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IB- Final - quiz

International Business (Trường Đại học Kinh tế Thành phố Hồ Chí Minh)

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CHAPTER 4 + 5

TRUE / FALSE

1. Building an organization culture that places a high value on ethical behavior requires
incentive and reward systems. True
2. The term social strata refers to the extent to which individuals can move out of the strata
into which they were born. False
3. The ethical obligations of a multinational corporation toward employment conditions,
human rights, environmental pollution, and the use of power are always clear-cut. False
4. Islam is a polytheistic religion, like Christianity and Judaism. False
5. Norms are abstract ideas about what a group believes to be good, right, and desirable.
False
6. The value systems and norms of a country are unrelated to the costs of doing business
in that country. False
7. International businesses that are ill-informed about the practices of another culture are
likely to fail. True
8. Ethical dilemmas are situations in which none of the available alternatives seems
ethically acceptable. True
9. Social responsibility refers to the idea that businesspeople should favor decisions that
have both good economic and social consequences. True
10. 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. True
11. In countries where the value of group identification is considered to be primary,
managers and workers are discouraged from moving from company to company. True
12. Folkways include rituals and symbolic behavior. True
13. Both Hindus and Buddhists stress the afterlife and spiritual achievement rather than
involvement in this world. True
14. 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. True

MULTIPLE CHOICES

1. ________ are the routine conventions of everyday life. Folkways

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2. Religion may be defined as shared beliefs and rituals that are concerned with the
realm of the sacred.
3. According to ________, suffering originates in people's desires for pleasure. Buddhism
4. The ________ outlawed the paying of bribes to foreign government officials to gain
business. Foreign Corrupt Practices Act
5. Culture is not static.
6. Hinduism and Buddhism both stress the importance of the afterlife.
7. 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. righteous moralist
8. Companies can strengthen the ________ of employees by committing themselves to
not retaliate against employees who complain about unethical actions. moral courage
9. Identify the incorrect statement about environmental regulations: Environmental
regulations are similar across developed and developing nations.
10. Ethical systems are a set of moral principles, or values, that are used to guide and
shape behavior.
11. Which of the following statements about the use of spoken language is true? Most
people prefer to converse in their own language rather than English.
12. 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
social responsibility.
13. A caste system differs from a class system because it is not possible for an
individual to change his or her caste, while a class system allows people to
change their class through individual achievement.

QUESTIONS

What are the ways in which international business and its managers can ensure that ethical
issues are considered in business decisions?

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CHAPTER 6 + 7

TRUE / FALSE

1. A country has an absolute advantage in the production of a product when it is more

efficient than any other country in producing it. True
2. Trade wars benefit countries with interventionist governments. False
3. Governments do not always act in the national interest when they intervene in the
economy; politically important interest groups often influence them. True
4. Factor endowments refer to the extent to which a country is gifted with such resources
as land, labor, and capital. True
5. The simple model of free trade assumed away transportation costs between countries.
True
6. Export tariffs are far less common than import tariffs. True
7. GATT has not recognized the infant industry argument as a legitimate reason for
protectionism. False
8. Under a tariff rate quota, a higher tariff rate is applied to imports within the quota than
those over the quota. False
9. XYZ Toys manufactures and sells small quantities of each of its products, but it can still
benefit from economies of scale. False
10. Unlike other trade policies, local content regulations tend to benefit consumers and not
producers. False
11. Protecting industries deemed important for national security and retaliating against unfair
foreign competition are economic arguments for government intervention. False
12. Tariffs are generally pro-consumer and anti-producer. True
13. 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. True
14. From a profit perspective, it makes sense for firms to disperse their productive activities
to those countries where they can be performed most efficiently. True
15. Antidumping policies are designed to punish foreign firms that are engaged in dumping.
True

MULTIPLE CHOICES

1. ________ are unit cost reductions associated with a large scale of output. Economies
of scale
2. 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 an import quota.
3. Which of the following observations about tariffs is true? Export tariffs are used to
raise revenue for the government.
4. ________ are levied as a proportion of the value of the imported good. Ad valorem
tariffs
5. Antidumping duties are often called countervailing duties.
6. 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 first-mover advantage.
7. Specific tariffs are levied as a fixed charge for each unit of a good imported.

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8. Which of the following is a major benefit of engaging in free trade? It gives countries
access to products that they cannot produce.
9. The variety of goods that a country can produce is limited by the size of the market in
industries where ________ are important. economies of scale
10. 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? Heckscher-Ohlin theory
11. ________ in agriculture could jump-start economic growth among the world's poorer
nations and alleviate global poverty. Free trade
12. Tariffs do not benefit consumers.
13. Identify the true statement about trade barriers. To conform to local content
regulations, a firm may have to locate more production activities in a given market
than it would otherwise.
14. Which of the following is one of the main instruments of trade policy? Tariffs
15. ________ 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. New trade theory
16. A ________ helps domestic producers to compete against foreign imports. A subsidy
17. The ________ argues that a large proportion of the world's new products had been
developed by U.S. firms. product life-cycle theory
18. A company that sells its product in a foreign market below the cost of production may be
accused of dumping.
19. The theories of international trade claim that promoting free trade is generally in the best
interests of a country, although it may not always be in the best interest of an
individual firm.
20. Governments use ________ to boost exports and restrict imports. administrative trade
policies

QUESTIONS

Explain the concept of free trade.

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CHAPTER 9

TRUE / FALSE

1. Because of the fact that everyone benefits from economic integration, it is easy to
achieve and sustain.F
2. Charlyce lives in a country where there are no barriers to the trade of goods and
services. This is called a free trade area.T
3. Since its establishment, the euro has had a stable trading history.F
4. A benefit to companies of economic integration is the opportunity to centralize their
production and reduce costs.T
5. 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.F
6. A regional free trade agreement will benefit the world only when the amount of trade it
creates exceeds the amount of trade it diverts. T
7. A key benefit resulting from the adoption of the euro is the ability to compare prices
across member markets.T
8. The European Union is an example of a perfect economic union.F
9. The Council of the European Union is responsible for proposing EU legislation,
implementing it, and monitoring compliance with EU laws by member states.F
10. In a customs union, trade barriers are eliminated among member countries, and each
country maintains its own external trade policies.F
11. Political turmoil in several African nations has persistently impeded any meaningful
progress in economic integration.T
12. 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.T
13. The Andean Pact is a highly successful common market modeled after the EU.F
14. Establishment of the euro created the largest currency zone in the world, replacing the
position the U.S. dollar had held for decades.F
15. Concerns about national sovereignty in the EU have been a major impediment to
economic integration.T

MULTIPLE CHOICES

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

external trade policy, and allows factors of production to move freely between members.
A common market

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2. From least integrated to most integrated, the levels of economic integration are a: free
trade area, a customs union, a common market, an economic union, and a political
union.
3. Which level of economic integration eliminates trade barriers between member countries
and adopts a common external trade policy? customs union
4. Which is the most enduring free trade area in the world? European Free Trade
Association (EFTA)
5. ________ 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. An
economic union
6. Which feature of an economic union differentiates it from a common market? a common
monetary and fiscal policy
7. Which of the following is a reason the European Union is considered an imperfect
economic union? Not all members of the union have adopted the euro.
8. Firms outside of trading areas run the risk of being shut out of the single market by the
creation of a "trade fortress."
9. Which of the following is a reason Turkey is not yet a member of the EU? There are
concerns over human rights issues in the country.
10. Which of the following is true of ASEAN? It is slowly progressing toward establishing a
free trade zone.

QUESTIONS

Compare and contrast a free trade area and a common market. Provide examples.

In a free trade area, all obstacles to trading goods and services among member countries are
eliminated, while each country retains the autonomy to set its own regulations for nonmember
nations. On the other hand, a common market not only removes trade barriers between member
countries, but also implements a unified external trade policy towards nonmembers. Factors of
production can freely move between member countries in a common market, allowing for the
unrestricted flow of labor and capital through immigration, emigration, and cross-border capital
transfers. The European Free Trade Area exemplifies a free trade area, while the European
Union has evolved from a common market to a more integrated system.

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CHAPTER 8 + 12

TRUE / FALSE

1. Only a few countries have adopted the free market view in its pure form. False
2. Because licensing is more costly and more risky than FDI, other things being equal, the
theories argue that FDI is preferable to licensing. False
3. The cost of capital is the difference between cost of inputs and outputs. False
4. Financial services is an information-intensive industry. True
5. Investors can reduce the level of risk by diversifying a portfolio internationally. True
6. One way countries have encouraged firms to undertake FDI is through double taxation.
False
7. The Eurocurrency market has been one cause of a decrease in global financial
regulations. True
8. By using the global capital market, investors have a much wider range of investment
opportunities than in a purely domestic capital market. True
9. The WTO supports the promotion of international trade in services. True
10. By placing tariffs on imported goods, governments can increase the cost of exporting
relative to foreign direct investment and licensing. True
11. 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. False
12. A capital market brings together those who want to invest money and those who want to
borrow money. True
13. FDI has been declining in the last few decades because protectionist pressures have
become less intense. False
14. Licensing involves the establishment of a new operation in a foreign country. False
15. The globalization of capital has been universally seen as a positive development. False
16. Offshore production refers to FDI undertaken to serve the host market. False

MULTIPLE CHOICES

1. Which of the following statements is true about the growth of foreign direct investment in
the world economy over the last few decades? FDI has accelerated faster than world
trade growth.
2. What has made the United States an attractive target for foreign direct investment? its
wealthy domestic markets
3. The ________ of FDI refers to the amount of FDI undertaken over a year. Flow
4. ________ is made when a corporation sells stock to investors. An equity loan
5. Developing nations currently account for ________ of FDI in the form of cross-border
mergers and acquisitions. about one-third or less
6. Which of the following statements is true of debt loans? Debt loans should be repaid
at regular intervals.
7. 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. balance of payments
8. The relatively low correlation between the movement of stock markets in different
countries indicates that countries pursue different macroeconomic policies.
9. The cost of capital is higher in a purely domestic capital market than in a global
market.

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10. What is a disadvantage of the global capital market? Foreign investments may be
driven by speculative flows in the market.
11. FDI occurs when a firm invests directly in facilities to produce a product in a foreign
country.
12. Which of the following statements is true of market makers? Market makers connect
investors and borrowers in a capital market.
13. The liquidity of the market is ________ in a purely domestic capital market. Limited
14. A ________ brings together those who want to invest money and those who want to
borrow money. capital market
15. An equity loan is made when a corporation sells stock to investors.
16. ________ perform a direct connection function in capital markets. Investment banks
17. The element of risk into investing in foreign assets is greater with ________ exchange
rates. Floating
18. Host country citizens that are employed by an MNE following an FDI are an example of
a direct effect.
19. ________ requires a corporation to repay a predetermined portion of the loan amount at
regular intervals regardless of how much profit it is making. A debt loan
20. A country's ________ accounts keep track of both its payments to and its receipts from
other countries. balance-of-payments
21. A purely domestic capital market faces the problem of limited liquidity.
22. Market makers are financial service companies that connect investors and
borrowers.
23. The stock of FDI refers to the total accumulated value of foreign-owned assets at a
given time.
24. An Italian car manufacturer purchases a U.S. producer of car tires. This is an example of
an acquisition.

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CHAPTER 10 + 11

TRUE / FALSE

1. Carry trade is nonspeculative in nature. False

2. The gold standard called for fixed exchange rates against the U.S. dollar. False
3. The international monetary system refers to the institutional arrangements that
govern exchange rates. True
4. 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. False
5. To minimize the risk of an unanticipated change in exchange rates, a company
can protect itself by entering into a forward exchange contract. True
6. The IMF does not expect governments to meet any obligations except to pay
back the money it borrows. False
7. The foreign exchange market converts the currency of one country into that of
another country. True
8. Implementing a fixed exchange rate regime increases the price inflation in
countries. False
9. 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. False
10. A country that introduces a currency board commits itself to converting its
domestic currency on demand into another currency at a fixed exchange rate.
True
11. 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. True
12. The current system of foreign exchange is a mixed system of government
intervention and speculative activity. True
13. Fixed exchange rates lead to speculation and uncertainty in the value of
currencies. False
14. Market forces have produced a stable dollar exchange rate under a floating
exchange rate regime. False
15. 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. True
16. Governments allow convertibility to preserve their foreign exchange reserves.
False
17. 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. False

MULTIPLE CHOICES

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

Governments can restore monetary control by removing the obligation to maintain
exchange rate parity.
2. ________ 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. Spot exchange rates
3. The ________ helps consumers compare the relative prices of goods and
services in different countries. exchange rate
4. Which of the following is an advantage of using the gold standard? The standard
contains a powerful mechanism for achieving balance-of-trade equilibrium by all
countries.
5. 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?
The United States offers a better deal.
6. The rate at which one currency is converted into another is known as the
exchange rate.
7. ________ arises from volatile changes in exchange rates. Foreign exchange risk
8. What are the two main functions of the foreign exchange market? converting
currency and providing some insurance against foreign exchange risk
9. Gold par value refers to the amount of a currency needed to purchase one ounce of
gold.
10. When a tourist goes to a bank in a foreign country to convert money into the local
currency, the exchange rate used is the spot rate.
11. An exchange rate of €1 = $1.30 indicates that one euro buys 1.30 dollars.
12. What was the World Bank's initial mission? providing low-interest loans to help
finance the building of Europe's economy
13. International businesses use foreign exchange markets for many reasons. Which
of the following is one of these reasons? to invest for short terms in money markets
when they have spare cash

QUESTIONS

1. What is the international monetary system? What are the major trading
currencies?

The international monetary system encompasses the intricate mechanisms that regulate the
exchange rates of the world's major trading currencies, including the prestigious U.S. dollar, the
esteemed euro of the European Union, the revered Japanese yen, and the distinguished British
pound.

2. What are the main uses of foreign exchange markets for international business?

Foreign exchange markets are essential for international business by facilitating key functions
such as currency conversion, which allows businesses to conduct transactions globally by
converting one currency into another. These markets enable companies to hedge against the
risk of adverse currency fluctuations by locking in exchange rates for future trades, thereby
protecting against potential losses. Additionally, foreign exchange markets offer opportunities for

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speculation, allowing businesses to profit from changes in currency values through strategic
buying and selling. They also provide access to foreign capital markets, assisting companies in
securing funding and managing cross-border investments. Furthermore, foreign exchange
markets play a crucial role in price setting, helping determine the relative value of different
currencies, which impacts pricing strategies for goods and services worldwide. By leveraging
these functions, international businesses can effectively manage financial risks, enhance
profitability, and maintain competitive pricing in the global marketplace.

CHAPTER 10 + 11

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TRUE / FALSE

1.

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