Question 1

Which of the following is not among possible advantages of membership in the European Union (EU)?

Accepted Answer

A) The EU allows unrestricted trade among member nations. 
B) The EU permits anyone with an EU passport to work in any EU nation. 
C) The EU guarantees starting salaries for government workers in any EU nation. 
D) The EU enhances political and social cooperation among its members.

Question 2

Policies that restrict free trade among nations are called _____.

Accepted Answer

A) import controls 
B) balance-of-trade laws 
C) trade controls 
D) economic sanctions

Question 3

The major purposes of the General Agreement on Tariffs and Trade (GATT)include encouraging free trade,regulating and reducing tariffs,and providing a forum for resolving trade disputes.

Accepted Answer

A) True 
 B)False

Question 4

Nations engage in trade primarily because no nation can produce all of the goods and services that it needs.

Accepted Answer

A) True 
 B)False

Question 5

In many countries,American firms may be at a disadvantage in competing with local companies because only the educated classes speak English.

Accepted Answer

A) True 
 B)False

Question 6

Foreign direct investment,which is generally the most expensive commitment that a company can make to an overseas market,is usually driven by the size and attractiveness of the market.

Accepted Answer

A) True 
 B)False

Question 7

Chic Clothing Inc. has expanded to six locations in four different countries. Having seized the opportunity to make this move two years ago, top managers are now very glad they did (as are shareholders). Business is booming in both the U.S. and foreign markets. Current plans call for opening four new stores every year—two in the United States and two in Europe—for each of the next ten years. Chic’s managers are well aware that they’ll have to put a great deal of effort into learning new languages, traditions, customs, exchange rates, religions, and political practices.
-Because businesspeople participate in a nation's culture,Chic managers must heed the Foreign Corrupt Practices Act in order to avoid contaminating foreign cultural environments.

Accepted Answer

A) True 
 B)False

Question 8

The Foreign Corrupt Practices Act,which prohibits the distribution of bribes,can put American businesspeople at a competitive disadvantage.

Accepted Answer

A) True 
 B)False

Question 9

It is parents' weekend and your parents will arrive at your dorm in an hour.There are two tasks left to be done: washing the dishes and vacuuming.You and your roommate have agreed to divide up the work.In the past,you have been able to do the dishes in 30 minutes and vacuum in 15 minutes.Your roommate takes 40 minutes to do the dishes and 60 minutes to vacuum.Based on this scenario:

Accepted Answer

A) you have an absolute advantage in both jobs and a comparative advantage in doing dishes. 
B) your roommate has an absolute advantage in doing dishes and a comparative advantage in vacuuming. 
C) you have an absolute advantage in both jobs and a comparative advantage in vacuuming. 
D) neither of you has an absolute advantage in either tasks,and you have a comparative advantage in vacuuming.

Question 10

The largest factor in a country's balance of payments is its _____.

Accepted Answer

A) defense budget 
B) welfare bill 
C) import-export balance 
D) credit-card debt

Question 11

According to the principle of _____,a country that decides to specialize in the production of a particular product must sacrifice the production of another product.

Accepted Answer

A) comparative advantage 
B) absolute advantage 
C) cross-production 
D) opportunity cost

Question 12

What's the international language of business?

Accepted Answer

A) Spanish 
B) English 
C) Japanese 
D) Chinese

Question 13

Among other things,many MNCs (multinational corporations)have increased their sensitivity to local market conditions by _____.

Accepted Answer

A) centralizing decision making 
B) decentralizing decision making 
C) hiring more local workers and managers 
D) using foreign advertising firms

Question 14

Usually driven by the size and attractiveness of the foreign market,_____ is generally the most expensive commitment that a company can make in an overseas market.

Accepted Answer

A) foreign direct investment 
B) a joint venture 
C) foreign licensing 
D) a strategic alliance

Question 15

Chic Clothing Inc. has expanded to six locations in four different countries. Having seized the opportunity to make this move two years ago, top managers are now very glad they did (as are shareholders). Business is booming in both the U.S. and foreign markets. Current plans call for opening four new stores every year—two in the United States and two in Europe—for each of the next ten years. Chic’s managers are well aware that they’ll have to put a great deal of effort into learning new languages, traditions, customs, exchange rates, religions, and political practices.
-Understanding that,in some countries,people's personal and business lives overlap more than they do in the United States will help Chic managers deal with counterparts in high-context cultures.

Accepted Answer

A) True 
 B)False

Question 16

Under a(n)_____ between a U.S.
based company and a foreign company,in return for the right to use the parent company's brand name and sell its goods and services,the foreign company is required to adhere to an established business model.

Accepted Answer

A) international franchising agreement 
B) international licensing agreement 
C) strategic alliance 
D) outsourcing contract

Question 17

One way of dealing with local laws and regulations in foreign countries is to hire local _____ to provide advice.

Accepted Answer

A) advertising firms 
B) attorneys 
C) politicians 
D) underworld figures

Question 18

The United States is currently experiencing an international trade _____.

Accepted Answer

A) balance 
B) surplus 
C) equilibrium 
D) deficit

Question 19

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.
-In selling prepackaged food products and spices to foreign outlets,Cajun would be engaged in _____.

Accepted Answer

A) licensing 
B) franchising 
C) exporting 
D) outsourcing

Question 20

A factory worker in the United States receives approximately _____ times more pay per hour than a manual worker in India.

Accepted Answer

A) three 
B) eight 
C) ten 
D) twelve

Exam 9: Business in a Global Environment

Which of the following is not among possible advantages of membership in the European Union (EU) ?

Policies that restrict free trade among nations are called _____.

The major purposes of the General Agreement on Tariffs and Trade (GATT)include encouraging free trade,regulating and reducing tariffs,and providing a forum for resolving trade disputes.

Nations engage in trade primarily because no nation can produce all of the goods and services that it needs.

In many countries,American firms may be at a disadvantage in competing with local companies because only the educated classes speak English.

Foreign direct investment,which is generally the most expensive commitment that a company can make to an overseas market,is usually driven by the size and attractiveness of the market.

The Foreign Corrupt Practices Act,which prohibits the distribution of bribes,can put American businesspeople at a competitive disadvantage.

The largest factor in a country's balance of payments is its _____.

According to the principle of _____,a country that decides to specialize in the production of a particular product must sacrifice the production of another product.

What's the international language of business?

Among other things,many MNCs (multinational corporations) have increased their sensitivity to local market conditions by _____.

Usually driven by the size and attractiveness of the foreign market,_____ is generally the most expensive commitment that a company can make in an overseas market.

Under a(n) _____ between a U.S. based company and a foreign company,in return for the right to use the parent company's brand name and sell its goods and services,the foreign company is required to adhere to an established business model.

One way of dealing with local laws and regulations in foreign countries is to hire local _____ to provide advice.

The United States is currently experiencing an international trade _____.

A factory worker in the United States receives approximately _____ times more pay per hour than a manual worker in India.