51. U.S. MNCs are more likely to oppose export controls by the U.S.

government on high-technology goods when

______________.
a. comparable goods are available from other advanced countries
b. comparable goods are not available from other advanced countries
c. the controls are imposed on other technologically advanced countries
d. the controls are also imposed by other technologically advanced countries
e. such controls are a multilateral effort

52. Countries may attempt to regulate business activities that are conducted outside their borders, a practice known as
______________.
a. intratrade
b. intertrade
c. principle of comity
d. extraterritoriality
e. cultural convergence

53. The anti-boycott law provision in the U.S. trade law is an example of ______________.
a. civil law
b. extraterritoriality
c. bureaucratic law
d. tort law
e. embargo
54. Which of the following acts is likely to be the most controversial application of extraterritoriality affecting
international business today?
a. the North American Free Trade Agreement
b. the Brady Act
c. the Helms-Burton Act
d. the Landlam Act
e. the Reagan Act

55. The ______________ authorizes the U.S. government and the former U.S. owners of the confiscated assets to take
action against their new foreign owners.
a. Helms-Burton Act
b. North American Free Trade Agreement
c. Reagan Act
d. Brady Act
e. Landlam Act

56. In the eyes of the U.S. government, the ______________ is simply designed to ensure that foreign companies do not
profit from Cuban property that was stolen from U.S. owners.
a. Helms-Burton Act
b. Reagan Act
c. North American Free Trade Agreement
d. Brady Act
e. Landlam Act

57. The following is about host country laws that affect foreign firms.
a. Other countries must consent to these laws before they become enforceable.
b. These laws are usually challenged and settled by a third party.
c. Foreign firms are better off circumventing those laws.
d. Foreign firms have little recourse except to obey the laws.

58. The transfer of ownership of resources from the private sector to the public sector is ______________.
a. repatriation
b. transfer pricing
c. privatization
d. nationalization
e. offset obligations

59. When the host government nationalizes a company’s property and compensates the private owners for their losses,
the transfer is called ______________.
a. Expropriation
b. confiscation
c. privatization
d. convergence
e. counterpurchase
60. When the host government offers no compensation to the private owners for their losses incurred after the
company’s property is nationalized, the transfer is called _____________.
a. expropriation
b. confiscation
c. privatization
d. convergence
e. counterpurchase

61. The conversion of state-owned property to privately owned property is ______________.

a. transfer pricing
b. privatization
c. nationalization
d. repatriation
e. offset obligations

62. Most state-owned enterprises sold to the private sector are likely to be any of the following EXCEPT:
a. undercapitalized.
b. understaffed.
c. unprofitable.
d. overstaffed.

63. Which of the following is not about privatization?

a. Privatization is the opposite of nationalization.
b. Privatization gained momentum in the 1980s because of political ideology.
c. Privatization is very attractive as a form of entry to some foreign countries.
d. Privatization only takes place in the poorer countries of the world.
e. Privatization gained momentum in the 1980s due to economic pressure.

64. Privatization, which gained momentum in the 1980s, stems from two primary forces:
a. demographic ideology and economic pressure.
b. political ideology and economic pressure.
c. economic pressure and cultural ideology.
d. cultural ideology and demographic pressure.

65. Which of the following will most likely protect a local economy from foreign domination by MNCs?
a. Transfer pricing
b. Constraints on foreign ownership
c. Repatriation of profits
d. Intellectual property rights
e. Privatization

66. According to the text, Canada effectively limits foreign ownership of newspapers to _________ as part of its
program to protect the country’s culture from being inundated by its neighbor to the south.
a. 15%
b. 25%
c. 45%
d. 65%
e. 75%
67. Countries can constrain foreign MNCs by imposing restrictions on their ability to ______________ profits earned in
the host country.
a. expropriate
b. repatriate
c. nationalize
d. privatize
e. expatriate

68. Which of the following is not a positive impact of MNC to a host country?
a. Increase in the level of employment in the local area.
b. Improvement of local infrastructure.
c. Importation of a new technology to the country.
d. The ability of the MNC to locate in another country.
e. Increasing the tax base of the local community.

69. The push by Nestle to sell its infant formula in developing countries is an example of ______________.
a. the economic impact of MNC on host countries
b. the effect of job creation on host countries
c. the negative cultural impact of MNC on host countries
d. the positive technological impact of MNC on host countries
e. the positive cultural impact of MNC on host countries

70. Which of the following is not a necessary question to be answered in resolving an international dispute?
a. Which country's law should be applied?
b. How will the settlement be enforced?
c. Should we use local or foreign currency when settling disputes?
d. In which country should the conflict be resolved?
e. Should we use litigation, negotiation, or arbitration?

71. ______________ is when a party involved in an international dispute can seek a court system most favorable to its
interests if there is no provision in the contract as to which country's law applies.
a. Principle of comity
b. Arbitration
c. Forum shopping
d. Political risk assessment

72. The principle of comity provides that ______________.

a. reciprocity between two countries is not essential for enforcement of foreign court decisions
b. a country will honor and enforce within its own territory the judgment and decision of foreign courts
c. a foreign court decision may violate domestic law
d. a country will not honor and enforce within its own territory the judgment and decision of foreign courts
e. a party to a contract may seek to hear a case in a court system that is favorable to its own interests
73. In order for the principle of comity to apply, countries commonly require all of the following conditions to be met
EXCEPT:
a. reciprocity is extended between countries.
b. proper notice is given to the defendant.
c. local currency is devalued.
d. the foreign court judgment does not violate domestic statutes or treaty obligations.

74. ______________ is the process by which both parties to the conflict agree to submit their cases to a private
individual or body whose decision they will honor.
a. Mediation
b. Arbitration
c. Expropriation
d. Repatriation
e. Expatriation

75. The ______________ of 1976 of the United States provides that the actions of foreign governments against U.S. firms
are generally beyond the jurisdiction of U.S. courts.
a. Foreign Corrupt Practices Act
b. North American Free Trade Agreement
c. Brady Act
d. Foreign Sovereign Immunities Act

THE TECHNOLOGICAL ENVIRONMENT

76. All of the following are examples of intellectual property EXCEPT:

a. patents.
b. copyrights.
c. trademarks.
d. ideas.
e. brand names.

77. Which of the following is NOT an international treaty that protects intellectual property rights?
a. the Paris Convention
b. the Universal Copyright Convention
c. the Trade-Related Intellectual Property Rights agreement
d. the Smithsonian Accord

78. According to the Business Software Alliance, piracy of computer software will cost its members __________ in
revenues in 1999.
a. $12 million
b. $120 million
c. $1.2 billion
d. $12 billion
e. $120 billion

79. When a company files a series of patent applications protecting narrow, minor technical improvements to a
competitor’s existing patents, this is called _______________.
a. patent trending
b. patent depending
c. patent flooding
d. patent countervailing
THE POLITICAL ENVIRONMENT

80. Experienced international businesses engage in ______________ assessment, a systematic analysis of the political
risks they face in foreign countries.
a. cultural risk
b. economic risk
c. monetary risk
d. political risk
e. resource risk

81. ______________ risks are defined as any changes in the political environment that may adversely affect the value of
the firm’s business activities.
a. Political
b. Economic
c. Cultural
d. Resource
e. Monetary
82. Which of the following is NOT mentioned in the text as a category in which most political risks can be divided into?
a. ownership risk
b. operating risk
c. transfer risk
d. cultural risk

83. The type of risk in which the property of the firm is threatened through confiscation or expropriation is called
_____________.
a. ownership risk
b. operating risk
c. transfer risk
d. cultural risk

84. Which of the following is the type of risk in which the ongoing operations of the firm and/or safety of its employees
are threatened through changes in laws, environmental standards, tax codes, terrorism, and armed insurrection?
a. ownership risk
b. operating risk
c. transfer risk
d. cultural risk

85. The type of risk in which the government interferes with the firm’s ability to shift funds into and out of a country is
called ____________.
a. ownership risk
b. operating risk
c. transfer risk
d. cultural risk

86. According to the text, a ______________ risk affects all firms in a country.
a. macropolitical
b. micropolitical
c. operating
d. transfer
e. transaction

87. The civil wars that tore apart Sierra Leone, Zaire, and Bosnia, and Rwanda in the 1992 are categorized as
______________ risks.
a. macropolitical
b. micropolitical
c. operating
d. transfer
e. transaction

88. A ______________ risk affects only a specific firm or firms within a specific industry.
a. macropolitical
b. operating
c. transfer
d. micropolitical
e. transaction

89. Saudi Arabia’s nationalization of its oil industry in the 1970s is an example of a governmentally imposed
______________ risk.
a. macropolitical
b. operating
c. transfer
d. micropolitical
e. transaction

90. Even though most MNCs continually monitor the countries in which they do business for changes policy, the best
sources of information are _____________.
a. from consultants
b. from trade associations
c. internal to the firm
d. the country’s consulate

91. The greater and longer-lived a firm’s investment, the ______________ its risk assessment should be.
a. more narrow
b. more specific
c. broader
d. more cultural
e. more statistical

92. All of the following can be categorized as ways to build domestic political support in the host country EXCEPT:
a. purchasing inputs from local suppliers where possible.
b. repatriating profits to the home country.
c. employing host country citizens in key management and administrative positions.
d. supporting local charities.
93. Which of the following agencies or acts have been created by the U.S. government to insure its firms against political
risks?
a. Export Import Bank
b. Overseas Private Investment Corporation
c. Multilateral Investment Guarantee Agency
d. Foreign Services Immunities Act

94. The Multilateral Investment Guarantee Agency is a subsidiary of the ______________.

a. United Nations
b. World Trade Organization
c. World Bank
d. International Monetary Fund
e. European Union

95. A ______________ planned economy is one in which government planners determine prices and production levels
for individual firms.
a. vertically
b. horizontally
c. centrally
d. freely

96. Political risk assessment will be most crucial in which of the following countries?
a. United States
b. Japan
c. Canada
d. China
e. United Kingdom

97. The primary source of political risk in the countries of Central and Eastern Europe is ______________.
a. instability of economic policies
b. inadequate public infrastructures
c. finding a suitable business partner
d. privatization
e. instability of political systems

98. A primary source of political risk in most of the centrally planned economies is ______________.
a. the instability of their monetary systems.
b. the instability of their political systems.
c. the instability of their economic systems.
d. the instability of their legal systems.

99. Issues faced by foreign firms participating in the transition of former communist economies to free market systems
includes the following EXCEPT:
a. lack of executive education and management training.
b. unpredictability of the government.
c. adequate infrastructure.
d. absence of democratic institutions.
e. lack of tax codes.

100. Which of the following actions is not appropriate for a firm trying to reduce vulnerability to political risks?
a. Leasing rather than buying equipment in the home country.
b. Reducing the level of net investment in the local subsidiary.
c. Leasing rather than buying equipment in the host country.
d. Employing host country nationals in key positions
e. Building domestic local support by using local suppliers.