Question 1

What is the relative price of wheat in North Dakota prior to trade in Case II?

Accepted Answer

A) 2 bushels of wheat = ½ bottle of beer 
B) ½ bushel of wheat = 2 bottles of beer 
C) 1 bushel of wheat = ½ bottle of beer 
D) 1 bushel of wheat = 2 bottles of beer 
A) 2 bushels of wheat = ½ bottle of beer 
B) ½ bushel of wheat = 2 bottles of beer 
C) 1 bushel of wheat = ½ bottle of beer 
D) 1 bushel of wheat = 2 bottles of beer

Question 2

Most governments at least try to make it difficult for people to cross their borders illegally.This barrier to the free movement of labor is an example of

Accepted Answer

A) information asymmetry. 
B) excessive transactions costs. 
C) racial discrimination. 
D) a market imperfection. 
A) information asymmetry. 
B) excessive transactions costs. 
C) racial discrimination. 
D) a market imperfection.

Question 3

The Japanese automobile company Honda decided to establish production facilities in Ohio,mainly to

Accepted Answer

A) circumvent trade barriers. 
B) reduce transportation costs. 
C) reduce transactions costs. 
D) both a) and b) 
A) circumvent trade barriers. 
B) reduce transportation costs. 
C) reduce transactions costs. 
D) both a) and b)

Question 4

The Nestlé Corporation,a well-known Swiss MNC,used to issue two different classes of common stock,bearer shares and registered shares,and foreigners were allowed to hold only

Accepted Answer

A) registered shares. 
B) bearer shares. 
C) voting shares. 
D) convertible shares. 
A) registered shares. 
B) bearer shares. 
C) voting shares. 
D) convertible shares.

Question 5

Countries A and B currently consume 400 units of food and 400 units of textiles each and currently do not trade with one another.The citizens of country A have to give up one unit of food to gain two units of textiles,while the citizens of country B have to give up one unit of textiles to gain two units of food.Their production possibilities curves are shown.   Suppose that trade is allowed and that the international exchange rate between food and textiles is one-for-one.The increased consumption following trade will be

Accepted Answer

A) an increase of 400 units of food and 400 units of textiles. 
B) an increase of 1,200 units of food and 1,200 units of textiles. 
C) an increase of 800 units of food and 800 units of textiles. 
D) there are no gains from trade in this example. 
A) an increase of 400 units of food and 400 units of textiles. 
B) an increase of 1,200 units of food and 1,200 units of textiles. 
C) an increase of 800 units of food and 800 units of textiles. 
D) there are no gains from trade in this example.

Question 6

Which state is better at making guns?

Accepted Answer

A) South Carolina 
B) North Carolina 
C) neither 
A) South Carolina 
B) North Carolina 
C) neither

Question 7

Foreign-owned manufacturing companies in the world's most highly developed countries

Accepted Answer

A) generally are more productive and pay their workers more than do comparable locally-owned businesses. 
B) generally are less productive and therefore pay their workers less than do comparable locally-owned businesses. 
C) tend to specialize in different articles of manufacture than they produce in their home countries. 
D) usually do not build their own production facilities but simply buy existing domestic manufacturing firms. 
A) generally are more productive and pay their workers more than do comparable locally-owned businesses. 
B) generally are less productive and therefore pay their workers less than do comparable locally-owned businesses. 
C) tend to specialize in different articles of manufacture than they produce in their home countries. 
D) usually do not build their own production facilities but simply buy existing domestic manufacturing firms.

Question 8

Suppose that the citizens of North and South Carolina are currently consuming as much butter as they care to.What is the maximum increase in the number of guns that could occur following trade?

Accepted Answer

A) 83.33 guns 
B) 533.33 guns 
C) No increase 
A) 83.33 guns 
B) 533.33 guns 
C) No increase

Question 9

What is the relative price of a gun in terms of butter in North Carolina?

Accepted Answer

A) 1 gun costs 3 butters 
B) 3 guns cost 1 butter 
C) 1 gun costs 2 butters 
D) 2 gun costs 1 butter 
A) 1 gun costs 3 butters 
B) 3 guns cost 1 butter 
C) 1 gun costs 2 butters 
D) 2 gun costs 1 butter

Question 10

Suppose that trade occurs.Each country completely specializes and 500 kegs of beer are traded for 500 bottles of whiskey.What is the international price of beer?

Accepted Answer

A) 1 bottle of whiskey = 1 keg of beer 
B) 3 bottles of whiskey = 1 keg of beer 
C) 2/3 bottle of whiskey = 1 keg of beer 
D) 1 bottle of whiskey = 3 kegs of beer 
A) 1 bottle of whiskey = 1 keg of beer 
B) 3 bottles of whiskey = 1 keg of beer 
C) 2/3 bottle of whiskey = 1 keg of beer 
D) 1 bottle of whiskey = 3 kegs of beer

Question 11

Which is growing at a faster rate,foreign direct investment by MNCs or international trade?

Accepted Answer

A) FDI by MNCs. 
B) International trade. 
C) Since they are linked, they grow at the same rate. 
D) None of the above. 
A) FDI by MNCs. 
B) International trade. 
C) Since they are linked, they grow at the same rate. 
D) None of the above.

Question 12

A country like North Korea

Accepted Answer

A) probably rejects the notion of increased opportunity presented by free trade. 
B) engages in free trade. 
C) lies on a production possibilities curve superior to South Korea, since North Korea protects its domestic producers. 
D) none of the above 
A) probably rejects the notion of increased opportunity presented by free trade. 
B) engages in free trade. 
C) lies on a production possibilities curve superior to South Korea, since North Korea protects its domestic producers. 
D) none of the above

Question 13

The theory of comparative advantage

Accepted Answer

A) claims that economic well-being is enhanced if each country's citizens produce only a single product. 
B) claims that economic well-being is enhanced when all countries compare commodity prices after adjusting for exchange rate differences in order to standardize the prices charged all countries. 
C) claims that economic well-being is enhanced if each country's citizens produce that which they have a comparative advantage in producing relative to the citizens of other countries, and then trade production. 
D) claims that no country has an absolute advantage over another country in the production of any good or service. 
A) claims that economic well-being is enhanced if each country's citizens produce only a single product. 
B) claims that economic well-being is enhanced when all countries compare commodity prices after adjusting for exchange rate differences in order to standardize the prices charged all countries. 
C) claims that economic well-being is enhanced if each country's citizens produce that which they have a comparative advantage in producing relative to the citizens of other countries, and then trade production. 
D) claims that no country has an absolute advantage over another country in the production of any good or service.

Question 14

Countries A and B currently consume 400 units of food and 400 units of textiles each and currently do not trade with one another.The citizens of country A have to give up one unit of food to gain two units of textiles,while the citizens of country B have to give up one unit of textiles to gain two units of food.Their production possibilities curves are shown.   Under the theory of comparative advantage

Accepted Answer

A) The citizens of country A should make food and trade with the citizens of country B for textiles. 
B) The citizens of country A should make textiles and trade with the citizens of country B for food. 
C) There are no gains from trade in this example. 
D) A is twice as good as B at making food and B is twice as good as A at making textiles. 
A) The citizens of country A should make food and trade with the citizens of country B for textiles. 
B) The citizens of country A should make textiles and trade with the citizens of country B for food. 
C) There are no gains from trade in this example. 
D) A is twice as good as B at making food and B is twice as good as A at making textiles.

Question 15

Underlying the theory of comparative advantage are assumptions regarding

Accepted Answer

A) free trade between nations. 
B) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively immobile. 
C) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively mobile. 
D) a) and b) 
A) free trade between nations. 
B) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively immobile. 
C) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively mobile. 
D) a) and b)

Question 16

Privatization refers to the process of

Accepted Answer

A) having government operate businesses for the betterment of the public sector. 
B) government allowing the operation of privately owned business. 
C) prohibiting government operated enterprises. 
D) a country divesting itself of the ownership and operation of a business venture by turning it over to the free market system. 
A) having government operate businesses for the betterment of the public sector. 
B) government allowing the operation of privately owned business. 
C) prohibiting government operated enterprises. 
D) a country divesting itself of the ownership and operation of a business venture by turning it over to the free market system.

Question 17

Which state has an absolute advantage in producing wheat in Case I?

Accepted Answer

A) South Dakota 
B) North Dakota 
C) Neither state 
A) South Dakota 
B) North Dakota 
C) Neither state

Question 18

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

Accepted Answer

A) 5 percent. 
B) 10 percent. 
C) 15 percent. 
D) 20 percent. 
A) 5 percent. 
B) 10 percent. 
C) 15 percent. 
D) 20 percent.

Question 19

A firm with concentrated ownership

Accepted Answer

A) may give rise to conflicts of interest between dominant shareholders and small outside shareholders. 
B) may enjoy more accounting transparency than firms with diffuse ownership structures. 
C) is a partnership, never a corporation. 
D) tends to exist overseas but not in the U.S. 
A) may give rise to conflicts of interest between dominant shareholders and small outside shareholders. 
B) may enjoy more accounting transparency than firms with diffuse ownership structures. 
C) is a partnership, never a corporation. 
D) tends to exist overseas but not in the U.S.

Question 20

Recent corporate scandals at firms such as Enron,WorldCom and the Italian firm Parmalat

Accepted Answer

A) show that managers might be tempted to pursue their own private interests at the expense of shareholders. 
B) show that Italian shareholders are better at monitoring managerial behavior than U.S.shareholders. 
C) show that white-collar criminals hardly ever get punished. 
D) show that socialism is a better way to go than capitalism. 
A) show that managers might be tempted to pursue their own private interests at the expense of shareholders. 
B) show that Italian shareholders are better at monitoring managerial behavior than U.S.shareholders. 
C) show that white-collar criminals hardly ever get punished. 
D) show that socialism is a better way to go than capitalism.

What is the relative price of wheat in North Dakota prior to trade in Case II?

Most governments at least try to make it difficult for people to cross their borders illegally.This barrier to the free movement of labor is an example of

The Japanese automobile company Honda decided to establish production facilities in Ohio,mainly to

The Nestlé Corporation,a well-known Swiss MNC,used to issue two different classes of common stock,bearer shares and registered shares,and foreigners were allowed to hold only

Which state is better at making guns?

Foreign-owned manufacturing companies in the world's most highly developed countries

Suppose that the citizens of North and South Carolina are currently consuming as much butter as they care to.What is the maximum increase in the number of guns that could occur following trade?

What is the relative price of a gun in terms of butter in North Carolina?

Suppose that trade occurs.Each country completely specializes and 500 kegs of beer are traded for 500 bottles of whiskey.What is the international price of beer?

Which is growing at a faster rate,foreign direct investment by MNCs or international trade?

A country like North Korea

The theory of comparative advantage

Underlying the theory of comparative advantage are assumptions regarding

Privatization refers to the process of

Which state has an absolute advantage in producing wheat in Case I?

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

A firm with concentrated ownership

Recent corporate scandals at firms such as Enron,WorldCom and the Italian firm Parmalat

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 1: Globalization and the Multinational Firm

What is the relative price of wheat in North Dakota prior to trade in Case II?

Most governments at least try to make it difficult for people to cross their borders illegally.This barrier to the free movement of labor is an example of

The Japanese automobile company Honda decided to establish production facilities in Ohio,mainly to

The Nestlé Corporation,a well-known Swiss MNC,used to issue two different classes of common stock,bearer shares and registered shares,and foreigners were allowed to hold only

Which state is better at making guns?

Foreign-owned manufacturing companies in the world's most highly developed countries

Suppose that the citizens of North and South Carolina are currently consuming as much butter as they care to.What is the maximum increase in the number of guns that could occur following trade?

What is the relative price of a gun in terms of butter in North Carolina?

Suppose that trade occurs.Each country completely specializes and 500 kegs of beer are traded for 500 bottles of whiskey.What is the international price of beer?

Which is growing at a faster rate,foreign direct investment by MNCs or international trade?

A country like North Korea

The theory of comparative advantage

Underlying the theory of comparative advantage are assumptions regarding

Privatization refers to the process of

Which state has an absolute advantage in producing wheat in Case I?

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

A firm with concentrated ownership

Recent corporate scandals at firms such as Enron,WorldCom and the Italian firm Parmalat

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters