is the least

expensive to implement.

Most managers believe that knowledge of a foreign language is necessary

to succeed in an international posting.

The structure of market segments may differ significantly from country to

country.