Question 1

An MNC can

Accepted Answer

A) be a factor that increases the opportunities of the citizens of less developed countries. 
B) be a factor that increases the opportunity set of domestic investors. 
C) increase economic efficiency. 
D) all of the options 
A) be a factor that increases the opportunities of the citizens of less developed countries. 
B) be a factor that increases the opportunity set of domestic investors. 
C) increase economic efficiency. 
D) all of the options

Question 2

Since its inception the euro has brought about revolutionary changes in European finance.For example,

Accepted Answer

A) by redenominating corporate bonds and stocks from several different currencies into one common currency,the euro has precipitated the emergence of continent-wide capital markets in Europe that are comparable to U.S.markets in depth and liquidity. 
B) Swiss bank accounts are all denominated in euro. 
C) the European banking sector has become much more important as a source of financing for European firms. 
D) there have actually not been any revolutionary changes. 
A) by redenominating corporate bonds and stocks from several different currencies into one common currency,the euro has precipitated the emergence of continent-wide capital markets in Europe that are comparable to U.S.markets in depth and liquidity. 
B) Swiss bank accounts are all denominated in euro. 
C) the European banking sector has become much more important as a source of financing for European firms. 
D) there have actually not been any revolutionary changes.

Question 3

Japan has experienced large trade surpluses.Japanese investors have responded to this by

Accepted Answer

A) liquidating their positions in stocks to buy dollar-denominated bonds. 
B) investing heavily in U.S.and other foreign financial markets. 
C) lobbying the U.S.government to depreciate its currency. 
D) lobbying the Japanese government to allow the yen to appreciate. 
A) liquidating their positions in stocks to buy dollar-denominated bonds. 
B) investing heavily in U.S.and other foreign financial markets. 
C) lobbying the U.S.government to depreciate its currency. 
D) lobbying the Japanese government to allow the yen to appreciate.

Question 4

Consider the no-trade input/output situation presented in the following table and graph for South and North Carolina.Assume that free trade is legal. Input/Output without Trade
                           country                            south carolina        north carolina       total               I. total potintal output                                    (lbs. or yard; 000,000s)                                   guns      500       250       750              butter       1,000       750       1,750               II. consumption                                     (lbs. or yard; 000,000s)                                   guns      250      200       450              butter       500      150        650       Which state is better at making guns?

Accepted Answer

A) South Carolina 
B) North Carolina 
C) The states are equally good at making guns. 
A) South Carolina 
B) North Carolina 
C) The states are equally good at making guns.

Question 5

The emergence of global financial markets is due in no small part to

Accepted Answer

A) advances in computer and telecommunications technology. 
B) enforcement of the Soviet system of state ownership of resources of production. 
C) government regulation and protection of infant industries. 
D) none of the options 
A) advances in computer and telecommunications technology. 
B) enforcement of the Soviet system of state ownership of resources of production. 
C) government regulation and protection of infant industries. 
D) none of the options

Question 6

Consider a dentist and a 14-year old boy.The dentist can make $100 per hour drilling teeth and the 14-year old boy can make $2 per hour picking up used aluminum cans.The dentist is a manly man and can mow his half-acre lot in one hour.The 14-year old boy can mow the lawn in two hours.If the dentist hires the boy to mow his lawn at any price less than $100,but more than $4

Accepted Answer

A) both he and the boy are better off. 
B) the dentist would be exploiting the boy. 
C) the boy would be exploiting the dentist. 
D) all of the options 
A) both he and the boy are better off. 
B) the dentist would be exploiting the boy. 
C) the boy would be exploiting the dentist. 
D) all of the options

Question 7

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input.Country B can produce 8 yards of textiles or 5 pounds of food per unit of input.

Accepted Answer

A) Country A is relatively more efficient than Country B in the production of food. 
B) Country B is relatively more efficient than Country A in the production of food. 
C) Country A has an absolute advantage over Country B in the production of food and textiles. 
D) Country B is relatively more efficient than Country A in the production of food,but Country A has an absolute advantage over Country B in the production of food and textiles. 
A) Country A is relatively more efficient than Country B in the production of food. 
B) Country B is relatively more efficient than Country A in the production of food. 
C) Country A has an absolute advantage over Country B in the production of food and textiles. 
D) Country B is relatively more efficient than Country A in the production of food,but Country A has an absolute advantage over Country B in the production of food and textiles.

Question 8

Consider the no-trade input/output situation presented in the following table and graph for South and North Carolina.Assume that free trade is legal. Input/Output without Trade
                           country                            south carolina        north carolina       total               I. total potintal output                                    (lbs. or yard; 000,000s)                                   guns      500       250       750              butter       1,000       750       1,750               II. consumption                                     (lbs. or yard; 000,000s)                                   guns      250      200       450              butter       500      150        650       What is the relative price of a pound of butter in terms of guns in North Carolina?

Accepted Answer

A) 1 pound of butter costs 0.33 guns. 
B) 1 gun costs 0.33 pounds of butter. 
C) 1 pound of butter costs 0.66 guns. 
D) 2 guns costs 0.66 pounds of butter. 
A) 1 pound of butter costs 0.33 guns. 
B) 1 gun costs 0.33 pounds of butter. 
C) 1 pound of butter costs 0.66 guns. 
D) 2 guns costs 0.66 pounds of butter.

Question 9

If one country is twice the size of another country and is better at making almost everything than the benighted citizens of the smaller county,

Accepted Answer

A) the bigger county enjoys an absolute advantage. 
B) the bigger county enjoys an relative advantage. 
C) the bigger county enjoys an comparative advantage. 
D) there is not enough information to make a determination. 
A) the bigger county enjoys an absolute advantage. 
B) the bigger county enjoys an relative advantage. 
C) the bigger county enjoys an comparative advantage. 
D) there is not enough information to make a determination.

Question 10

Consider the no-trade input/output situation presented in the following table and graph for South and North Carolina.Assume that free trade is legal. Input/Output without Trade
                           country                            south carolina        north carolina       total               I. total potintal output                                    (lbs. or yard; 000,000s)                                   guns      500       250       750              butter       1,000       750       1,750               II. consumption                                     (lbs. or yard; 000,000s)                                   guns      250      200       450              butter       500      150        650       How much does it cost for North Carolina to produce one gun?

Accepted Answer

A) 3 pounds of butter 
B) .33 pounds of butter 
C) 1.33 pounds of butter 
D) none of the options 
A) 3 pounds of butter 
B) .33 pounds of butter 
C) 1.33 pounds of butter 
D) none of the options

Question 11

Recently,financial markets have become highly integrated.This development

Accepted Answer

A) allows investors to diversify their portfolios internationally. 
B) allows minority investors to buy and sell stocks. 
C) has increased the cost of capital for firms. 
D) none of the options 
A) allows investors to diversify their portfolios internationally. 
B) allows minority investors to buy and sell stocks. 
C) has increased the cost of capital for firms. 
D) none of the options

Question 12

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) all of the options 
A) circumvent trade barriers. 
B) reduce transportation costs. 
C) reduce transactions costs. 
D) all of the options

Question 13

In David Ricardo's theory of comparative advantage,

Accepted Answer

A) international trade is a zero-sum game in which one trading partner's gain comes at the expense of another's loss. 
B) liberalization of international trade will enhance the welfare of the world's citizens. 
C) is a short-run argument,not a long-run argument. 
D) has been superseded by the now-orthodox view of mercantilism. 
A) international trade is a zero-sum game in which one trading partner's gain comes at the expense of another's loss. 
B) liberalization of international trade will enhance the welfare of the world's citizens. 
C) is a short-run argument,not a long-run argument. 
D) has been superseded by the now-orthodox view of mercantilism.

Question 14

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

Question 15

As capital markets are becoming more integrated,the goal of shareholder wealth maximization

Accepted Answer

A) has been altered to include other goals as well. 
B) has lost out to other goals,even in the U.S. 
C) has been given increasing importance by managers in Europe. 
D) has been shown to be a deterrent to raising funds abroad. 
A) has been altered to include other goals as well. 
B) has lost out to other goals,even in the U.S. 
C) has been given increasing importance by managers in Europe. 
D) has been shown to be a deterrent to raising funds abroad.

Question 16

MNCs can use their global presence to

Accepted Answer

A) take advantage of underpriced labor services available in certain developing countries. 
B) gain access to special R&D capabilities residing in advanced foreign counties. 
C) boost profit margins and create shareholder value. 
D) all of the options 
A) take advantage of underpriced labor services available in certain developing countries. 
B) gain access to special R&D capabilities residing in advanced foreign counties. 
C) boost profit margins and create shareholder value. 
D) all of the options

Question 17

Today for an MNC to produce merchandise in one country on capital equipment financed by funds raised in a number of different currencies through issuing securities to investors in many countries,and then selling the finished product to customers in yet other countries is

Accepted Answer

A) not uncommon. 
B) extremely common. 
C) uncommon. 
D) the norm. 
A) not uncommon. 
B) extremely common. 
C) uncommon. 
D) the norm.

Question 18

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.

Question 19

The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can produce when they completely specialize in one or another product.The last two columns give each country's consumption without trade. $$\begin{array} { l c c c c c c } 
& \begin{array} { c } 
\text { Maxirnumn } \
\text { beer } \
\text { production }
\end{array} & \begin{array} { c } 
\text { Maxirnum } \
\text { whiskey } \
\text { production }
\end{array} & \begin{array} { c } 
\text { Beer consumption } \
\text { without trade }
\end{array} & \begin{array} { c } 
\text { Beer consurnption } \
\text { without trade }
\end{array} \
\begin{array} { l } 
\text { Northem } \
\text { Irelard } \
\text { Southem }
\end{array} & 500 \mathrm { kegs } & 1500 \mathrm { kegs } & 300  \mathrm { kegs } & 600  \text { bottles } \
\text { Ireland } & 1200 \mathrm { kegs } & \mathbf { 8 0 0 } \mathrm { kegs } & 600 \mathrm { kegs } & 400 \text { bottles }
\end{array}$$ What is the price of beer without trade in Southern Ireland?

Accepted Answer

A) 2 bottles of whiskey = 3 kegs of beer 
B) 5 bottles of whiskey = 12 kegs of beer 
C) 1 bottle of whiskey = 1 kegs of beer 
D) none of the options 
A) 2 bottles of whiskey = 3 kegs of beer 
B) 5 bottles of whiskey = 12 kegs of beer 
C) 1 bottle of whiskey = 1 kegs of beer 
D) none of the options

Question 20

The World Trade Organization,WTO,

Accepted Answer

A) has the power to enforce the rules of international trade. 
B) covers agriculture and physical goods,but not services or intellectual property rights. 
C) recently expelled China for human rights violations. 
D) ruled that NAFTA is to be the model for world trade integration. 
A) has the power to enforce the rules of international trade. 
B) covers agriculture and physical goods,but not services or intellectual property rights. 
C) recently expelled China for human rights violations. 
D) ruled that NAFTA is to be the model for world trade integration.

An MNC can

Since its inception the euro has brought about revolutionary changes in European finance.For example,

Japan has experienced large trade surpluses.Japanese investors have responded to this by

The emergence of global financial markets is due in no small part to

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input.Country B can produce 8 yards of textiles or 5 pounds of food per unit of input.

If one country is twice the size of another country and is better at making almost everything than the benighted citizens of the smaller county,

Recently,financial markets have become highly integrated.This development

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

In David Ricardo's theory of comparative advantage,

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

As capital markets are becoming more integrated,the goal of shareholder wealth maximization

MNCs can use their global presence to

Today for an MNC to produce merchandise in one country on capital equipment financed by funds raised in a number of different currencies through issuing securities to investors in many countries,and then selling the finished product to customers in yet other countries is

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

The World Trade Organization,WTO,

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

		country
	south carolina	north carolina	total
I. total potintal output
(lbs. or yard; 000,000s)
guns	500	250	750
butter	1,000	750	1,750
II. consumption
(lbs. or yard; 000,000s)
guns	250	200	450
butter	500	150	650

Exam 2: Globalization and the Multinational Firm

An MNC can

Since its inception the euro has brought about revolutionary changes in European finance.For example,

Japan has experienced large trade surpluses.Japanese investors have responded to this by

The emergence of global financial markets is due in no small part to

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input.Country B can produce 8 yards of textiles or 5 pounds of food per unit of input.

If one country is twice the size of another country and is better at making almost everything than the benighted citizens of the smaller county,

Recently,financial markets have become highly integrated.This development

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

In David Ricardo's theory of comparative advantage,

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

As capital markets are becoming more integrated,the goal of shareholder wealth maximization

MNCs can use their global presence to

Today for an MNC to produce merchandise in one country on capital equipment financed by funds raised in a number of different currencies through issuing securities to investors in many countries,and then selling the finished product to customers in yet other countries is

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

The World Trade Organization,WTO,

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