Font size
S
M
L
XL
WorksheetsGBE chapter 11, 9, 5
Total questions: 145
Worksheet time: 1hrs 13mins
Name
Class
Date
1.
Ecuador decided to abandon its own currency; the Sucre; and adopt the U.S. dollar as its official legal tender; This process is known as;
a)
Pegged exchange rate
b)
Dollarization
c)
A dirty float
d)
A currency board
e)
Managed-float system
2.
Under the **gold standard**; if a country was exporting more than it was importing; it would experience a net inflow of gold; leading to;
a)
An increase in the domestic money supply and price inflation
b)
A decrease in the domestic money supply and price deflation
c)
A currency devaluation
d)
The establishment of a currency board
e)
A banking crisis
3.
The 1944 conference that led to the creation of the IMF and the World Bank is known as the;
a)
Jamaica Agreement
b)
Maastricht Treaty
c)
Bretton Woods agreement
d)
Treaty of Rome
e)
Single European Act
4.
Under the Bretton Woods system; the U.S. dollar was the only currency convertible to gold at a fixed rate; while other currencies were;
a)
Allowed to float freely against the dollar
b)
Pegged to the value of the British pound
c)
Pegged to the value of the U.S. dollar
d)
Backed by their own central bank's gold reserves
e)
Managed using a dirty-float system
5.
A country with a **fixed exchange rate** regime finds its imports are rapidly exceeding its exports; To maintain the fixed rate; its central bank must;
a)
Print more domestic currency
b)
Sell its reserves of foreign currency to buy its own currency
c)
Buy foreign currency using its domestic currency
d)
Allow the currency to depreciate by 10%
e)
Request an SDR allocation from the IMF
6.
A key argument for a **floating exchange rate** is that it grants a country **monetary policy autonomy**; meaning the central bank can;
a)
Expand the money supply to combat domestic unemployment without being tied to a parity rate
b)
Only change interest rates with IMF approval
c)
Fix the currency value to gold
d)
Force other countries to adopt its currency
e)
Never intervene in the currency markets
7.
A country is suffering a severe recession; Under a floating exchange rate; this might lead to capital outflow and a currency depreciation; which could help recovery through;
a)
Import-led growth
b)
A banking crisis
c)
Export-led growth
d)
A foreign debt crisis
e)
Higher domestic interest rates
8.
An argument for a **fixed exchange rate** is that it imposes **monetary discipline**; preventing a government from;
a)
Lowering taxes during a recession
b)
Financing its expenditures by simply printing more money and causing inflation
c)
Joining a regional trade bloc
d)
Using fiscal policy to manage the economy
e)
Engaging in international trade
9.
A country establishes a system where its domestic currency is 100% backed by the U.S. dollar; and the authority to print money is removed from the central bank; This is an extreme pegged system known as a;
a)
Dirty-float system
b)
Currency board
c)
Managed-float system
d)
Floating exchange rate
e)
Dollarization
10.
A speculative attack on the Thai Baht in 1997 caused its value to plummet; forcing the government to expend its foreign reserves; This event is a classic example of a;
a)
Banking crisis
b)
Foreign debt crisis
c)
Currency crisis
d)
Moral hazard
e)
Trade diversion
11.
After a period of bad loans and deregulation; a country's citizens lose faith in the financial system and rush to withdraw their deposits; This situation is called a;
a)
Currency crisis
b)
Foreign debt crisis
c)
Moral hazard
d)
Banking crisis
e)
SDR allocation
12.
The 'one-size-fits-all' criticism of the IMF suggests that;
a)
All member countries should adopt the U.S. dollar
b)
The IMF applies the same tight economic policies to different countries without considering their unique circumstances
c)
The SDR should be the only global currency
d)
The World Bank should handle all financial crises
e)
All exchange rates should be fixed
13.
The concept that banks and countries might behave recklessly because they expect the IMF to bail them out is known as;
a)
Moral hazard
b)
The Washington consensus
c)
A currency board
d)
A balance-of-trade equilibrium
e)
Kantian ethics
14.
The **SDR (Special Drawing Rights)** is best described as;
a)
A global currency used by tourists
b)
An interest rate set by the World Bank
c)
A reserve asset and accounting unit of the IMF, valued as a basket of leading currencies
d)
A type of low-interest loan for developing nations
e)
A fixed peg to the U.S. dollar
15.
Under the Bretton Woods system; if a country's currency weakened by more than 10%; what was the expected procedure;
a)
The country would have to leave the system
b)
The country was allowed to devalue with IMF approval
c)
The U.S. would have to revalue the dollar
d)
The World Bank would issue a loan
e)
The country had to adopt a currency board
16.
The **dirty-float system** is a system where a currency is technically floating but the central bank intervenes if the value moves too far from what is considered its;
a)
Gold standard value
b)
Pegged rate
c)
"Fair" value
d)
SDR value
e)
Fixed rate
17.
A **pegged exchange rate** is when a currency's value is;
a)
Allowed to fluctuate freely with supply and demand
b)
Fixed to the value of another single currency
c)
Determined by the price of gold
d)
Managed by the World Bank
e)
Based on a basket of currencies like the SDR
18.
A key reason for the collapse of the Bretton Woods system was;
a)
The elimination of capital flows
b)
The U.S. controlling its inflation and running a persistent balance-of-payments surplus
c)
The U.S. being unable to control its inflation and running a persistent balance-of-payments deficit
d)
The IMF running out of SDRs
e)
The World Bank's decision to peg all currencies to gold
19.
The **Washington Consensus** refers to the idea that institutions like the IMF and World Bank tend to;
a)
Promote fixed exchange rates for all countries
b)
Apply a common set of free-market policies to countries in their programs
c)
Encourage protectionism and trade barriers
d)
Advocate for the nationalization of state enterprises
e)
Oppose any form of capital flow liberalization
20.
An IMF program that requires a country to sell off its state-owned enterprises to improve efficiency is promoting;
a)
Tax reform
b)
Privatization
c)
Fiscal discipline
d)
Trade liberalization
e)
Deregulation
21.
The **Jamaica Agreement** formalized the end of the Bretton Woods system by;
a)
Re-establishing the gold standard for all currencies
b)
Allowing countries to adopt the exchange rate systems of their choice (fixed or floating)
c)
Creating the SDR as the sole global currency
d)
Requiring all countries to peg their currency to the U.S. dollar
e)
Merging the IMF and the World Bank
22.
If the interest rate on a 3-month U.S. Treasury bill rises; what is the likely effect on the SDR interest rate; given the dollar's weight in the SDR basket;
a)
It will decrease
b)
It will have no effect
c)
It will increase
d)
It will become fixed
e)
It will be determined by the World Bank
23.
A primary function of the **World Bank** is to;
a)
Provide short-term loans to stabilize currencies
b)
Govern exchange rates globally
c)
Provide low-interest, long-term loans to poor nations for development projects
d)
Act as a lender of last resort for commercial banks
e)
Manage the SDR system
24.
A country running a current account deficit under a fixed exchange rate system will experience;
a)
A gain in international reserves and economic expansion
b)
A loss of international reserves and economic contraction
c)
A currency appreciation
d)
Monetary policy autonomy
e)
Lower interest rates
25.
The U.S. dollar's role as the primary currency held in reserve by other countries makes it the de facto;
a)
Pegged currency
b)
Gold standard
c)
SDR
d)
Reserve currency
e)
Currency board
26.
A key advantage of a fixed exchange rate is the reduction of **uncertainty** for international businesses; which can;
a)
Increase speculation
b)
Harm global economic growth
c)
Improve global economic growth
d)
Cause a banking crisis
e)
Lead to high inflation
27.
If a country on a **currency board** experiences a massive outflow of capital as investors exchange the local currency for the foreign one; what happens automatically;
a)
The government prints more money
b)
Domestic interest rates rise to make holding the local currency more attractive
c)
The currency is devalued
d)
The currency is allowed to float freely
e)
The IMF intervenes with a loan
28.
A situation where a country cannot pay back its loans to foreign lenders is a;
a)
Currency crisis
b)
Banking crisis
c)
Foreign debt crisis
d)
Balance-of-trade crisis
e)
Moral hazard crisis
29.
The main purpose of U.S. tariffs during the period 1861-1933 was to;
a)
Generate revenue for the government
b)
Restrict imports and protect domestic industries
c)
Promote free trade with other nations
d)
Comply with the Bretton Woods agreement
e)
Stabilize the exchange rate
30.
The fact that U.S. monetary policy decisions affect Euro-area bond yields but not the other way around reflects the dollar's role as a;
a)
Pegged currency
b)
Floating currency
c)
Dominant global asset and reserve currency
d)
Component of the SDR only
e)
Weak and unstable currency
31.
A country that wants to use its own monetary policy to combat a recession (e.g.; by lowering interest rates) would find this difficult under which system;
a)
A floating exchange rate
b)
A fixed exchange rate
c)
A dirty-float system
d)
A system with high capital mobility
e)
The current international system
32.
The IMF's function of **surveillance** involves;
a)
Lending money to countries in crisis
b)
Monitoring the macroeconomic policies of all member countries
c)
Conducting economic and policy research
d)
Providing training to government officials
e)
Setting the SDR interest rate
33.
Which of the following IMF program goals aims to help countries broaden their tax base;
a)
Fiscal discipline
b)
Tax reforms
c)
Privatization
d)
Trade liberalization
e)
Legal reforms
34.
If a country's currency depreciates significantly; its exports become cheaper and its imports become more expensive; This process helps with;
a)
Creating a currency crisis
b)
Trade balance adjustments
c)
Imposing monetary discipline
d)
Reducing speculation
e)
Increasing inflation
35.
The argument that widespread **speculation** can create destabilizing fluctuations in exchange rates is a case for;
a)
Floating exchange rates
b)
Fixed exchange rates
c)
Dollarization
d)
Currency boards
e)
The gold standard
36.
The **international monetary system** is best defined as the institutional arrangements that;
a)
Govern FDI flows
b)
Countries adopt to govern exchange rates
c)
Regulate international trade in goods
d)
Prevent banking crises
e)
Promote regional economic integration
37.
The Chinese Renminbi was added to the SDR basket in 2016; reflecting its;
a)
Status as a freely floating currency
b)
Declining importance in the global economy
c)
Growing importance in the global economy
d)
Peg to the U.S. dollar
e)
Role in the Bretton Woods system
38.
A criticism of the IMF is that it lacks **accountability** because;
a)
It only lends to developed nations
b)
Its policies always fail
c)
There is no formal mechanism to hold it responsible for the outcomes of its programs
d)
It is controlled by the World Bank
e)
It only uses outside experts
39.
A country reaches **balance-of-trade equilibrium** when;
a)
The value of its currency is pegged to another
b)
Its exports are exactly zero
c)
The income its residents earn from exports equals the money they pay for imports
d)
It has adopted the U.S. dollar
e)
It has a fixed exchange rate
40.
The collapse of the Bretton Woods system was partly due to a shortage of monetary gold; which created liquidity problems and increased dependency on;
a)
The British pound
b)
The SDR
c)
The Japanese yen
d)
The U.S. dollar
e)
The Euro
41.
Under a currency board; the amount of domestic currency in circulation is dictated by the amount of;
a)
Gold reserves held by the central bank
b)
Foreign currency reserves backing it
c)
SDRs allocated by the IMF
d)
Government debt
e)
The country's GDP
42.
A country with a floating exchange rate that is experiencing a trade deficit will likely see its currency;
a)
Appreciate, making the deficit worse
b)
Depreciate, helping to correct the deficit
c)
Remain unchanged
d)
Be pegged to the dollar by the IMF
e)
Be replaced by a currency board
43.
Which of the following is NOT a function of the IMF;
a)
Surveillance of macroeconomic policies
b)
Lending to countries with balance-of-payments problems
c)
Providing long-term development loans for infrastructure projects
d)
Economic and policy research
e)
Institutional capacity building
44.
When a country running a current account deficit on a fixed exchange rate loses international reserves; this leads to;
a)
Lower interest rates and economic expansion
b)
Tighter liquidity, higher interest rates, and economic contraction
c)
A currency revaluation
d)
The immediate adoption of a floating rate
e)
An increase in government borrowing
45.
The primary objective of the Bretton Woods system was to ensure;
a)
Monetary and financial stability
b)
Free-floating exchange rates
c)
The dominance of the British pound
d)
The rapid liberalization of capital flows
e)
The elimination of the IMF
46.
A country's net international reserve position (NIR) is most directly and automatically affected by central bank intervention under which system;
a)
A floating exchange rate
b)
A fixed exchange rate
c)
A managed-float system
d)
The current international system
e)
A system with dollarization
47.
The increase in private capital flows (FDI, portfolio, etc.) since the 1980s has made resolving debt defaults more complicated because;
a)
The IMF no longer provides loans
b)
The number of creditors has increased, making coordination difficult
c)
The WTO now regulates all capital flows
d)
All countries have adopted currency boards
e)
All debt is now denominated in SDRs
48.
The current international monetary system is characterized by;
a)
A universal fixed exchange rate system
b)
Countries having discretion to choose their own exchange rate regimes
c)
The dominance of the SDR as the main reserve currency
d)
A complete lack of capital mobility
e)
The IMF mandating all monetary policy
49.
A group of countries agrees to remove all tariffs and quotas on trade between them but maintain their own individual trade policies towards non-member countries; This is a;
a)
Customs union
b)
Common market
c)
Free trade area
d)
Economic union
e)
Political union
50.
The European Union requires that products like toys and electronics meet a common set of standards; allowing them to be sold anywhere in the EU; It also has a common tariff for goods imported from outside the EU; These features mean the EU is at least a;
a)
Free trade area
b)
Customs union
c)
Common market
d)
Political union
e)
Economic union
51.
A situation where a country joins a free trade area and begins importing a product from a higher-cost member country instead of a lower-cost non-member country is called;
a)
Trade creation
b)
Trade diversion
c)
An optimal currency area
d)
A customs union
e)
A common market
52.
**Trade creation** occurs when;
a)
High-cost domestic producers are replaced by low-cost producers within the free trade area
b)
Low-cost external producers are replaced by high-cost producers within the free trade area
c)
A country imposes new tariffs on its trading partners
d)
A political union is formed
e)
A country leaves a free trade area
53.
Which level of economic integration allows for the free movement of goods; services; AND factors of production (labor and capital) between members; and has a common external trade policy;
a)
Free trade area
b)
Customs union
c)
Common market
d)
Political union
e)
Economic union
54.
The European Union is a full **economic union** because it has a common market; common external trade policy; harmonized tax rates; and a;
a)
Common language
b)
Common legal system for all laws
c)
Common currency (for many members)
d)
Single head of state
e)
Common foreign policy
55.
The **European Commission** is the institution responsible for;
a)
Setting interest rates for the Eurozone
b)
Proposing EU legislation, implementing it, and monitoring compliance
c)
Serving as the supreme appeals court for EU law
d)
Acting as the heads of state of EU members
e)
Ratifying international treaties
56.
The **Single European Act** had the objective of;
a)
Creating the Euro as a common currency
b)
Establishing the European Parliament
c)
Removing frontier controls and other barriers to create a single market by 1992
d)
Admitting former communist countries to the EU
e)
Leaving agriculture out of the integration process
57.
The treaty that committed the European Community members to adopting a common currency was the;
a)
Treaty of Rome
b)
Treaty of Lisbon
c)
Single European Act
d)
Maastricht Treaty
e)
NAFTA Agreement
58.
A key benefit of the **Euro** is that it;
a)
Allows each country to have its own independent monetary policy
b)
Increases the costs of converting currencies for businesses and tourists
c)
Makes it easier to compare prices across countries and boosts capital market liquidity
d)
Guarantees that all EU members will have the same rate of economic growth
e)
Creates a new optimal currency area
59.
A major cost of adopting the Euro is that member countries lose control over their own;
a)
Fiscal policy (taxing and spending)
b)
Monetary policy (interest rates and money supply)
c)
Trade policy with non-EU members
d)
Agricultural policy
e)
Border controls
60.
An **optimal currency area** is a region where;
a)
All countries have the same language and culture
b)
Similarities in economic activity make a single currency a feasible instrument of macroeconomic policy
c)
The benefits of a single currency are always zero
d)
Trade diversion is maximized
e)
All members are part of a political union
61.
NAFTA (now USMCA) is an example of a;
a)
Common market
b)
Customs union
c)
Economic union
d)
Political union
e)
Free trade area
62.
A provision of **NAFTA** was the removal of most restrictions on foreign direct investment among the members; but with special protection given to which Mexican industries;
a)
Automotive and textiles
b)
Tourism and agriculture
c)
Energy and railway industries
d)
Financial services and telecommunications
e)
Aerospace and pharmaceuticals
63.
The main motivation behind the creation of the European Community (now EU) was;
a)
To create a military alliance against the Soviet Union
b)
The devastation of two world wars and a desire for lasting peace and economic power
c)
To establish the Euro as the world's reserve currency
d)
To form a bloc to compete with NAFTA
e)
To promote agricultural protectionism
64.
The institution that includes the heads of state of EU members and the president of the European Commission is the;
a)
European Parliament
b)
European Commission
c)
European Council
d)
Court of Justice
e)
European Central Bank
65.
The **European Free Trade Association (EFTA)** is a free trade area that notably left which major sector out of its agreement;
a)
Financial services
b)
Manufacturing
c)
Technology
d)
Agriculture
e)
Fisheries
66.
If Spain; an EU member; experiences a severe recession; it cannot devalue its currency (the Euro) to boost exports; This illustrates which cost of a single currency;
a)
Loss of fiscal policy control
b)
Loss of monetary policy control
c)
The problem of trade diversion
d)
The problem of trade creation
e)
The failure of the Single European Act
67.
The **Treaty of Rome** was the foundational treaty that;
a)
Created the Euro
b)
Established the European Community and provided for the creation of a common market
c)
Admitted the UK into the European Community
d)
Created NAFTA
e)
Established the principle of "mutual recognition"
68.
Which of the following represents the highest level of regional economic integration;
a)
Free Trade Area
b)
Customs Union
c)
Common Market
d)
Economic Union
e)
Political Union
69.
The Andean Community's goal is to be a customs union; but it has been imperfectly implemented; A fully implemented customs union would require Bolivia; Colombia; Ecuador; and Peru to have;
a)
A single currency and central bank
b)
Free movement of labor and capital between them
c)
A common external trade policy towards countries like the U.S. and China
d)
A single head of government for the entire bloc
e)
Harmonized tax rates
70.
An argument *for* regional economic integration is that it;
a)
Increases the risk of armed conflict by creating rival blocs
b)
Increases national sovereignty over all policy areas
c)
Creates economic dependencies that can increase political cooperation and reduce conflict
d)
Guarantees that trade diversion will never occur
e)
Ensures all groups within a country benefit equally
71.
An argument *against* regional economic integration is the concern over a loss of **national sovereignty** because;
a)
Countries must give up some control over key policies like trade and monetary policy
b)
It always leads to a political union
c)
It increases the power of domestic producers
d)
It leads to trade creation
e)
It is opposed by the WTO
72.
The **Court of Justice** is the supreme appeals court for;
a)
NAFTA disputes
b)
International law globally
c)
EU law
d)
EFTA trade issues
e)
ASEAN regulations
73.
The principle of **'mutual recognition'** established by the Single European Act means that;
a)
If a product standard is accepted in one EU country, it must be accepted in all others
b)
All EU countries must recognize each other's political leaders
c)
The Euro must be accepted as legal tender in all member states
d)
All member states must have the same tax rates
e)
Member states must recognize each other's university degrees
74.
The **Treaty of Lisbon** increased the power of which EU institution; making it a co-equal legislator for almost all European laws;
a)
The European Commission
b)
The European Council
c)
The Court of Justice
d)
The European Parliament
e)
The European Central Bank
75.
The right of foreign truckers to pick up and deliver goods within another member state's borders is called;
a)
Mutual recognition
b)
A common market
c)
Cabotage
d)
Trade diversion
e)
An economic union
76.
The fact that trade between the U.S.; Canada; and Mexico grew from 25% of total U.S. trade in 1990 to over 40% by 2017 is presented as evidence of **NAFTA's** success in;
a)
Creating a political union
b)
Promoting trade among its members
c)
Establishing a common currency
d)
Harmonizing environmental standards
e)
Creating trade diversion
77.
The **Association of Southeast Asian Nations (ASEAN)** is an attempt to establish a;
a)
Political Union
b)
Economic Union
c)
Common Market
d)
Free Trade Area
e)
Customs Union
78.
Which of the following countries is a member of the European Free Trade Association (EFTA) but not the European Union (EU);
a)
Germany
b)
France
c)
The United Kingdom
d)
Switzerland
e)
Spain
79.
If joining the EU caused high-cost Italian car manufacturers to lose sales to more efficient German car manufacturers; this would be an example of;
a)
Trade diversion
b)
Trade creation
c)
A political union
d)
An optimal currency area
e)
A customs union failure
80.
The European Union's structure; with a central political apparatus coordinating economic; social; and foreign policy; shows that it has elements of a;
a)
Free Trade Area only
b)
Customs Union only
c)
Common Market only
d)
Political Union
e)
It has no such elements
81.
A key economic reason for a country to join an economic bloc is to;
a)
Protect its domestic industries from all foreign competition
b)
Increase its national sovereignty
c)
Capture more gains from free trade and investment
d)
Avoid having to follow any international rules
e)
Increase the cost of goods for its consumers
82.
If France; Germany; and Spain all remove barriers to the free flow of goods; services; capital; and labor; they have at least created a;
a)
Free Trade Area
b)
Customs Union
c)
Common Market
d)
Political Union
e)
Economic Union
83.
The existence of the Euro is a key feature of which level of integration for the Eurozone countries;
a)
Customs Union
b)
Common Market
c)
Free Trade Area
d)
Political Union
e)
Economic Union
84.
If NAFTA had resulted in U.S. firms moving production from an efficient supplier in Asia to a less efficient supplier in Mexico simply to avoid tariffs; this would be;
a)
Trade creation
b)
Trade diversion
c)
An optimal currency area
d)
A political union success
e)
A benefit of free trade
85.
The body responsible for implementing EU legislation and run by one commissioner from each member state is the;
a)
European Council
b)
European Parliament
c)
Court of Justice
d)
European Commission
e)
EFTA
86.
The persistent economic problems in Greece and Spain after 2008 raised questions about whether the Eurozone is truly a(n);
a)
Free Trade Area
b)
Customs Union
c)
Optimal currency area
d)
Political Union
e)
Common Market
87.
Which of the following is NOT a commitment of countries in an **economic union**;
a)
Removing barriers to the free flow of goods and services
b)
Adoption of a common currency
c)
Harmonization of tax rates
d)
Pursuit of a common external trade policy
e)
Adoption of a single language
88.
A key difference between a common market and a customs union is the addition of;
a)
A common currency
b)
Free movement of factors of production (labor and capital)
c)
A common external trade policy
d)
Elimination of internal trade barriers
e)
A central political apparatus
89.
The Single European Act aimed to reduce costs for businesses by instituting **open public procurement**; which means;
a)
Government contracts must be open to suppliers from any member state
b)
All public goods must be free
c)
All procurement must be done through the European Commission
d)
Only domestic suppliers can bid on government contracts
e)
Procurement is limited to members of a customs union
90.
The long-term goal of **regional economic integration** is often to achieve;
a)
Increased national sovereignty
b)
Greater political cooperation and reduce the risk of conflict
c)
Higher tariffs between member states
d)
Trade diversion over trade creation
e)
Separate external trade policies
91.
Which of the following is an example of a **political union**;
a)
NAFTA
b)
The United States of America
c)
ASEAN
d)
EFTA
e)
The Eurozone
92.
The fact that tax regulations in the EU still require unanimity among council members to become law indicates that;
a)
The EU is a perfect political union
b)
The EU has achieved full fiscal harmonization
c)
National sovereignty in sensitive areas is still a major concern
d)
The European Commission has ultimate power
e)
The Treaty of Lisbon failed
93.
ASEAN's creation of the ASEAN Free Trade Area (AFTA) is an example of countries in a region moving towards;
a)
A single currency
b)
Greater economic integration
c)
A political union
d)
A common market
e)
A single foreign policy
94.
A benefit of the Euro is the development of a highly liquid pan-European **capital market**; which;
a)
Restricts investment options for individuals
b)
Increases the range of investment options for individuals and institutions
c)
Is controlled by the European Commission
d)
Eliminates all risk from investing
e)
Is only open to EFTA members
95.
Which EU institution is comprised of the heads of state of the member countries;
a)
European Commission
b)
European Parliament
c)
Court of Justice
d)
European Council
e)
European Central Bank
96.
A primary challenge of regional economic integration is that while the nation as a whole may benefit; certain groups will;
a)
Receive all of the benefits
b)
Experience adjustment costs, such as job losses
c)
Gain more political power
d)
Be exempt from the new rules
e)
See no change in their economic status
97.
A manager is faced with a situation where any course of action will have a negative ethical consequence; and there is no clear right choice; This is known as a(n);
a)
Ethical dilemma
b)
Stakeholder claim
c)
Righteous moralist position
d)
Ethical strawman
e)
Kantian imperative
98.
The **Friedman Doctrine** states that the only social responsibility of a business is to;
a)
Solve social problems like poverty and pollution
b)
Increase its profitability, so long as it stays within the law
c)
Adopt the ethical standards of the country in which it is operating
d)
Treat all people as ends, and never as means
e)
Ensure a just distribution of economic goods
99.
A manager of a U.S. company operating in a foreign country believes that the U.S. standards of ethics are the correct ones to follow everywhere; This manager is a(n);
a)
Cultural Relativist
b)
Naïve Immoralist
c)
Righteous Moralist
d)
Utilitarian
e)
Kantian
100.
An executive justifies paying bribes in a foreign country by saying; "Look; all our competitors from other nations are doing it; so we have to do it too to stay competitive"; This is the logic of a(n);
a)
Cultural Relativist
b)
Righteous Moralist
c)
Kantian
d)
Naïve Immoralist
e)
Friedman Doctrine supporter
101.
The ethical approach that holds that the moral worth of an action is determined by its consequences; aiming for the greatest good for the greatest number; is;
a)
Kantianism
b)
Rights theories
c)
Cultural Relativism
d)
Utilitarianism
e)
The Friedman Doctrine
102.
The belief that people should be treated as ends in themselves and never purely as means to the ends of others is the core principle of;
a)
Utilitarianism
b)
Kantianism
c)
The Naïve Immoralist approach
d)
Cultural Relativism
e)
The Friedman Doctrine
103.
Philosopher John Rawls developed a theory of **just distribution** based on a conceptual exercise where everyone is imagined to be behind a;
a)
Veil of ignorance
b)
Curtain of justice
c)
Wall of ethics
d)
Mask of morality
e)
Screen of fairness
104.
According to Rawls' **difference principle**; inequalities are justified only if they;
a)
Benefit the most advantaged people in society
b)
Benefit everyone equally
c)
Benefit the least-advantaged people in society
d)
Are based on cultural norms
e)
Increase the company's profits
105.
An organization's employees; directors; and stockholders are considered its;
a)
External stakeholders
b)
Community stakeholders
c)
Internal stakeholders
d)
Governmental stakeholders
e)
Media stakeholders
106.
A company's customers; suppliers; and the communities in which it operates are its;
a)
Internal stakeholders
b)
Stockholders
c)
Employees
d)
External stakeholders
e)
Directors
107.
A company that sets extremely aggressive sales targets for its employees; which pressures them to engage in deceptive sales practices to meet their quotas; is exhibiting unethical behavior caused by;
a)
Personal ethics
b)
Unrealistic performance goals
c)
Kantianism
d)
Just distribution
e)
Societal culture
108.
The idea that "When in Rome; do as the Romans do" is a central tenet of which ethical strawman approach;
a)
The Friedman Doctrine
b)
Cultural Relativism
c)
The Righteous Moralist
d)
The Naïve Immoralist
e)
Utilitarianism
109.
A major flaw in **Utilitarianism** is that it can be extremely difficult to measure the benefits; costs; and risks of an action; and it may ignore;
a)
The consequences of an action
b)
The overall good of society
c)
Considerations of justice and minority rights
d)
The company's profitability
e)
The law
110.
According to Hofstede's cultural dimensions; a society high in **masculinity** and **power distance** is likely to place;
a)
More emphasis on ethical behavior
b)
Less emphasis on ethical behavior
c)
Equal emphasis on ethical behavior as other cultures
d)
Emphasis only on Kantian ethics
e)
Emphasis only on Utilitarian ethics
111.
A company appoints a senior manager whose sole job is to ensure that all employees are trained in and comply with the company's code of ethics; This manager is a(n);
a)
Chief Financial Officer
b)
Stakeholder
c)
Ethics Officer
d)
Righteous Moralist
e)
Naïve Immoralist
112.
An organizational culture that protects employees who report unethical practices by their superiors is fostering;
a)
The Friedman Doctrine
b)
Moral courage and whistleblowing
c)
Cultural Relativism
d)
Unrealistic performance goals
e)
The difference principle
113.
The concept of **Corporate Social Responsibility (CSR)** suggests that businesses should;
a)
Only focus on increasing shareholder value within the law
b)
Consider the social consequences of their economic actions in decision-making
c)
Always adopt the ethics of their home country
d)
Always adopt the ethics of the host country
e)
Ignore stakeholders in their decision-making
114.
**Sustainability** in a business context means that an organization's actions should;
a)
Maximize short-term profits at all costs
b)
Not negatively affect the ability of future generations to meet their own economic needs
c)
Be based solely on the consequences of those actions
d)
Follow the cultural norms of the host country
e)
Prioritize internal stakeholders over external stakeholders
115.
A manager making a decision based purely on economic logic without considering the ethical implications is an example of unethical behavior rooted in;
a)
Personal ethics
b)
Decision-making processes
c)
Organizational culture
d)
Leadership
e)
Societal culture
116.
**Rights theories** argue that all human beings have fundamental rights that take precedence over;
a)
The law
b)
The collective good
c)
Corporate profits
d)
Cultural norms
e)
Utilitarian outcomes
117.
The **Friedman Doctrine** would be challenged by a situation where a company is legally allowed to emit high levels of pollution in a country with weak environmental laws because;
a)
It is not maximizing profit
b)
It is breaking the law
c)
The action is legal but ethically questionable due to the harm it causes
d)
It is following the principle of cultural relativism
e)
It is treating people as ends
118.
A U.S. manager refuses to bribe a foreign official; even though it is a common practice in that country and not strictly illegal; because it violates U.S. law (the FCPA) and the company's global code of conduct; This manager is acting as a;
a)
Naïve Immoralist
b)
Cultural Relativist
c)
Righteous Moralist
d)
Utilitarian
e)
Follower of the Friedman Doctrine
119.
A pharmaceutical company decides to provide a life-saving drug to a poor country at a very low cost; even though it could legally charge a much higher price; This action aligns with the concept of;
a)
The Friedman Doctrine
b)
CSR and stakeholder theory
c)
The Naïve Immoralist approach
d)
Cultural Relativism
e)
Only Kantianism
120.
A key way for a business to integrate ethical considerations into its operations is to include ethical assessments in its **hiring and promotion** process; such as by;
a)
Only hiring people from the home country
b)
Using psychological tests and not promoting those who act unethically
c)
Setting unrealistic performance goals
d)
Ignoring the personal ethics of candidates
e)
Hiring based only on economic performance
121.
The idea that an ethical decision is one you would be comfortable communicating to all affected stakeholders is a key component of which integration method;
a)
Hiring and promotion
b)
Organizational culture
c)
Ethical decision-making processes
d)
Appointing an ethics officer
e)
Fostering moral courage
122.
**Kantian ethics** would argue that using child labor is wrong; not because of its negative consequences; but because it;
a)
Is illegal in the home country
b)
Violates the fundamental dignity of the children by treating them as means to an end
c)
Is not profitable in the long run
d)
Is not a common practice in most cultures
e)
Goes against the principle of just distribution
123.
A company that actively invests in community projects and funds scholarships in the towns where its factories are located is engaging in;
a)
The Friedman Doctrine
b)
Corporate Social Responsibility (CSR)
c)
Cultural Relativism
d)
The Naïve Immoralist approach
e)
An ethical dilemma
124.
An **ethical dilemma** arises when;
a)
A decision is clearly right or wrong
b)
There is no ethically acceptable solution
c)
A manager must choose between profit and the law
d)
A stakeholder makes a claim against the company
e)
A company must decide which culture's ethics to follow
125.
The concept of a **'veil of ignorance'** is a tool to help managers;
a)
Calculate the utilitarian consequences of an action
b)
Determine the cultural norms of a host country
c)
Make impartial decisions by ignoring personal characteristics
d)
Increase company profits
e)
Justify any action as ethical
126.
If a company's leaders consistently act unethically and reward employees who cut corners; this will shape the company's;
a)
Decision-making processes
b)
Personal ethics
c)
Organizational culture
d)
Societal culture
e)
Code of ethics
127.
A manager who believes "the ends justify the means" is implicitly following which ethical philosophy;
a)
Kantianism
b)
Rights theories
c)
Utilitarianism
d)
Cultural Relativism
e)
The Righteous Moralist
128.
A company that ensures its suppliers are not using forced labor is considering the rights of which group of **external stakeholders**;
a)
Customers
b)
The suppliers' employees
c)
Shareholders
d)
The company's own employees
e)
Unions
129.
**Ethics** are defined as the accepted principles of right or wrong that govern;
a)
Only the actions of an organization
b)
Only the conduct of a person
c)
Only the members of a profession
d)
The conduct of a person, a profession, or an organization
e)
Only business people
130.
A home-country manager working abroad who feels a cultural and psychological distance from local employees may be more prone to unethical behavior due to a lack of;
a)
Financial resources
b)
Accountability and connection
c)
Leadership support
d)
Moral courage
e)
Clear performance goals
131.
John Rawls' theory of justice is primarily concerned with the;
a)
Maximization of corporate profit
b)
Consequences of business actions
c)
Fair and equitable distribution of economic goods and services
d)
Universal rights of all human beings
e)
Cultural relativity of ethics
132.
The concept of **sustainability** requires a business to consider the impact of its actions on;
a)
This quarter's profits only
b)
The company's leaders
c)
Future generations
d)
The Friedman Doctrine
e)
The home country's culture
133.
A manager asking "Would my family, friends, or colleagues approve of this decision?" is using a practical method for what;
a)
Evaluating a decision-making process for ethical soundness
b)
Hiring a new employee
c)
Setting performance goals
d)
Implementing CSR
e)
Conducting a stakeholder analysis
134.
Treating people with dignity and respect because they are conscious human beings is a core tenet of;
a)
Utilitarianism
b)
Kantianism
c)
Cultural Relativism
d)
The Naïve Immoralist view
e)
The Friedman Doctrine
135.
The main flaw of the **Righteous Moralist** approach is that it is;
a)
Too focused on consequences
b)
Often impractical and fails to recognize cultural nuances
c)
The same as the Naïve Immoralist approach
d)
Always the most profitable approach
e)
Illegal under international law
136.
The accepted principles of right and wrong governing the conduct of business people specifically is the definition of;
a)
Ethics
b)
Business ethics
c)
Corporate social responsibility
d)
Sustainability
e)
Stakeholder theory
137.
A company that decides to invest in new, cleaner technology that is more expensive but reduces pollution for the local community is balancing the needs of its shareholders with those of its;
a)
Internal stakeholders only
b)
Directors only
c)
External stakeholders (the community)
d)
Competitors
e)
It is not balancing any needs
138.
The idea that inequalities are justified if they raise the living standards for everyone, especially the poorest, is known as the;
a)
Veil of ignorance
b)
Difference principle
c)
Friedman Doctrine
d)
Kantian imperative
e)
Utilitarian calculus
139.
A factory manager is pressured by headquarters to meet an unrealistic production quota. As a result, the manager skips important safety checks, leading to an accident. This is a classic example of unethical behavior driven by;
a)
Personal ethics
b)
Organizational culture
c)
Unrealistic performance goals
d)
Leadership
e)
Societal culture
140.
A business that adheres to the **Friedman Doctrine** would argue that donating to charity is only acceptable if;
a)
It is required by law
b)
It maximizes shareholder profit (e.g., through positive PR)
c)
It is a common practice in that culture
d)
It is demanded by all stakeholders
e)
It creates the greatest good for the greatest number
141.
An employee who learns of illegal accounting practices at their company and reports it to the authorities, despite the risk to their career, is demonstrating;
a)
The Naïve Immoralist view
b)
Moral courage
c)
Cultural Relativism
d)
Utilitarianism
e)
The Friedman Doctrine
142.
Which of these is an **internal stakeholder**;
a)
A customer
b)
A supplier
c)
A labor union
d)
A company director
e)
The local community
143.
The strawman approach of **Cultural Relativism** would be ethically problematic in a country where;
a)
Gift-giving is a sign of respect
b)
Bribes are a common part of doing business
c)
The laws are very strict
d)
The culture is high in individualism
e)
There are no cultural norms
144.
A company's code of ethics is a key part of shaping its;
a)
Decision-making processes
b)
Organizational culture and leadership
c)
Hiring and promotion policies
d)
CSR strategy
e)
All of the above
145.
The main difference between Utilitarianism and Rights Theories is that;
a)
Utilitarianism focuses on consequences, while Rights Theories focus on inalienable human rights
b)
Utilitarianism is a strawman approach, while Rights Theories are not
c)
Utilitarianism is about justice, while Rights Theories are about profit
d)
Rights Theories are culturally relative, while Utilitarianism is universal
e)
There is no difference
Reset
