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chapters 1-3 cba 300

A survey of CEOs of the 162 largest firms on Fortune’s list of the 500 largest American corporations
found that the internationally oriented courses that were viewed as being the most important for early
career positions included topics related to:
D. all of the above.
The increased internationalization of business requires __________ to have a basic knowledge of
international business.
all managers
. If you already have a job, you can enhance your opportunities for international experience by:
all of the above.
As stated in the text, an international business is:
a business whose activities involve crossing national borders
Foreign business denotes:
the domestic operations within a foreign country.
A multidomestic company is:
. an organization with multicountry affiliates.
A global company is:
an organization that attempts to standardize operations worldwide.
International business differs from domestic business in that a firm operating across borders must deal
. all of C, D, and E.
The domestic environment is composed of all the uncontrollable forces originating in the __________
that surround and influence the life and development of the firm.
home country
The kinds of forces in the foreign environment are __________ those in the domestic environment except
that they occur in foreign nations
the same as
Decision making in the international environment is __________ it is in a purely domestic
. more complex than
Unconscious reference to one’s

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own cultural values when judging behavioral actions of others in a new
and different environment is called:
self-reference criterion.
__________ was the world’s leading manufacturing country for about 1,800 years, until it was replaced
by Britain in about 1840.
none of the above.
International business really began:
before the time of Christ.
UNCTAD, an agency of the United Nations, estimates there are __________ international firms in the
Due to the expanding importance of foreign-owned firms in local economies, host governments have
made their policies toward these companies:
. more liberal.
_______ refers to the transportation of any domestic good or service to a destination outside a country or
The level of service exports worldwide increased more than _______ between 1980 and 2010.
According to the text, the tendency toward an international integration of goods, technology, information,
labor, and capital, or the process of making this integration happen, is called:
economic globalization.
Which of the following are identified in the text as being drivers of globalization?
The major globalization drivers include all of the following except:
According to supporters of the globalization of trade and investment, free trade:
creates more and better jobs.
According to opponents of the globalization of trade and investment:
all of the above.
Reasons for international firms to enter into foreign markets are linked to which of the following desires?
All of the above.
The major globalization drivers include all of the following except:
. cultural.
The worldwide stock of outward FDI is estimated to have increased _______ between 1990 and
9 fold
According to the Exporter Data Base, small and medium-sized enterprises accounted for ___________ of
all U.S. exporters.
nearly 98 percent
One measure of the magnitude of international trade and how it has grown is that _____________ of
everything grown or made in the world is now exported.
B. 25 percent
The level of merchandise exports in 2010, worldwide, was:
$15.2 trillion.
The level of services exports in 2010, worldwide, was:
$3.7 trillion.
Between 1980 and 2010, the level of merchandise exports from Africa:
increased by 250 percent.
In examining the volume of international trade:
the proportion of manufacturing value added generated by South and East Asia has quadrupled since
More than one-half of the exports from developing countries go to __________ countries, and this
proportion has been _____________ over the past 35 years.
. developed; decreasing
When considering where to export, advantages to managers of focusing on a nation that is already a
sizable purchaser of goods coming from the home country include:
export and import regulations are not insurmountable.
When considering where to export, advantages to managers of focusing on a nation that is already a
sizable purchaser of goods coming from the home country include:
satisfactory transportation facilities have already been established
The three largest markets for American exports of goods in 2010 were:
Japan, Mexico, and China.
The three nations that exported the largest amount of goods to the United States in 2010 were:
Canada, Mexico, and China.
Many of the Asian countries that are major exporters to the United States are also significant importers of
American goods because:
all of the above.
Supporters of mercantilism:
viewed accumulation of precious metals as an activity essential to a nation’s welfare.
Mercantilists believed that:
. a nation should have an export surplus in order to accumulate precious metals
Adam Smith claimed that:
.market forces, not government controls, should determine direction, volume, and the composition of
international trade.
The capability of one nation to produce more of a good with the same amount of input than another
country is:
an absolute advantage
If Ecuador has an absolute advantage in coffee and Argentina in wheat, then, according to trade
all of the above.
A nation having absolute disadvantages in the production of two goods with respect to another nation has
___________ in the production of the good in which its absolute disadvantage is less
a comparative advantage
According to the theory of comparative advantage:
none of the above
Locating activities in another nation is:
Offshoring is an application of:
comparative advantage.
According to trade theory:
traders need to know the exchange rate between their own currency and that of the nation they are
considering trading with before they can decide whether it is advantageous to import, export, or buy
Theory based on ____________________ states that international and interregional differences in
production costs occur because of differences in the supply of production factors.
resource endowments
The theory of resource endowment:
. states that a nation will trade goods that can be produced with the production factor that is most
The international product life cycle:
is concerned with the role of innovation in trade patterns.
Economies of scale and the experience curve:
. explain why many companies will engage in international trade.
Which of the following elements are included in Porter’s Diamond Model of national advantage?
none of the above
Porter’s Diamond Model of national advantage:
claims that the ability of local firms in a country to utilize the country’s resources to gain a competitive
advantage is based on demand conditions, factor conditions, substitute products, and firm strategy,
structure, and rivalry.
_______________ occurs primarily because of relative price differentials among nations
International trade
To sum up international trade theory, we can say that the primary reason for trade is:
the existence of price differentials among nations
Which of the following is explained by international trade theory?
All of the above
Firms from __________ had the largest total outstanding stock of direct overseas investment at the
beginning of 2010.
the United States
At the beginning of 2010, the value of the outstanding stock of foreign direct investment of all nations
totaled more than:
$19 trillion.
Regarding the annual outflows of foreign direct investment:
much of the recent increase has been associated with mergers, acquisitions, and other international
investments made by companies in industries facing increased competition and global consolidation.
Regarding foreign direct investment and trade:
fewer government barriers to trade, increased competition from globalizing firms, and new production
and communications technology are causing many international firms to disperse the activities of their
production systems to locations close to available resources.
Regarding economic and social development:
for the Trade and Development Index, the best regional performance among developing countries was
that of the countries of the East Asia and Pacific region.
The monopolistic advantage theory suggests that firms in oligopolistic industries are likely to
_______________ foreign direct investment when they have technical and other .
The monopolistic advantage theory states that:
FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.
. IMF quotas are determined by the relative size of a nation in the global economy and:
all of the above.
The IMF initially played a central role in:
setting fixed exchange rates among nations’ currencies with an established par value based on gold.
The major function of the World Bank is to serve as a:
nonprofit banking cooperative for its members to meet development needs.
The IBRD is a major institution of the World Bank whose function is to loan to:
middle-income and creditworthy poor nations.
The WTO exists to:
establish and help implement rules of trade among nations in order to increase trade flows
Is the WTO’s idea of “fair competition” really a code phrase for free trade?
Not really. Trade relationships among nations can be exceedingly complex, and the WTO supports fair
competition, which may mean freer trade rather than free trade.
The Doha Development Agenda is:
. an extended conference of the WTO initially convened in Doha.
The WTO has made progress on trade-related intellectual property rights (TRIPS). An example of this
progress is:
an agreement that property rights should not take precedence over public health.
Regional trade agreements such as NAFTA can be seen to impact the WTO:
negatively, because they undercut the nondiscrimination principle of the WTO.
In a free trade area, members drop internal tariffs. External tariffs:
are maintained independently by each member.
Economic integration often progresses:
in stages, from free trade area to customs union to common market.
Most African nations have their main trade relationships:
with developed nations, often built on former colonial ties
ASEAN began as a defensive alliance of 10 Asian nations concerned about:
the spread of communism in their region.
NAFTA maintains restrictions on the movement of labor, a limitation that suggests it is:
a free trade area.
The EU began as a common market for:
the coal and steel industries.
. The Treaty of Rome, signed in 1957, established a common market for coal and steel for:
West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy.
The EMU (European Monetary Union or Economic and Monetary Union) has established the euro, a
currency that is used in:
16 of the EU member-countries.
The Council of European Union, the primary policy-setting institution of the EU, is composed of:
the member-states’ ministers who represent the specific area being discussed.
The impact of the EU on the WTO could be said to be negative, since:
.the favored trade relationships among EU members are not extended to nonmember countries, so the
EU undercuts the WTO.
The EU’s impact on international business is:
substantial, since EU standards, especially in the areas of ecology and sustainability, impact any firm
that wants to do business in the EU.
Under new institutional theory, institutions can be categorized as formal and informal, and the informal
institutions can be further categorized as:
normative and cognitive.
This type of institution operates through laws and regulations, with coercion as the regulative
. formal
Informal institutions are composed of sets of
voluntary agreements.
The Chinese concept of guanxi is an example of:
an informal, cognitive institution.
. The United Nations is probably the best known among:
international organizations.
All UN member-countries belong to the UN’s:
General Assembly.
The UN’s International Court of Justice (ICJ) is also known as:
the World Court.
At the end of World War II, the UN called for the conference that set up the World Bank and the IMF.
This conference was:
held at Bretton Woods, New Hampshire.
That the common interest of all nations in a workable international exchange rate system transcends their
conflicting international interests is the premise of:
. the International Monetary Fund (IMF).
The World Bank’s two major institutions are the International Development Association and the:
. International Bank for Reconstruction and Development (IBRD).
The geographical area that receives the most International Development Association (IDA) credits and
grants is:
. Africa.
. IDA’s purpose is to loan to:
the poorest nations.
The purpose of the International Financial Corporation (IFC) is to invest in companies and financial
institutions in developing countries in order to build:
domestic capital markets.
The WTO is the only international organization designed to establish and help implement:
. rules of trade among nations.
The first principle of the WTO’s five basic principles is trade without:
. discrimination.
The idea that WTO members treat all members equally is known as:
the MFN (most-favored-nation) principle.
The Doha Development Agenda is:
a WTO conference on trade.
The results of liberalized trade so far have been:
uneven for developing and developed economies.
The main difference between a free trade area (FTA) and a customs union is that in a customs union,
there is:
a common external tariff.
ASEAN began as a:
security and military alliance among Southeast Asian nations.
The Organization for Economic Cooperation and Development provides information on:
. economic and other activities within its member-nations.
The following country is not a member of ASEAN:
How many countries in the EU use the euro as their currency?
“Trade without discrimination” in the WTO means that
all trading partners must be treated the same
The UN is important to international business for many reasons, including that it:
develops standards and norms in technical areas.
International institutions are important to international business managers because, in general, they:
. limit choices, thereby providing ways to settle disagreements and resolve conflicts.
International institutions offer graduating international business majors:
interesting career development and internship opportunities.
EU rulings:
affect all businesses within the EU and those that trade within the EU.
The OECD is called the “rich man’s club” because its members:
. are 34 of the world’s wealthiest nations.
The main purpose of the OECD is to:
provide economic research and a discussion forum.
The OECD has encouraged members to:
eliminate bribery in all commercial transactions.
Two good places to begin country-level research are the websites of the:
specific country’s government and OECD.
Which country does not belong to the OECD?
The most serious recent challenge to the EU has been:
. the recent financial crisis.

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