Quiz IB Chapter 1~9

Quiz Chapter 1(See related pages)

Your Results:The correct answer for each question is indicated by a .

1 CORRECT A global company is an organization with multicountry affiliates, each of which formulates its own

business strategy based on perceived market differences.

A) True

B) False

2 CORRECT One variable commonly used to measure where and how fast internationalization takes place is the

increase in total foreign direct investment.

A) True

B) False

3 CORRECT The forces in the foreign environment operate the same way as those in the domestic environment

except that they occur in foreign nations.

A) True

B) False

4 CORRECT An international manager has two choices on what to do with a concept or technique employed in

domestic operations: (1) transfer it intact or (2) adapt it to local conditions.

A) True

B) False

5 CORRECT Financial, economic, and distributive forces are examples of controllable forces influencing the life

and development of a firm.

A) True

B) False

6 CORRECT All the following are true about a global company except that it:

A) maintains a presence in key markets around the world.

B) looks for differences among markets.

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C) integrates its operations worldwide.

D) standardizes operations worldwide in one or more of the firm's functional areas.

7 CORRECT The major globalization drivers include all of the following except:

A) political.

B) social.

C) technological.

D) market.

8 CORRECT Due to the expanding importance of foreign-owned firms in local economies, host governments

have made their policies toward these companies _____.

A) more strict

B) more liberal

C) less powerless

D) more confronting

9 CORRECT Management has no direct control over the external environment of the firm but can exert influence

by:

A) heavy promotion of new products to change cultural attitudes.

B) focusing on the strategic plan.

C) increasing the number of people.

D) exerting control over the inventory.

10 CORRECT Unconscious reference to one's own cultural values when judging behavioral actions of others in a

new and different cultural environment is called:

A) self-reference culture.

B) self-reference values.

C) self-reference criterion.

D) self-reference environment.



1 CORRECT The extensive distribution system is one reason Japan sells more to developing nations than most

developed nations do.

A) True

B) False

2 CORRECT The distinction between portfolio investment and direct investment has begun to increase in recent

years due to the growing number of international mergers, acquisitions, and alliances.

A) True

B) False

3 CORRECT Engaging in foreign trade is typically less costly and less risky than making a direct investment into

foreign markets.

A) True

B) False

4 CORRECT Simultaneously introducing products in foreign markets and in the domestic markets reduces sales

volume while also increasing the cost of goods sold.

A) True

B) False

5 CORRECT Export processing zones and in-bond plants are bound by taxation and regulation of materials

brought into the zones for processing and subsequent re-export.

A) True

B) False

6 CORRECT The annual outflows of foreign direct investment means:

A) level of state-owned investment funds.


B) value of the total outstanding stock of all foreign direct investment.

C) the amount invested each year into other nations.

D) bamboo network in the level of worldwide FDI.

7 CORRECT In using GDP per capita as a basis for making comparisons of nations' economies, all of the

following statements hold true except:

A) extreme care must be exercised to avoid drawing unwarranted conclusions.

B) the statistical systems in many developing countries are deficient.

C) the reliability of the data provided is often questionable.

D) GDP per capita is an arithmetic mean obtained by dividing GDP by the total income.

8 CORRECT Preferential trading arrangement is:

A)an agreement by a small group of nations to establish free trade among themselves while maintaining trade restrictions with all other nations.

B)an agreement by a small group of nations to establish free trade with all other nations while maintaining trade restrictions among themselves.

C)an agreement by a small group of nations to study the direction of trade and analyze major trading partners.

D)an agreement that allows government designated zones to make their initial market entry with local manufacturing facilities.

9 CORRECT In-bond plants (maquiladoras):

A)are government designated zones where parts and processed materials can be imported without import duties.

B) requires import duty to be paid only on the value added on the finished product.

C) do not require the imported items to be re-exported.

D) are located on the border between Mexico and the U.S.

10 CORRECT Increasing wage rates in Mexico have affected maquiladoras in which of the following ways?

A)They have encouraged Mexican firms to establish U. S. plants to supply the Mexican market.

B) They have encouraged higher value added work in the Mexican maquiladoras plants.

C) They have encouraged high labor intensive work in the Mexican maquiladoras plants.

D) They have encouraged low skill production in the Mexican maquiladoras plants.



1 CORRECT The Heckscher-Ohlin theory states that differences in production costs occur because of differences

in the supply of production factors.

A) True

B) False

2 CORRECT An important outcome of Leontief's work was recognizing the potential for differences in the kinds

of labor as well as differences in natural and capital resources.

A) True

B) False

3 CORRECT Recent research on the first mover theory also confirms that firms moving first into a market soon

dominate it.

A) True

B) False

4 CORRECT Internalization theory suggests that to obtain a higher return on its investment, a firm should

transfer its superior knowledge in the open market rather than selling it to a foreign subsidiary.

A) True

B) False

5 CORRECT The eclectic theory of international production is sometimes referred to as the OLI model.

A) True

B) False

6 CORRECT Adam Smith claimed that:

A)government, not market forces, should determine the direction, volume, and composition of international trade.

B) a nation could trade advantageously if it had a comparative advantage.


C)market forces, not government controls, should determine the direction, volume, and composition of international trade.

D) customers' tastes are affected by income levels.

7 CORRECT Which of the following is not true about the international product life cycle?

A) Concerns the role of innovation in trade patterns.

B) Can be applied to new product introduction by firms in any of the industrialized nations.

C)Views a product as going through a full life cycle from the standardization stage to internationalization.

D) The initial innovation stage of the cycle borrows from the Linder theory.

8 CORRECT Economies of scale and the experience curve effect are important for international trade because:

A)most manufacturing, mining, and transportation industries are subject to economies of scale.

B)they allow a nation's industries to become low-cost producers without requiring that the nation have an abundance of a certain class of production factors.

C) they justify efforts at being a first-mover in order to become an international leader.

D)they do not allow the spread of very high fixed costs over sales within foreign and home markets.

9 CORRECT To sum up international trade theory, we can say that the primary reason for trade is:

A) similarities in endowments of the factors of production.

B) differences in interest rates for investments.

C) the existence of price differentials among nations.

D) effective utilization of factor intensities.

10 CORRECT Dunning's Eclectic Theory of International Production states that if a firm is going to invest in

production facilities abroad, it must have the following kinds of advantages:

A) ownership-specific, location-specific, and internationalization.

B) strategic, location-specific, and technological.

C) ownership-specific, location-specific, and internalization.

D) technological, financial, and ownership-specific.



1 CORRECT The United Nations institution addresses issues that require global or regional solutions.

A) True

B) False

2 CORRECT The GATT and the WTO work in tandem to support trade liberalization.

A) True

B) False

3 CORRECT The OECD, the "rich man's club," was formed to keep trade within the developed nation markets.

A) True

B) False

4 CORRECT The North American Free Trade Agreement integrates the nations of North America to ensure free

trade and free movement of labor.

A) True

B) False

5 CORRECT On EU matters, the European Court of Justice has authority that supersedes that of the member-

nations' national courts.

A) True

B) False

6 CORRECT The IMF has had many successes. Which of the following point to one of the current IMF challenges?

A) Develop a way for global financial markets to spread risks.

B) Develop and maintain a system of currency exchange that makes global trade possible.

C) Support governments in their noninflationary monetary management.

D) Help the world trading system avoid financial disasters.


7 CORRECT All of the following are fundamental principles of ASEAN except:

A) noninterference by members in the internal affairs of one another.

B) renunciation of the threat or use of force.

C) enlargement of the organization's activities to include a peacekeeping force.

D) effective cooperation among members.

8 CORRECT OAS focuses on:

A) opening government procurements to transnational bids.

B) including protectionist barriers in all sectors that protect domestic products.

C)fostering democracy, protecting human rights, strengthening security, and fighting corruption.

D) serving as a regional vehicle for promoting open trade and practical economic cooperation.

9 CORRECT Which of the following is not included in the membership criteria for the European Union?

A) Adherence to principles of liberty.

B) The country must show evidence of respect for democracy.

C) The country must show respect for human rights and fundamental freedoms.

D) The country must have a rising GDP.

10 CORRECT What is the role of the Council of the European Union?

A) Pass European laws.

B) Administer the daily operations of the EU.

C) Act as a policy-setting institution of the EU and the voice of the member-states.

D) Focus on financial and social issues.



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1 CORRECTThe national culture is a key determinant for the evaluation of managers.

A) True

B) False

2 INCORRECT Legal characteristics and political structures are components of culture.

A) True

B) False

3 CORRECTThe demonstration effect is a result of the backward-bending labor supply curve.

A) True

B) False

4 CORRECTGenerally, the greater the difference between an old and a new method or product, the easier it is for the firm to gain acceptance of a change.

A) True

B) False

5 CORRECTAccording to Hofstede, power distance is the extent to which members of a society accept the unequal distribution of power among individuals.

A) True

B) False

6 CORRECTThe first step international business managers can take in order to learn to live with other cultures is to:

A) learn the language.

B) visit the country.

C) realize that other cultures exist which are different from their own.

D) make friends with natives of the country.


7 CORRECTAll of the following indicate the importance of technological superiority to international companies except:

A) it can be embodied in the company's products.

B)it gives a firm confidence to enter a foreign market even when other companies are already established there.

C)it enables the firm to obtain better-than-usual conditions for a foreign market investment.

D) it keeps the international division of labor constant.

8 CORRECTStrategic technology leveraging is:

A) using external technology to complement rather than substitute for internal technology.

B) obtaining more efficiency from technology by increasing capital investment.

C) using technology to improve a firm's strategy.

D) forming blocs to prevent the poaching of technological ideas and innovations.

9 CORRECTSocial units based on free associations may be formed by all of the following except:

A) Age.

B) Family.

C) Common interest.

D) Gender.

10 CORRECT ____ is the degree to which the members of a society feel threatened by ambiguity and are rule-

oriented.

A) Uncertainty avoidance

B) Power distance

C) Individualism

D) Short-term orientation



1 CORRECTFactor conditions are a combination of natural resources that a country inherits, and resources a country can mold, such as labor force and infrastructure.

A) True

B) False

2 CORRECTThe differences in climatic conditions among a firm's markets have limited impact on its product mix.

A) True

B) False

3 CORRECTThe principal nonrenewable energy sources are the fossil fuels and nuclear power.

A) True

B) False

4 CORRECTEnvironmental sustainability is an economic state in which the demands placed on the environment can be met without reducing the environment's ability to provide for future generations.

A) True

B) False

5 CORRECTThe traditional input-process-output economic business model provides a helpful framework for thinking about environmental sustainability as it relates to business.

A) True

B) False

6 CORRECTPorter's diamond model considers four aspects of a country's economic environment that affect its competitive position. Which of the following is not one of them?

A) Factor conditions


B) Related and supporting industries

C) Demand conditions and firm strategy

D) Ethics

7 CORRECTIn more densely populated nations, it is not very costly to market and distribute products. Which of the following options does not substantiate the reason for such low costs?

A) Population centers are closer.

B) Communication systems are better.

C) More people are available for employment.

D) Improved prospecting equipment.

8 CORRECTWaterways that provide access to interior regions are ____.

A) rhine waterways

B) inland waterways

C) outlet waterways

D) remote waterways

9 CORRECTWhich of the following is a renewable source of energy?

A) Biomass

B) Natural gas

C) Coal

D) Petroleum

10 INCORRECT Which of the following is not one of the characteristics of evolving sustainable business practices

that are widely agreed upon?

A) Limits

B) Interdependence

C) Values and principles

D) Equity in distribution



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1 CORRECT Economic data provide information on the number of people and the socioeconomic data tell us if

they have purchasing power.

A) True

B) False

2 CORRECT A simple calculation based on GNI, total population, and income distribution may indicate that a

country is not a good market.

A) True

B) False

3 CORRECT Changes in wage rates may lead a multinational firm, obtaining products or components from a

number of subsidiaries, to change its labor unions.

A) True

B) False

4 CORRECT Unit labor costs rise in unison with compensation rates if gains in productivity outstrip increases in

hourly compensation.

A) True

B) False

5 CORRECT Total population is the most general indicator of potential market size.

A) True

B) False

6 CORRECT Economic analyses become more complex when a firm enters overseas markets because:

A) the uncontrollable economic variables must be forecasted.

B) managers must operate in two new environments, foreign and international.


C) economists know less about foreign exchange rates.

D)analysts must stay informed of the actions taken by components of the international environment.

7 CORRECT Newly industrialized economies (NIEs) are:

A) four Asian tigers and the middle-income economies.

B) world's lower-income nations, which are less technically developed.

C) fast-growing upper-middle-income and high-income economies.

D) a classification for all industrialized nations, which are the most technically developed.

8 CORRECT Comparison of income redistribution studies over time indicates that in early stages of

development:

A) income inequality decreases.

B) income inequality stays the same.

C) the upper and lower quintiles families grow at the expense of the middle quintile.

D) income inequality increases.

9 CORRECT Since _____ consumer expenditures eliminate differences in relative prices, marketers use these

data to analyze the change in composition consumption with the level of development.

A) GNI-Based

B) capita-based

C) PPP-based

D) calculation-based

10 CORRECT The population size:

A)alone provides a basis for estimating the consumption of low-priced products such as cigarettes and soap.

B)and GNI/capita are necessary for estimating the consumption of low-priced, mass-consumption products such as soap and soft drinks.

C) alone is insufficient for estimating the consumption of any product.

D)and employment rates are required for estimating the consumption of low-priced products such as soap and economy automobiles.



1 CORRECT The rules of traditional international law require that the country compensates the foreign owners.

In the absence of compensation, confiscation becomes expropriation.

A) True

B) False

2 CORRECT Politically, in the U.S., the term "conservative," is a person, group, or party that wishes to minimize

government activities.

A) True

B) False

3 CORRECT An advantage that state-owned companies have over privately owned business comes in the form

of direct subsidies.

A) True

B) False

4 CORRECT The WTO defines dumping as selling a product abroad for less than the average cost of production

in the exporting nation.

A) True

B) False

5 CORRECT Ad valorem duty is a combination of specific and compound duties.

A) True

B) False

6 CORRECT Privatization includes all of the following except:

A) ownership transfer from public to private sector.


B) contracted out services.

C) state-owned activities leased to private entities.

D) government agencies completely funding private owned companies.

7 CORRECT All the following are true about country risk assessment except:

A) it assesses the country's economic situation and policies.

B) it is impacted by government changes.

C) it determines how much risk exists of losing the asset or not being paid.

D)the information needed to judge country risks is not dependant on the nature of its business and the length of time required for the investment.

8 CORRECT Unfair competition caused by a nation's low requirements for bank capital-asset ratios is associated

with:

A) financial services dumping.

B) cultural dumping.

C) tax dumping.

D) social dumping.

9 CORRECT A shipment of flavoring extract invoiced at $15,000 arrives in the United States. The flavoring

extracts and fruit flavors contain more than 50 percent alcohol by weight, and have been subjected to a specific duty of $.15 per pound plus a 5 percent ad valorem. What would be the compound duty?

A) $1875

B) $1125

C) $750

D) $2250

10 CORRECT Orderly marketing arrangements are:

A)arrangements by which the government of the importing nation assigns quantities to specific countries.

B) permissions to allow a stipulated amount of goods to enter duty-free or at a low rate.

C) limits placed on specific classes of imports.

D)formal agreements between exporting and importing countries that stipulate the import or export quotas each nation will have for a good.



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1 CORRECT A capital gains tax is imposed every time assets are purchased.

A) True

B) False

2 CORRECT In emerging market countries, tax treaties are viewed as a key tool in giving foreign investors

confidence in their stability.

A) True

B) False

3 CORRECT The U.S. focus on antitrust legislation is concerned with the industry's competitive structure and

thus pays attention to rivals' objections.

A) True

B) False

4 CORRECT The product liability standard holds the designer/manufacturer liable for damages caused by a

product without the need for a plaintiff to prove negligence in the product's design or manufacture.

A) True

B) False

5 CORRECT Facilitating payments for import approvals and the processing of government papers are

permissible under the FCPA.

A) True

B) False

6 CORRECT Extraterritorial application of laws is:

A) legal relations between governments.


B) laws governing transactions of individuals and companies that cross international borders.

C) an agreement between countries, which may be bilateral or multilateral.

D)a country's attempt to apply its laws to foreigners or nonresidents and to acts and activities that take place outside its borders.

7 CORRECT A major step toward the harmonization of patent treatment is the:

A) ACTA.

B) OHIM.

C) EPO.

D) WIPO.

8 CORRECT Under American antitrust laws, illegal per se means illegal:

A) for extraterritorial conspiracies.

B) for conspiring across international boundaries.

C) for conspiracies concerning strategic products.

D) even though no injury or damage has resulted from the conspiracies.

9 CORRECT Under the rule of strict liability:

A)a defendant is liable and is subject to fines or imprisonment when their product causes death, injury, or damage.

B)a defendant can be found liable for damages even though no negligence or fault has been proved by the plaintiff.

C) a lawyer charges the plaintiff no fee to begin representation and action.

D) punitive damages cannot be awarded.

10 CORRECT The U.S. accounting practice is guided by:

A) Financial Accounting Standards Board.

B) International Accounting Standards Board.

C) International Financial Reporting Standards.

D) Public Company Accounting Oversight Board.

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Quiz IB Chapter 1~9