Question 1

Assume that the world economy consists of two countries: Russia and Republic of Belarus. Each country can produce tomatoes and potatoes. Russia can produce 1000 tons of tomatoes or 3000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 3 × tomatoes = 3000. Republic of Belarus can produce 500 tons of tomatoes or 1000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 2 × tomatoes = 1000. Countries can freely trade with each other.
-If people in both countries eat the same dish that requires 0.1 kg or tomatoes and 1.4 kg of potatoes to prepare,how much tomatoes are CONSUMED in Republic of Belarus?

Accepted Answer

A)  Less than 100 tons 
B)  At least 100 tons but less than 200 tons 
C)  At least 200 tons but less than 400 tons 
D)  More than 400 tons

Question 2

The common monetary policy for the euro zone is now formulated by

Accepted Answer

A)  the Bundesbank in Germany. 
B)  the Federal Reserve Bank. 
C)  the World Bank. 
D)  the European Central Bank.

Question 3

The goal of shareholder wealth maximization

Accepted Answer

A)  is not appropriate for non-U.S. business firms. 
B)  means that all business decisions and investments that a firm makes are done for the purpose of making the owners of the firm better off financially. 
C)  is a sub-objective the firm should attempt to achieve after the objective of customer satisfaction is met. 
D)  is in conflict with the privatization process taking place in third-world countries.

Question 4

What is the specific Canadian perspective on international finance?

Accepted Answer

The answer of What is the specific Canadian perspective on...

Question 5

Assume that the world economy consists of two countries: Russia and Republic of Belarus. Each country can produce tomatoes and potatoes. Russia can produce 1000 tons of tomatoes or 3000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 3 × tomatoes = 3000. Republic of Belarus can produce 500 tons of tomatoes or 1000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 2 × tomatoes = 1000. Countries can freely trade with each other.
-If the price of potatoes is $300 per ton,with free trade the price of tomatoes can be any of the numbers below EXCEPT

Accepted Answer

A)  $600 
B)  $750 
C)  $900 
D)  All of these numbers can be the equilibrium price of tomatoes

Question 6

Assume that the world economy consists of two countries: Russia and Republic of Belarus. Each country can produce tomatoes and potatoes. Russia can produce 1000 tons of tomatoes or 3000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 3 × tomatoes = 3000. Republic of Belarus can produce 500 tons of tomatoes or 1000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 2 × tomatoes = 1000. Countries can freely trade with each other.
-If people in both countries eat the same dish that requires 0.1 kg or tomatoes and 1.4 kg of potatoes to prepare,and the price of potatoes is $1000 per ton,what is the GDP in Republic of Belarus?

Accepted Answer

A)  $165,000 
B)  $333,333 
C)  $1,000,000 
D)  None of these

Question 7

Assume that the world economy consists of two countries: Russia and Republic of Belarus. Each country can produce tomatoes and potatoes. Russia can produce 1000 tons of tomatoes or 3000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 3 × tomatoes = 3000. Republic of Belarus can produce 500 tons of tomatoes or 1000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 2 × tomatoes = 1000. Countries can freely trade with each other.
-Which country has absolute advantage in producing potatoes?

Accepted Answer

A)  Russia 
B)  Republic of Belarus 
C)  Both countries 
D)  Neither country

Question 8

Exchange rate risk refers to

Accepted Answer

A)  An expected drop in an exchange rate. 
B)  A highly stable exchange rate. 
C)  Lower profit due to an expected drop in an exchange rate. 
D)  Lower profits due to an unexpected change in exchange rates.

Question 9

Privatization refers to 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

Question 10

The "Big Bang" refers to:

Accepted Answer

A)  Deregulation of the Japanese stock market 
B)  Deregulation of the German stock market 
C)  Deregulation of the British stock market 
D)  Deregulation of the Mexican stock market

Question 11

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

Accepted Answer

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

Question 12

Assume that the world economy consists of two countries: Russia and Republic of Belarus. Each country can produce tomatoes and potatoes. Russia can produce 1000 tons of tomatoes or 3000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 3 × tomatoes = 3000. Republic of Belarus can produce 500 tons of tomatoes or 1000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 2 × tomatoes = 1000. Countries can freely trade with each other.
-If people in both countries eat the same dish that requires 0.1 kg of tomatoes and 1.4 kg of potatoes to prepare,how much potatoes will be produced in the Republic of Belarus?

Accepted Answer

A)  None 
B)  333.33 tons 
C)  500 tons 
D)  666.67 tons

Exam 1: Globalization and the Multinational Firm