PHẦN TRẮC NGHIỆM

CHAPTER 1: GLOBALIZATION
1/ Which of the following is not characteristic of globalization?
A. National economies are turning into independent economic systems.
B. Material culture is starting to look similar the world over.
C. Perceived distance is shrinking due to advances in transportation and
telecommunications.
D. Barriers to cross-border trade and investment are declining
2/ Globalization has _____ the opportunities for a firm to expand its revenues by
selling around the world and _____ its costs by producing in nations where key
inputs are cheap.
 increased, reduced
3/ Since the collapse of communism at the end of the 1980s, the erstwhile communist
nations have transformed their economies by encouraging all of the following except
A. privatizing state-owned enterprises.
B. regulating markets.
C. increasing competition.
D. welcoming investment by foreign businesses.
4/ Identify the incorrect statement concerning globalization.
A. It has been blamed for unemployment in developed nations, environmental
degradation and the Americanization of popular culture.
B. It has created new threats for businesses accustomed to dominating their domestic
markets.
C. It is transforming industries and is highly welcomed by those who believed their
jobs were protected from foreign competition.
D. According to most economists it is a very beneficial process where gains outweigh
the losses by a wide margin.
5/ The most global markets currently are markets for
 Industrial goods
6/ Which of the following is not an impediment that makes it difficult for firms to
achieve the optimal dispersion of their productive activities to locations around the
globe?
A. Reduced transportation costs.
 B. Government regulations.
C. Issues associated with economic and political risk.
D. Barriers to foreign direct investment.
7/ The ______ is primarily responsible for policing the world trading system and
making sure nation-states adhere to the rules laid down in trade treaties signed by
member states.
 World Trade Organization
8/ The _____ was created in 1944 by 44 nations that met in Breton Woods, New
Hampshire to promote economic development.
 World Bank
9/ The institution, created in 1944 at Bretton Woods, responsible for maintaining
order in the international monetary system is the
 IMF
10/ _____ occur(s) when a firm exports goods or services to consumers in another
country.
 International trade
11/ The _____ was established to remove barriers to the free flow of goods, services,
and capital between nations.
 GATT
12/ At the Doha Round of the WTO in late 2001,
 an agenda was established to phase out subsidies to agricultural producers.
13/ The reduction in the average tariff rates on manufactured products since 1950
implies all of the following except that
A. firms are dispersing parts of their production process to global locations to drive
down production costs and increase product quality.
B. the economies of the world's nation states are becoming more intertwined.
C. nations are becoming increasingly independent of each other for important goods
and services.
D. the world has become significantly wealthier since 1950.
14/ The growing integration of the world economy is:
 increasing the intensity of competition in a wide range of manufacturing and
service industries
15/ Which of the following statements regarding cross-border trade and investment
is not true?
A. "Protection" from foreign competitors has been, at times, demanded by the United
States.
B. Forecasts indicate a return to the restrictive trade policies of the 1920s and 30s.
C. If trade barriers decline no further, they will put a brake upon the globalization of
both markets and production.
D. It is not clear whether the political majority in the industrialized world favors
further reductions in trade barriers.
16/ Identify the incorrect statement pertaining to the World Wide Web.
A. It makes it much easier for buyers and sellers to find each other.
B. Viewed globally, it is emerging as an equalizer.
C. It rolls back all of the constraints of location, scale, and time zones.
D. It allows businesses to expand their global presence at a lower cost than ever
before.
17/ Since 1980, the world's containership fleet has more than _____, reflecting in
part the growing volume of international trade.
 Quadrupled
18/ Technological innovations have facilitated all of the following except:
A. globalization of production.
B. globalization of markets.
C. creation of electronic global marketplaces.
D. creation of absolutely homogeneous consumer markets.
19/ According to World Bank numbers,
 today's developing nations may account for more than 60 percent of world
economic activity by 2020.
20/ In the 1970s, many Japanese firms invested in North America and Europe
 as a hedge against unfavorable currency movements.
21/ What is the total cumulative value of foreign investments best referred to as?
 Stock of foreign direct investments
22/ The share of the total FDI stock accounted for by which of the following
countries increased markedly from 1980 to 2000?
  France
23/ Firms based in _____ accounted for 17.5 percent of the stock of foreign direct
investment in 2011, up from only 1.1 percent in 1980.
 developing countries
24/ Which of these statements pertaining to cross-border FDI flows is true?
A. The growth of FDI resumed in 2004 and continued through 2006.
B. A surge in FDI from 1995 to 1997 was followed by a slump from 1998 to 2000.
C. Among developing nations, the largest recipient of FDI has been Russia.
D. The dramatic increase in FDI reflects the decreasing internationalization of
business corporations.
25/ Which of the following countries has been the largest recipient of foreign direct
investment and received about $70 billion a year in inflows in 2005 and 2006
 China
26/ Identify the incorrect statement regarding the former Communist nations of
Europe and Asia.
A. The economies of most of the former Communist states are very strong and
developed.
B. Many of the former Communist nations of Europe and Asia share a commitment
to free market economies.
C. As a result of disturbing signs of growing unrest and totalitarian tendencies, the
risks involved in doing business in these countries is very high.
D. For about half a century these countries were essentially closed to Western
international business.
27/ Which of the following observations concerning Latin American countries is
true?
A. Complete restrictions on direct investment by foreign firms.
B. Characterized by low growth, high debt, and hyperinflation.
C. Debt and inflation are up compared to previous decades.
D. Substantial opportunities exist, but are accompanied by substantial risks.
28/ Which of the following statement pertaining to changes in the global economy of
the 21st century is not true?
A. Barriers to the free flow of goods, services, and capital have been coming down.
B. Volume of cross-border trade and investment has been growing more rapidly than
global output.
 C. National economies are becoming more independent and moving away from the
global economic system.
D. As economies advance, more nations are joining the ranks of the developed world.
29/ Which of the following does not help create an economic system that is favorable
to international business?
A. Decreased privatization
B. Widespread deregulation
C. Open markets
D. Falling trade and investment barriers
30/ When a company "exports jobs" overseas, the company is
 taking advantage of lower wages in foreign markets
31/ If the critics of globalization are correct, all of the following things must be
shown except:
A. the share of national income received by labor, as opposed to the share received by
the owners of capital should have declined in advanced nations.
B. even though labor's share of the economic pie may have declined, living standards
need not deteriorate if the size of the total pie has increased sufficiently to offset
the decline in labor's share.
C. the decline in labor's share of national income must be due to moving production
to low-wage countries, as opposed to improving production technology and
productivity.
D. economic growth in developed nations has offset the fall in unskilled workers'
share of national income, raising their living standards.
32/ A study by the OECD, whose members include the 20 richest economies in the
world, noted all of the following except
A. the gap between the poorest and richest segments of society in some OECD
countries widened.
B. in almost all countries real income levels rose over the 20-year period studied.
C. falling unemployment rates brought gains to low-wage workers and fairly broad-
based wage growth.
D. the gap between rich and poor had narrowed in all OECD countries.
33/ Critics of globalization maintain that the apparent decline in real wage rates of
unskilled workers
 is due to the migration of low-wage manufacturing jobs offshore and a
corresponding reduction in demand for unskilled workers
34/ The shift toward a more integrated and interdependent world economy is
referred to as
 globalization
35/ The merging of historically distinct and separate national markets into one huge
global marketplace is known as
 the globalization of markets
36/ Firms that are involved in international business tend to be
 large, small, and medium-sized
37/ Which is not a factor of production?
A. trade
B. land
C. capital
D. energy
38/ The sourcing of good and services from around the world to take advantage of
national differences in the cost and quality of factors of production is called
 the globalization of production
39/ Which organization is responsible for policing the world trading system?
 World Trade Organization
40/ What is the single most important innovation to the globalization of markets and
production?
 the development of the microprocessor
41/ Which of the following trends is true?
A. the United States is accounting for a greater percentage of world trade than ever
before
B. the United States is accounting for a greater percentage of foreign direct
investment than ever before
C. the share of world trade accounted for by developing countries is rising
D. the share of foreign direct investment by developing countries is declining
42/ Which of these is not a concern of anti-globalization protesters?
A. globalization raises consumer income
B. globalization contributes to environmental degradation
 C. globalization is causing a loss of manufacturing jobs in developing countries
D. globalization implies a loss of national sovereignty

CHAPTER 3: DIFFERENCES IN CULTURE

1/ During the 1960s and 1970s, class divisions in _____ raised the cost of doing
business there, relative to other European countries.
 Great Britain
2/ Which of the following is not true regarding culture?
A. Culture is static
B. Culture is evolving
C. It is a system of values and norms that are shared among a group of people
D. It involves the knowledge and beliefs of people
3/ _____ is/are best defined as shared assumptions about how things ought to be
 Values
4/ The system of values and norms that are shared among a group of people and
that when taken together constitute a design for living best defines
 Culture
5/ Social rules and guidelines that prescribe appropriate behavior in particular
situations are best described as
 Norms
6/ A group of people who share a common set of values and norms form a
 Society
7/ _____ are the routine conventions of everyday life
 Folkways
8/ _____ are social conventions concerning things such as the appropriate dress code
in a particular situation, good social manners, eating with the correct utensils,
neighborly behavior, and the like
 Folkways
9/ An act, as simple as shaking hands when meeting new people is an example of
 symbolic behavior
10/ A Japanese executive's ritual of presenting a business card to a foreign business
executive is an example of
 folkways
11/ Mores are
 the norms that are seen as central to the functioning of a society and its social life
12/ Which of the following statements about values and norms of a culture is not
true?
A. The values and norms of a society do not emerge fully formed
B. They are the evolutionary product of a number of factors
C. They are influenced by religion
D. They do not influence social structure
13/ The social organization of Western society tends to emphasize on
 individual achievement
14/ Emphasis on individualism results in all of the following disadvantages except
A. managers tend to develop good general skills but lack the company-specific
experience.
B. difficulty in building teams within an organization to perform collective tasks.
C. executives are not exposed to different ways of doing business.
D. difficulty to achieve cooperation both within a company and between companies
15/ A central value of Japanese culture is the importance attached to
 Group membership
16/ It has been argued that the success of Japanese enterprises in the global
economy has been based partly on all of the following except
A. the diffusion of self-managing work teams.
B. the close cooperation among different functions within Japanese companies.
C. the high degree of managerial mobility between companies.
D. the cooperation between a company and its suppliers on issues such as design,
quality control, and inventory reduction.
17/ Which of the following refers to the extent to which individuals can move out of
the strata into which they are born?
A. Caste stratification
B. Class system
 C. Social mobility
D. Individual potential
18/ A _____ is a closed system of stratification in which social position is determined
by the family into which a person is born, and change in that position is usually not
possible during an individual's lifetime.
 Caste system
19/ This is a less rigid form of social stratification in which social mobility is possible
 Caste system
20/ These strata are typically defined on the basis of characteristics such as family
background, occupation, and income
 Social strata
21/ A class system
 allows an individual to change his/her position via personal achievements
22/ A condition where people tend to perceive themselves in terms of their class
background and this shapes their relationships with members of other classes is
known as
 class consciousness
23/ In China, class divisions
 were strengthened during the high point of Communist rule
24/ The emergence of class consciousness in Great Britain can be attributed to
 the relative lack of class mobility
25/ Ethical systems are
 a set of moral principles, or values, that are used to guide and shape behavior
26/ Religion may be defined as
 shared beliefs and rituals that are concerned with the realm of the sacred
27/ According to sociologists, which of the following branches of Christianity has the
most important economic implications?
 Protestant
28/ Which of the following observations is correct?
 A. None of the economic principles established in the Koran are pro-free enterprise.
B. The Koran speaks approvingly of free enterprise.
C. The Koran speaks disapprovingly of earning legitimate profit through trade and
commerce.
D. Protection of the right to private property is not embedded within Islam.
29/ According to Islam, those who hold property are regarded as
 Trustees
30/ This is an Islamic banking method where banks lend money to a business, and
rather than charging that business interest on the loan, they take a share in the
profits that are derived from the investment
 Mudarabah
31/ Which Islamic banking method is the most widely used among the world's
Islamic banks, primarily because it is the easiest to implement?
 Murabaha
32/ According to Max Weber
 devout Hindus would be less likely to engage in entrepreneurial activity than
devout Protestants
33/ Three values central to the Confucian system of ethics have very important
economic implications. Which of the following is not one among them?
A. Loyalty
B. Rule-based law
C. Reciprocal obligations
D. Honesty in dealings with others
34/ Which of the following statements about the use of spoken language is false?
A. The nature of a language structures the way we perceive the world.
B. The language of a society can directs the attention of its members to certain
features of the world rather than others.
C. Countries with more than one language often have more than one culture.
D. Most people prefer to converse in English rather than their own language
35/ The _____ dimension of Hofstede's study explores how a society deals with the
fact that people are unequal in physical and intellectual capabilities.
 Power distance
36/ The individualism vs. collectivism dimension of Hofstede's study explored
 the relationship between the individual and his/her fellows
37/ Hofstede's uncertainty avoidance dimension considered
 the extent to which different cultures socialized their members into accepting
ambiguous situations and tolerating uncertainty
38/ Hofstede's masculinity vs. femininity dimension examined
 the relationship between gender and work roles
39/ Hofstede's dimension of Confucian dynamism
 captures attitudes toward time, persistence, ordering by status, protection of face,
respect for tradition, and reciprocation of gifts and favors.
40/ The belief in the superiority of one's own culture is known as
 ethnocentrism
41/ Abstract ideas about what a group believes to be good right, and desirable are
called
 values
42/ The basic social organization of a society is its
 social structure
43/ The group is the primary unit of social organization in
 Japan
44/ Which of the following is not characteristic of individualism?
A. individual achievement
B. low managerial mobility
C. low company loyalty
D. entrepreneurial behavior
45/ Which religion promotes the notion that a moral force in society requires the
acceptance of certain responsibilities called dharma?
 Hinduism
46/ _________ is the mother tongue of the largest number of people in the world.
 Chinese
47/ _________ focuses on how society deals with the fact that people are unequal in
physical and intellectual capabilities
 power distance
48/ An act, as simple as shaking hands when meeting new people is an example of
 Symbolic behavior
49/ The emphasis on individualism in the U.S, results in all of the following
disadvantages except
A. Managers tend to develop good general skills but lack the company-specific
experience
B. Difficulty in building teams within an organization to perform collective tasks
C. Executives are not exposed to different ways of doing business
D. Difficulty to achieve cooperation both within a company and between companies
50/ It has been argued that the success of Japanese enterprises in the global
economy has been based partly all of the following except
A. The diffusion of self-managing work teams
B. The close cooperation among different functions within Japanese companies
C. The high degree of managerial mobility between companies
D. The cooperation between a company and its suppliers on issues such as design,
quality control and inventory reduction
51/ Gabrielle Green, a manager at Cryptic Corporation, believes in empowerment,
upward mobility, and motivating her employees. This describes her
 values
52/ What is the difference between folkways and mores
 Violating mores can bring serious retribution
53/ Which of the following is NOT considered a prevailing factor in the formation of
values and norms of a culture?
A. Political philosophies
B. Dominant religion
C. Homogeneity
D. Dominant language
54/ Factors such as _____ and _____ clearly influence the values and norms of a
society
  social structure; religion
55/ What type of consciousness refers to a condition where people perceive
themselves in terms of their background, and this shapes their relationships with
members of other classes?
 Class
56/ Which of the following countries scores high on individualism and low on power
distance?
 United States
57/ There are three values central to the Confucian system of ethics that have very
important economic implications. Which of the following is one of these?
A. Filial piety
B. Rule-based law
C. Humaneness
D. Honesty in dealings with others

CHAPTER 5: INTERNATIONAL TRADE THEORY

1/ Which of the following refers to the purchase, sale, or exchange of goods and services
across national borders?
 International trade
2/ ________ occurs between different states, regions, or cities within a country.
 Domestic trade
3/ One way to measure the importance of trade to a nation is to examine ________
 the volume of an economy's trade relative to its total output
4/ Which of the following statements is NOT true about the services trade today?
A. Trade in services makes up about 20 percent of total world trade.
B. Trade in services tends to be more important for emerging markets.
C. The United States is a top exporter of services in the world.
D. Trade in services is growing for many nations.
5/ The U.S. Department of Commerce estimates that for every $1 billion increase in
exports, ________ jobs are created in the United States.
 22,800
6/ Most of the world merchandise trade is comprised of trade in ________.
 manufactured goods
7/ When a country has a weak currency relative to other nations, imports are ________
relative to domestic products
 more expensive
8/ The majority of total world merchandise trade occurs among ________.
 high-income economics
9/ Trade among the world's high-income economies accounts for roughly ________
percent of total world merchandise trade.
 60
10/ Merchandise trade between low- and middle-income nations accounts for about
________ percent of total world trade
 6
11/ The smallest portion of total world trade takes place between ________.
 low- and middle-income nations
12/ Which of the following countries is the most important trading partner of the Central
and Eastern European nations that recently joined the European Union?
 Germany
13/ When doing business in the Pacific Rim, ________.
 tone down the use of legal language
14/ Companies are leaving Mexico for Asia and Europe because of differences in all of
the following EXCEPT ________.
A. education
B. climate
C. red tape
D. taxes
15/ According to ________, measures of a nation's well-being are irrelevant.
 Mercantilism
16/ The most prominent mercantilist nations included all of the following EXCEPT
________.
 A. the Netherlands
B. Spain
C. the United States
D. Portugal
17/ The trade theory that nations should accumulate financial wealth, usually in the form
of gold, by encouraging exports and discouraging imports is called ________.
 Mercantilism
18/ The practice of mercantilism rested upon each of the following EXCEPT ________.
A. enhanced trade deficits
B. government intervention
C. colonialism
D. trade surpluses
19/ The condition that results when the value of a nation's exports is greater than the
value of its imports is called ________.
 a trade surplus
20/ The condition that results when the value of a country's imports is greater than the
value of its exports is called ________.
 a trade deficit
21/ According to mercantilism, accumulation of national wealth depended on ________.
 increasing a nation's trade surplus
22/ Colonies were important to mercantilist nations for all the following reasons
EXCEPT ________.
A. to serve as sources of inexpensive raw materials
B. to serve as markets for higher-priced finished goods
C. to serve as a source of profits for mercantilist powers
D. to serve as a source of military protection
23/ Nations following the theory of ________ believed that the world's wealth was
limited and that a nation could increase its share of the pie only at the expense of its
neighbors.
 mercantilism
24/ Which of the following refers to the ability of a nation to produce a good more
efficiently than any other nation?
  Absolute advantage
25/ Who proposed the theory of absolute advantage?
 Adam Smith
26/ Adam Smith believed which of the following?
 Market forces should determine trade flows.
27/ The theory of absolute advantage measures a nation's wealth by determining the
________.
 living standards of its people
28/ The theory of absolute advantage destroys the mercantilist idea that international
trade is a ________.
 zero-sum game
29/ The theory of ________ measures a nation's wealth by the living standards of its
people.
 absolute advantage
30/ When there are gains to be had by both countries that are party to an exchange,
international trade is considered a(n) ________.
 positive-sum game
31/ When a country is not able to produce a good more efficiently than other nations, but
produces the good more efficiently than it does any other good, it is said to have a(n)
________.
 comparative advantage
32/ Which of the following developed the theory of comparative advantage?
 David Ricardo
33/ To complete his business bookkeeping each month, a small business owner spends
about 20 hours and gives up $2,000 in income. If he hired a bookkeeper to do the work,
the job would be completed in 15 hours and would cost $600. Should the owner hire the
bookkeeper or continue to do the work himself?
 He should hire the bookkeeper because the bookkeeper has an absolute advantage
in completing the books.
34/ Country A produces one ton of coffee using one unit of resources. Country B
produces two tons of coffee using one unit of resources. Which of the following is true
regarding Country A and Country B?
 Country B has an absolute advantage in producing coffee
35/ According to the theory of ________, trade is still beneficial even if one country is
less efficient in the production of two goods, as long as it is less inefficient in the
production of one of the goods
 comparative advantage
36/ Which of the following is NOT a limitation of the absolute and comparative
advantage theories?
A. The theories assume that there are only two countries engaged in the production
and consumption of just two goods.
B. The theories assume that there are no costs for transporting traded goods from one
country to another.
C. The theories consider labor the only resource used in the production process.
D. The theories assume that specialization in the production of one particular good
result in gains in efficiency.
37/ Comparative advantage theory focuses on which of the following?
 Maximization of production and consumption
38/ Both absolute and comparative advantage theories assume that ________ is the only
resource used in the production process
 labor
39/ The ________ theory states that countries produce and export goods that require
resources that are abundant and import goods that require resources in short supply
 factor proportions
40/ The focus of factor proportions theory is on the ________.
 productivity of the production process
41/ Factor proportions theory was developed by ________.
 Heckscher and Ohlin
42/ Under factor proportions theory, a nation's resources include all of the following
EXCEPT ________.
 A. labor
B. land
C. information
D. capital equipment
43/ Factor proportions theory argues that a country should produce and export goods
________.
 that require factors of production that are most abundant
44/ Country X is a small country with a large population. Most of its land is devoted to
housing and commercial developments; agricultural land is in short supply. According to
the factor proportions theory, which of the following would Country X most likely
import?
 Crops such as wheat and corn
45/ The Leontief paradox describes evidence ________.
 that U.S. exports require more labor-intensive production than its imports
46/ The international product life cycle theory was developed by ________
 Raymond Vernon
47/ The international product life cycle theory was put forth for which type of goods?
 Manufactured goods
48/ During which stage of the international product life cycle theory does high
purchasing power and buyer demand in an industrialized nation encourage a company to
design and introduce a product concept?
 New product stage
49/ During which stage of the international product life cycle theory does demand rise
and remain sustained over a fairly lengthy period of time?
 Maturing product stage
50/ During which stage of the product life cycle are companies looking for low-cost
production bases in developing nations to supply a growing worldwide market?
 Standardized product stage
51/ A product's components are made in a country that can produce them at a high level
of productivity and assembled in another country where productivity in assembly is high.
This process resembles the theory of ________.
  comparative advantage
52/ Much production in the world today closely resembles what is predicted by the
________.
 theory of comparative advantage
53/ Which of the following is NOT an argument offered by the new trade theory?
A. Gains can arise from diversification and managed growth.
B. Gains can arise from specialization and increasing economies of scale.
C. Companies first to enter a market can create barriers to entry.
D. Government may play a role in assisting its home companies.
54/ New trade theory is in line with the theory of ________ but at odds with ________
theory.
 comparative advantage; factor proportions
55/ National competitive advantage theory states that a nation's competitiveness in an
industry depends on ________.
 the capacity of the industry to innovate and upgrade
56/ The Porter diamond consists of all the following EXCEPT ________.
A. factor conditions
B. demand conditions
C. supply conditions
D. firm strategy, structure, and rivalry
57/ Which element of national competitive advantage theory divides resources into two
groups: basic and advanced?
 Factor conditions
58/ All of the following theories show why it is beneficial for a country to engage in
international trade even for products it is able to produce for itself, except
A. Mercantilism.
B. Heckscher-Ohlin
C. Comparative advantage
D. Absolute advantage
59/ Which theory suggested that comparative advantage arises from differences in
national factor endowments?
 Heckscher-Ohlin
60/ Which theory suggests that as products mature the optimal production location will
change?
 Product life-cycle
61/ Economies of scale and first mover advantages are important to which trade theory?
 New trade theory
62/ Porter's diamond of competitive advantage includes all of the following except
A. Factor endowments
B. Demand conditions
C. First-mover advantages
D. Firm strategy, structure, and rivalry
63/ _________refer to the nature of home demand for the industry's product or service.
 Demand conditions
64/ This theory, proposed in 1776, was the first to explain why unrestricted free trade is
beneficial to a country
 Absolute advantage
65/ ______suggests that international differences in labor productivity are key to
understanding patterns of international trade
 David Ricardo
66/ This theory explains the observed patterns of international trade by emphasizing 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
67/ Identify the incorrect statement pertaining to Raymond Vernon's product life-cycle
theory.
 A product in the early stage of the product life cycle is imported by the country
where it was innovated
68/ Which theory stresses that in some cases countries specialize in the production and
export of particular products not because of underlying differences in factor endowments
but because in certain industries the world market can support only a limited number of
firms?
  New trade
69/ The theory of _______ developed by Michael Porter, focuses on the importance of
country factors, in addition to factor endowments, such as domestic demand and domestic
rivalry in explaining a nation's dominance in the production and export of particular
products.
 National competitive advantage
70/ The theory of ______makes a crude case for government involvement in promoting
exports and limiting imports
 Mercantilism
71/ According to the _______ US is a major player in the commercial jet aircraft industry
because U.S firms were first movers in the world market
 New trade theory
72/ The main tenet of mercantilism was that it was in a country's best interest to maintain
a trade
 Surplus
73/ When a government limits imports via tariffs and quotas and subsidizes exports in
order to maximize exports and minimize imports, the country is following
 A mercantilist philosophy
74/ According to Smith, countries should specialize in the production of goods for which
they have an absolute advantage and then
 Trade these goods for the goods produced by other countries
75/ According to the theory, it makes sense for a country to specialize in producing the
goods it produces most efficiently and buy the products it produces less efficiently from
other countries, even if it could produce the goods more efficiently itself
 Comparative advantage
76/ During the _______ stage of Vernon's product life cycle as the market in the United
States and other advanced nations matures, the product moves toward standardization and
price becomes important
 Late
77/ According to the product life cycle theory, the locus of global production initially
switches from the US. to other advanced nations and then from those nations to
developing countries. The consequence of this trend for the pattern of world trade is that
over time the US
 Switches from being an exporter of the product to being an importer of the product
CHAPTER 8: REGIONAL ECONOMIC INTERGRATION
1/ An agreement between countries in a geographic region to reduce tariff and nontariff
barriers to the free flow of goods, services, and factors of production between each other
is referred to as
 regional economic integration
2/ The movement toward regional economic integration has been most successful in
 Europe
3/ Identify the incorrect statement pertaining to the European Union.
A. In 1993, it formally removed many bathers to doing business across borders within
the EU
B. Its member states have launched a single currency, the elm°.
C. It was joined by two countries Switzerland and Norway, in 2007.
D. It has expanded to 27 countries in 2007
4/ On January 1, 1993 ______ moved toward a single market with 340 million
consumers.
 the European Union
5/ In 1991, Argentina, Brazil, Paraguay, and Uruguay implemented an agreement known
as
 MERCOSUR
6/ These are the most popular form of regional economic integration, accounting for
almost 90% of regional agreements
 Free trade areas
7/ Which of the following selections accurately depicts the levels of economic integration
from least integrated to most integrated?
 Free trade area, customs union, common market, economic union, and full
political union
8/ In a free trade area
 barriers to the trade of goods and services among member nations are removed
9/ In a(n)____, no discriminatory tariffs, quotas, subsidies, or administrative impediments
are allowed to distort trade between member nations; however, each country is allowed to
determine its own trade policies with regard to nonmembers
 free trade area
10/ The most enduring free trade area in the world is the
 European Free Trade Association
11/ Which of the following statements best defines a common market?
A. All barriers to trade of goods and services among member countries are removed
and each country maintains its own policy toward nonmember countries.
B. It involves the free flow of products and factors of production between member
countries and adoption of individual external trade policies
C. It has no barriers to trade between member countries, includes a common external
trade policy, and allows factors of production to move freely between members
D. It eliminates trade between member countries and adopts a common external trade
policy.
12/ Which of the following statements best defines a customs union?
A. All barriers to trade of goods and services among member countries are removed
and each country maintains its own policy toward nonmember countries.
B. It involves the free flow of products and factors of production between member
countries and adoption of individual external trade policies
C. It has no barriers to trade between member countries, includes a common external
trade policy, and allows factors of production to move freely between members
D. It eliminates trade between member countries and adopts a common external trade
policy.
13/ The Andean Pact is an example of a(n)
 customs union
14/ Identify the incorrect statement about a common market
A. It has no barriers to trade between member countries
B. It includes a common external trade policy
C. It establishes a central political apparatus coordinating the economic, social, and
foreign policy of the member states.
D. It allows factors of production to move freely between members
15/ A(n) _____ involves the free flow of products and factors of production between
member countries and the adoption of a common external trade policy, along with a
common currency, harmonization of members' tax rates, and a common monetary and
fiscal policy.
 economic union
16/ A political benefits of economic integration is that
 linking neighboring economies creates incentives for cooperation between the
neighboring states and reduces the potential for violent conflict.
17/ All of the following are reasons why economic integration has never been easy to
achieve or sustain except:
A. even though it aids the majority, it has its costs.
B. a nation as a whole may benefit significantly, but certain groups may lose.
C. There are concerns over loss of national sovereignty
D. Linking neighboring economies makes them increasingly dependent on each other
18/ ___ occurs when high-cost domestic producers are replaced low-cost domestic
producers within the free trade area.
 Trade creation
19/ Trade diversion occurs when
 higher-cost suppliers replace lower-cost external suppliers within the free trade
area
20/ The European Community was established by
 The Treaty of Rome signed in 1957
21/ The European Coal and Steel Community, formed in 1951, was a forerunner of
 EU
22/ Which of the following is not a main institution in the political structure of the EU?
A. The European Parliament
B. The European Central Bank
C. The European Commission
D. Council of the European Union
23/ The _____ is responsible for proposing EU legislation, implementing it, and
monitoring compliance with EU laws by member states.
 European Commission
24/ The______ represents the interests of member states and is clearly the ultimate
controlling authority within the EU.
 European Council
25/ Which of the following is directly elected by the populations of the member states
and is primarily a consultative rather than legislative body?
 The European Parliament
26/ Identify the incorrect statement pertaining to the EU's Court of Justice A. It is
comprised of one judge from each country
 Its judges are required to act as representatives of national interests
27/ The ___ adopted by the member nations of the European Community in 1987,
committed member countries to work toward the establishment of a single market by
December 31, 1992
 Single European Act
28/ All of the following are true of the euro except:
A. its notes and coins were first issued on January 1, 1999
B. It required participating countries to give up their own currencies
C. countries lost control of monetary policy when it was established
D. it created the second largest currency zone in the world
29/ In December 1991, EC members signed this treaty that committed them to adopting a
common currency by January 1, 1999.
 The Maastricht Treaty
30/ Which of the following is seen as a disadvantage of the euro?
A. Higher foreign exchange and hedging costs
B. National authorities losing control over monetary policy
C. It becomes difficult to compare prices across Europe
D. Undermines the development of a pan-European capital market.
31/ Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of
 NAFTA
32/ MERCOSUR originated as a(n)_____ between Brazil and Argentina in 1988
 free trade pact
33/ According to Alexander Yeats
  The trade diversion effects of MERCOSUR outweigh its trade creation effects
34/ In early 2006, six CARICOM members Abd the United States established the_____,
which was modeled on the EU's single market
 Caribbean Single Market and Economy
35/ All of the following are seen as stumbling blocks towards the establishment of the
Free Trade Area of the Americas exception
A. Brazil and Argentina want the United State to reduce its subsidies to U.S
agricultural producers
B. The United State wants its southern neighbors to agree to tougher enforcement of
intellectual property rights
C. Brazil and Argentina want the United State to scrap tariffs on agricultural imports
D. The United States want its southern neighbors to increase manufacturing tariffs
36/ Which of the following is not true of ASEAN?
A. Cambodia, Laos, Myanmar, and Singapore are among its members.
B. Its basic objective is to foster freer trade between member countries and to achieve
cooperation in their industrial policies.
C. It has been highly successful in achieving cooperation in its industrial policies.
D. It is punishing for free trade agreement with China, Japan, and South Korea.
37/ Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)?
A. It was founded in 2001
B. It currently has 57 member states
C. United States and Japan are not members of this body
D. Collectively, the member states account for much of the growth in the world
economy
38/ Collectively, the _______ member states account for about 55 percent of the world's
GNP and 49 percent of world trade
 APEC
39/ For international business, regional economic integration such as the EU
 Opens markets that had formerly been protected
40/ Which of the following is not a threat that emerges for international business as a
result of regional economic integration?
A. The business environment within each grouping becomes more competitive
 B. There is a risk of being shut out of the single market by the creation of a "trade
fortress"
C. It limits the ability of firms to pursue the corporate strategy of their choice.
D. The cost of doing business in a single market may fall.
41/ Which of the following is not true of NAFTA?
A. It created a free trade area of nearly 800 million people
B. It created the background for increased political stability in Mexico
C. Several other Latin American countries have indicated their desire to eventually
join NAFTA
D. Its participants are the United States, Canada, and Mexico
42/ All barriers to the free flow of goods and services between member countries are
removed, and a common policy toward nonmembers is established in a
 Customs union
43/ NAFTA is an example of a(n)
 Free trade area
44/ When higher cost suppliers within the free trade area replace lower cost external
suppliers
 There is trade diversion
45/ Which of the following statements best defines a custom union?
A. All barriers to the trade of goods and services among member countries are
removed and each country maintains its own policy towards non member
countries
B. Eliminates trade barriers between member countries and adopts a common
external trade policy and a common currency
C. Has no barriers to trade between member countries includes a common external
trade policy and allows factors of production to move freely between members
D. Eliminates trade barriers between member countries and adopts a common
external trade policy
46/ Economic theories suggest that free trade and investment
 Is a positive sum game

CHAPTER 14: ENTRY STRATEGY AND STRATEGIC ALLIANCES

1/ Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable
in
 politically stable developed and developing nations that have free market systems
2/ Which of the following is not an advantage associated with entering a foreign market
before other international businesses?
A. Ability to preempt rivals and capture demand by establishing a strong brand name.
B. Ability to ride down the experience curve ahead of rivals.
C. Ability to create switching costs.
D. Ability to avoid pioneering costs.
3/ Switching costs
 make it difficult for later entrants to win business
4/ Early entrants to a market that are able to create switching costs that tie the customer to
the product are capitalizing on
 first-mover advantages
5/ All of the following are examples of pioneering costs except the costs of:
A. business failure.
B. educating consumers.
C. promoting and establishing a product offering.
D. learning from the mistakes of early entrants.
6/ The costs of promoting and establishing a product offering when a firm enters a
foreign market prior to its rivals are known as
 pioneering costs
7/ A large-scale entrant is more likely than a small-scale entrant to be able to capture
first-mover advantages associated with
 demand preemption
8/ Which of the following statements about small-scale entry is true?
A. The commitment associated with a small-scale entry makes it possible for the
small-scale entrant to capture first-mover advantages.
B. Small-scale entry is a way to gather information about a foreign market before
deciding whether to enter on a significant scale.
C. By giving a firm time to collect information, small-scale entry increases the risks
associated with a subsequent large-scale entry.
 D. Small-scale entry limits a firm’s ability to learn about a foreign market thereby
also limiting the firm's exposure to that market
9/ Which of the following is not an advantage of a small-scale entry?
A. A small-scale entrant is more likely to be able to capture first-mover advantages
associated with demand preemption, scale economies, and switching costs.
B. Small-scale entry is a way to gather information about a foreign market before
deciding how best to enter.
C. By giving the firm time to collect information, small-scale entry reduces the risks
associated with a subsequent large-scale entry.
D. Small-scale entry allows a firm to learn about a foreign market while limiting the
firm's exposure to that market.
10/ If a firm can realize location economies by moving production elsewhere, it should
avoid
 Exporting
11/ Which of the following is a distinct advantage of exporting?
A. It avoids the often-substantial costs of establishing manufacturing operations in the
host country.
B. Benefits from a local partner's knowledge of the host country's competitive
conditions.
C. Avoids the threat of tariff barriers by the host-country government.
D. Appropriate if lower cost locations for manufacturing the product can be found
abroad.
12/ When a firm faces significant transportation costs, _____ can be uneconomical
 Exporting
13/ When an exporting firm finds that its local agent is also carrying competitors'
products, the firm may switch to a _____ to handle local marketing, sales, and service
 wholly owned subsidiary
14/ When local agents carry the products of competing firms and have divided loyalties,
_____ is not appropriate
 exporting
15/ The threat of tariff barriers by the host government can make _____ very risky
 exporting
16/ Identify the incorrect statement about turnkey projects.
A. The contractor agrees to handle every detail of the project for a foreign client.
B. They are most common in industries which use inexpensive production
technologies.
C. This is a means of exporting process technology to other countries.
D. They create efficient global competitors in the process.
17/ In which of the following industries are turnkey projects the most common?
A. Fresh fruit, grain, and meat products.
B. Chemical, pharmaceutical, and metal refining.
C. Consumer durables, computer peripherals, and automotive parts.
D. Apparel, shoes, and leather products.
18/ A turnkey strategy
 is useful where FDI is limited by host-government regulations.
19/ Many Western firms that sold oil-refining technology to firms in Gulf states now find
themselves competing with these firms in the world oil market. This is an example of
 the firm entering into a turnkey project with a foreign enterprise, inadvertently
creating a competitor
20/ Firms that lack the capital necessary to develop foreign operations may choose _____
as a means of expanding internationally
 licensing
21/ An arrangement whereby a firm grants the right of intangible property to another
entity for a specified time period in exchange for royalties is a(n) _____ agreement
 licensing
22/ Patents, inventions, formulas, processes, designs, copyrights, and trademarks are all
forms of
 intangible property
23/ What is the primary advantage of licensing?
 It helps a firm avoid the development costs associated with opening a foreign
market
24/ Which of the following is a disadvantage of licensing?
A. It does not help firms that lack capital to develop operations overseas.
 B. It does not give a firm the tight control over strategy that is required for realizing
experience curve and location economies.
C. It cannot be used when a firm possesses some intangible property that might have
business applications.
D. The firm has to bear the development costs and risks associated with opening a
foreign market.
25/ When a company has some intangible property that might have business applications,
but the firm does not want to develop those applications itself, _____ makes sense.
 licensing
26/ Cross-licensing agreements are increasingly common in the _____ industry
 high-technology
27/ Which mode of entry is pursued primarily by manufacturing firms?
 licensing
28/ This mode of entry is primarily used by service firms
 franchising
29/ If a service firm wants to build a global presence quickly and at a relatively low cost
and risk, _____ makes sense.
 franchising
30/ Which of the following statements about franchising is true?
A. It guarantees consistent product quality.
B. It tends to involve more short-term commitments than licensing.
C. It is a specialized form of licensing.
D. It is employed primarily by manufacturing firms.
31/ Which of the following is an advantage of franchising?
 A firm is relieved of many of the costs and risks of opening a foreign market on its
own.
32/ Firms engaging in _____ with a local company can benefit from a local partner's
knowledge of the host country's competitive conditions, culture, language, political
systems, and business systems
 joint ventures
33/ Identify the advantage of establishing wholly owned subsidiaries
  It may be required if a firm is trying to realize location and experience curve
economies
34/ A wholly owned subsidiary is appropriate when
 the firm wants 100 percent of the profits generated in a foreign market
35/ A firm that establishes a _____ must bear the full costs and risks of entering a foreign
market
 wholly owned subsidiary
36/ A _____ is the costliest method of serving a foreign market from a capital investment
standpoint.
 wholly owned subsidiary
37/ "Protection of technology and The Ability to engage in global strategic coordination"
are advantages of which of the following?
 Wholly owned subsidiaries
38/ If a firm's core competency is based on control over proprietary technological know-
how, it should avoid _____ and _____ arrangements, if possible, to minimize the risk of
losing control over that technology
 licensing, joint-venture
39/ If a high-tech firm sets up operations in a foreign country to profit from a core
competency in technological know-how, which of the following entry strategy is best?
 Wholly owned subsidiaries
40/ Most service firms have found that _____ with local partners work best for
controlling subsidiaries.
 joint ventures
41/ Firms may prefer acquisitions to greenfield investments for all of the following
reasons except:
A. they allow companies to completely sidestep government regulations on
investment.
B. they are quick to execute.
C. they enable the firm to preempt competitors.
D. managers believe acquisitions are less risky
42/ According to the _____, top managers typically overestimate their ability to create
value from an acquisition
 hubris hypothesis
43/ To increase the potential for a successful acquisition, a firm should
 screen the foreign enterprise to be acquired.
44/ Which of the following is not important in the acquisition process?
A. Firms should strive to limit unwanted management attrition after acquisition.
B. An integration plan should quickly be implemented.
C. Proper screening of the company to be acquired should take place.
D. The hubris hypothesis should be maintained.
45/ When a firm wants to enter a market where there are already well-established
incumbent companies, and where global competitors are also interested in establishing a
presence, the firm should consider
 Acquisitions
46/ Firms entering markets where there are no incumbent competitors to be acquired
should choose
 greenfield investments.
47/ Which of the following is not an advantage of strategic alliances?
A. It allows firms to share the fixed costs of developing new products or processes.
B. It is a way to bring together complementary skills and assets that neither company
could easily develop on its own.
C. It will help the firm establish technological standards for the industry that will
benefit the firm.
D. It gives a firm tight control over operations in different countries.

PHẦN TRẮC NGHIỆM THÊM CHAPTER 14 (THẦY TÂN)

1/ _____ refers to the time and effort spent learning the rules of a new market
 Pioneering costs
2/ How do most firms begin their international expansion?
 With exporting
3/ What is the main disadvantage of wholly owned subsidiaries?
  The firm bears the full cost and risk of setting up overseas operations
4/ If a firm wants the option of global strategic coordination, the firm should choose
 A wholly owned subsidiary
5/ All of the following are advantages of acquisitions except
A. They are quicker to execute
B. It is easy to realize synergies by integrating the operations of the acquired entities
C. They enable firms to preempt their competitors
D. They may be less risky
6/ Which of the following is not important to a successful strategic alliance?
A. Establishing a 50:50 relationship with partner
B. Creating strong interpersonal relationships
C. A shared vision
D. Learning from the partner

PHẦN TRẮC NGHIỆM THÊM

1/ Due to benefits associated with free trade and investment, the gap between the rich and
poor nations of the world has reduced
 True
2/ The most global markets currently are markets for
 Industrial goods
3/ Most forecasts now predict a rapid rise in world output accounted for by developing
nations such as China, India, and South Korea, and a rapid decline in the share enjoyed
by rich industrialized countries such as Britain and the United States
 False
4/ A software company that uses Indian engineers to perform maintenance functions on
software designed in the United States is benefiting from
 Outsourcing
5/ A company has to be a major multinational corporation to facilitate, and benefit from,
the globalization of markets.
 False
6/ Globalization results in a greater degree of …… across markets than would be present
otherwise.
 homogeneity
7/ Currently, the most global of markets are for industrial goods and materials that serve a
universal need the world over
 True
8/ The trend from distinct national economic units and toward one huge global market is
commonly referred to as
 globalization
9/ Substantial impediments such as barriers to foreign direct investment make it difficult
for firms to achieve the optimal dispersion of their productive activities to locations
around the globe
 True
10/ Why do many U.S. companies use Indian software engineers to perform maintenance
functions?
 It compresses the time and lowers the costs required to develop new software
programs
11/ One concern of globalization opponents is that falling barriers to international trade
may destroy manufacturing jobs in wealthy advanced economies such as the United
States.
 True
12/ Why was the World Bank created?
 To promote economic development
13/ As transportation costs associated with the globalization of production decline,
dispersal of production to geographically separate locations become more economical
 True
14/ Although Gillette is an American company, it has invested substantial business
resources in activities outside the United States. This practice is referred to as
 foreign direct investment
15/ Economists argue that despite the many benefits to globalization, an increase in
international trade and cross-border investments will result in higher prices for goods and
services.
 False
16/ Which of the following technological developments did NOT dramatically enhance
globalization?
A. Developments in communication
B. Developments in agriculture technologies
C. Developments in information processing
D. Developments in transportation technologies
17/ To conduct international business, a multinational enterprise has to invest directly in
operations of other countries
 False
18/ Which are the two macro factors that seem to underlie the trend toward greater
globalization?
 The decline in barriers to the free flow of goods, services, and capital that has
occurred, and increased technological change
19/ Which of the following refers to the exporting of goods or services to consumers in
another country?
 International trade
20/ How has technological innovation affected the globalization of production?
 It makes it possible for a firm to create and then manage a globally dispersed
production system.

PHẦN TRUE/ FALSE CHAPTER 5

1/ The theories of Smith and Ricardo show that countries should not engage in
international trade for products that it is able to produce for itself.
 False
2/ According to Adam Smith, the invisible hand of the market mechanism, rather than
government policy, should determine what a country imports and what it exports
 True
3/ According to Ricardo's theory of comparative advantage, countries shall not produce a
good, even if they have an absolute advantage in its production, if they do not produce it
efficiently
 True
4/ A positive-sum game refers to a situation in which major industrial nations can benefit
even if some of them are able to benefit more than others
 False
5/ The basic message of the theory of comparative advantage is that potential world
production is greater with unrestricted free trade than it is with restricted trade
 True
6/ Despite the short-term adjustment costs associated with adopting a free trade regime,
trade would seem to produce greater economic growth and higher living standards in the
long run, just as Ricardo's theory leads us to expect
 True
7/ Vernon argued that early in the life cycle of a typical new product, while demand is
starting to grow rapidly in the United States, demand in other advanced countries is
available to all income groups.
 False
8/ In sum, Porter's argument is that the degree to which a nation is likely to achieve
international success in a certain industry is a function of the combined impact of factor
endowments, domestic demand conditions, related and supporting industries, and lack of
domestic rivalry
 False
9/ The product life-cycle theory argues that the developing nations will not produce a
product if the product is highly standardized
 False
10/ 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

PHẦN ĐỀ THI (CODE 321)

PART 1: MULTIPLE CHOICE
1/ The primacy of the value of group identification encourages managers and workers to
move from company to company
 False
2/ While the move toward regional economic integration is generally seen as a good
thing, some observers worry that it will lead to a world in which regional trade blocs
compete against each other
 True
3/ Which of the following statements is a fair comparison of the Heckscher-Ohlin theory
and the Ricardo theory of free trade?
A. Both theories argue that the pattern of international trade is determined by constant
returns to specialization.
B. Both theories argue that the pattern of international trade is determined by
currency exchange rates.
C. Unlike Ricardo's theory, the Heckscher-Ohlin theory argues that the pattern of
international trade is determined by differences in factor endowments, rather than
differences in productivity.
D. Unlike the Heckscher-Ohlin theory, Ricardo's theory makes fewer simplifying
assumptions.
4/ According to the new trade theory, firms that establish a(n) advantage with regard to
the production of a particular new product may subsequently dominate global trade in
that product
 First-mover
5/ What would be the consequences of dynamic gains in both the stock of a country's
resources and the efficiency with which resources are utilized?
 It will cause the country's PPF to be in a bell-shaped curve
6/ The principal argument of those who opposed NAFTA centered on the fear that
ratification would result in
 mass exodus of jobs from the United States into Mexico
7/ How does group primacy harm the Japanese society?
 It lacks dynamism and entrepreneurship
8/ David Ricardo's theory of comparative advantage attempts to rationalize why some
countries export automobiles, consumer electronics, and machine tools, while other
countries jewelry. This rationalization is best explained in terms of export chemicals,
watches, and
 international differences in labor productivity
9/ To an even greater degree than the theory of __ suggests that absolute advantage, the
theory of trade is a positive-sum game in which all gain
 comparative advantage
10/ In comparative advantage, the assumption is that resources can move freely from
production of one good to another. Why is this assumption unrealistic?
 The process of moving resources causes friction and human suffering
11/ Like the common market, a(n) __ involves the free flow of products and factors of
production between members and the adoption of a common between members and the
 economic union
12/ A common market includes all of the following characteristics, EXCEPT:
A. factors of production are allowed to move freely between members.
B. there are no restrictions on immigration between members.
C. harmonization of members' tax rates, and a common monetary and fiscal policy.
D. there are no restrictions on the cross-border flow of capital between members.
13/ The two main reasons that have made economic integration difficult to achieve are:
 concerns over costs and concerns over national sovereignty.
14/ In contrast to the Western emphasis on the __ in many other societies the __ is the
primary unit of social organization.
 individual; group
15/ Vernon argues that early in the life cycle of a typical new product, while demand is
starting to grow rapidly in the US, demand in other advanced countries
 Remains limited to high income groups
16/ A political benefit of economic integration that
 Linking neighboring economies creates incentives for cooperation between the
neighboring and reduce the potential for violent conflict
 it creates reduces the potential for violent conflict. (cách diễn giải khác)
17/ Two dimensions are particularly important when explaining differences between
cultures – the degree to which the basic unit of social organizations is the individual, as
opposed to the group, and the degree to which a society is stratified into classes
 False
Explain: the degree to which a society is stratified into classes or castes
18/ Which of the following theories argues that due to the presence of substantial scale
economy world demand will support only a few firms in many industries?
 new trade
19/ The prohibition of the payment or receipt of interest, which is considered usury, is
one of the economic principles of Islam
 True
20/ The family of Susan Capello places a staunch value on achieving formal, higher
education. However, when Maria decided to apply to the prominent university in her city,
she was not given admission because the university admitted students from only one
particular class. This problem is most closely related to
 emphasis on caste system (chưa chắc nha)
21/ Alyson Jeffrey, a manager at Omni Corporation, believes in empowerment,
motivating her employees. This describes her
 norms
22/ In producing its electronics products, Sony Corporation sources goods and services
from different locations around the globe in an attempt to take advantage of national
differences in the cost and quality of factors of production. This practice is made possible
by the globalization of
 production
23/ Which of the following statements most accurately captures the main tenet of
mercantilism?
A. It is in a country's best interests to import less specialized goods than to attempt to
make them at home.
B. it is in a country's best interests to maintain a trade surplus, to export more than it
imports.
C. It is in a country's best interests to not export products to less developed countries.
D. It is in a country's best interests to import products that are most efficiently
produced at home.
24/ The recent trends in international business strongly indicate that when Japanese and
German business together, the language in which they will communicate is almost certain
to be
 English
25/ The first theory of international trade emerged in England in the mid-16th century.
Referred to as the theory of comparative advantage, its principle assertion was that gold
and silver were the mainstays of national wealth and essential to vigorous commerce.
 True
26/ If the US started to import textiles from Mexico according to a free trade agreement,
but the US. previously acquired textiles from Costa Rica for less money, what kind of
trade situation would the US. be in?
 Trade creation
27/ All of the following are reasons why economic integration has never been easy to
achieve or sustain, except
A. Linking neighboring economies makes them increasingly dependent on each other
B. A nation as a whole may benefit significantly, but certain groups may lose
C. Even though it aids the majority, it has its costs
D. There are concerns over loss of national sovereignty
28/ Which one of the following dimensions focuses on how a society deals with the fact
that people are unequal in physical and intellectual capabilities?
 Power distance
29/ For participating countries, a drawback of a single currency in Europe is that:
 it will be more difficult to attract imports
30/ Which of the following selections accurately depicts the levels of economic
integration, from least Integrated to most integrated?
 Free trade area, customs union, common market, economic union, and full
political union
31/ The United States has an emphasis on individualism. This emphasis may lead to
which of the following problems?
 An adverse impact on managerial loyalty to the company.
32/ In the US, an individual can move smoothly from the working class to the upper class
in a lifetime by his/her own economic achievement
  True
33/ Similarities in the underlying structure of economic activity make it feasible to adopt
a single currency and use a single exchange rate as an instrument of macroeconomic
policy in a(n)
 optimal currency area.
34/ For society to conduct itself appropriately, the individuals within it must possess
varied values and norms that differentiate each of the particular individuals from all
others.
 True
35/ Porter's theory of national competitive advantage suggests that it is in the best interest
of business for a firm to invest in upgrading advanced factors of production. The means
for accomplishing this include all of the following EXCEPT:
A. provide better training for employees.
B. adopt policies that eliminate competition.
C. increase research and development activities.
D. develop methods to improve the skill levels of workers.
36/ What is the difference between folkways and mores?
 Violating mores can bring serious retribution
37/ A eliminates trade barriers between member countries and adopts a common external
trade policy
 customs union
38/ According to Smith, countries should specialize in the production of goods for which
they have an absolute advantage and then
 trade these goods for the goods produced by other countries
39/ How is the new generation of Japanese workers different from traditional Japanese
workers?
 The new generation Japanese worker is likely to be more direct than the traditional
Japanese worker.
40/ Free trade refers to a situation where a government attempts to influence through
quotas or duties what its citizens can buy from another country, or what they can produce
and sell to another country.
 True
PART 2: CASE STUDY
Case study 1: Globalization at General Electric
1/ Why are international markets so important to General Electric? How is General
Electric taking advantage of opportunities in foreign markets?
2/ How does General Electric under current CEO Jeffery Immelt differ from General
Electric under legendary CEO Jack Welch? What does this mean for General Electric?

Answer:
1/ Aside from gaining access to markets worldwide, GE focuses on taking advantage of
its global reach to find less expensive materials abroad and intellectual capital, thereby
lowering its cost of designing and manufacturing products. GE is acquiring companies
abroad, and setting up joint ventures with other foreign companies, to gain their assets
and ability to service local customers. It is setting up manufacturing facilities abroad to
access lower cost labor and materials and also sourcing more purchases abroad for the
same reasons. It also is identifying and hiring engineering and scientific talent from
around the world to boost its intellectual capital and is setting up R&D facilities where
this talent can work
2/ Immelt is more laid back than Welch. He believes in hard work, but he is not as
confrontational as Welch. Immelt also believes in making GE more digital. Welch may
be better than Immelt during 20 years of СЕО at GЕ since he understood very well how
to run а giant like GЕ. Both Welch and Immelt has own their self-regulation that helped
them to become effective leaders. Both of them are people of high responsibilities for
work and willing to challenge.

Case study 2: The Ecuadorian Rose Industry

1/ Describe the benefits that the rose industry has brought to Ecuador. In your opinion, do
the benefits outweigh the disadvantages? Why or why not?
2/ Consumer groups in Europe have pushed for reforms to Ecuador's environmental
regulations for its rose industry. Other groups have encouraged trade sanctions to force
Ecuadorian rose growers to be more environmentally responsible. Consider the impact
these groups could have on Ecuador and workers in the rose industry if they are
successful in their efforts
Answer:
1/ Most Ecuadorian roses are sold in the United States of Europe and consumer will
benefit because they can buy great quality at a lower price. The florist sells their roses in
various occasions like Valentine’s Day, Mother’s Day at premium price. By selling those
roses they can earn a great amount of profit. Major rose produces in and outside of these
two countries will suffer. They will first lose customer which will lead to a lack of
profitable business. Less profit will lead to layoffs, which will soon lead to foreclosures
and bad debt with the government. The worse debts you owe the more control the
government has over your life.
2/ If consumer groups in Europe are successful in pushing for reforms to Ecuador's
environmental regulations for its rose industry, it could have a significant impact on both
the country and the workers in the rose industry. On one hand, stricter environmental
regulations could lead to more sustainable and responsible practices in the rose industry,
which could benefit the environment and the health of the workers. On the other hand,
implementing these regulations could also increase the cost of production for rose
growers, which could result in higher prices for consumers and potentially reduced
demand for Ecuadorian roses.