Title: Global Environment
Course: Question Banks

Q: Compared to International Business, Globalization is:
- different geography.
- about China.
- more narrowly focused.
- broader.
A: broader.

Q: Managing multiple and varying currencies is a(n) ________ challenge in a global business environment.
- social
- technological
- cultural
- economic
A: economic

Q: The key drivers advancing globalization are:
- North American Free Trade Agreement (NAFTA) laws.
- trade agreements with China.
- higher tariffs.
- technical, cultural, and economic advances.
A: technical, cultural, and economic advances.

Q: If your country is the single, only source of a given product, good or service, you are said to have:
- comparative advantage.
- a marketing plan.
- a monopoly
- absolute advantage.
A: absolute advantage.

Q: Opportunity cost is a key consideration in determining:
- absolute advantage.
- a company’s tax rate.
- a company’s measure of value
- comparative advantage.
A: comparative advantage.

Q: In your global woodworking business you can produce 100 birdhouses, or 10 pieces of fine furniture for the same amount of resources. Therefore, each piece of fine furniture is worth:
- 1 birdhouse.
- 100 birdhouses.
- 1,000 birdhouses.
- 10 birdhouses.
A: 10 birdhouses.

Q: When countries specialize in producing goods they are most efficient at, and trade for their other goods from trading partner countries, the arrangement demonstrates:
- a competitive marketplace.
- the ups and downs of global trade
- a cyclical economy
- the Law of Comparative Advantage.
A: the Law of Comparative Advantage.

Q: In your country rubber trees are abundant and you can trade them very profitably for technology products, which you cannot produce profitably in your country. Your abundant rubber trees give you:
- economies of scale.
- a stable economy.
- a comparative advantage
- absolute advantage.
A: absolute advantage.

Q: Using their comparative and absolute advantages allows countries to:
- charge higher prices for their products.
- stabilize their political system.
- prevent other countries from imposing tariffs on their country.
- enter global trading markets.
A: enter global trading markets.

Q: The equation for balance of trade is:
- value of imports − value of exports.
- assets − liabilities.
- value of imports − cost of tariffs.
- value of exports − value of imports.
A: value of exports − value of imports.

Q: The equation for balance of payments is:
- Debt plus equity.
- Total value of imports − total value of imports.
- Total value of imports − debt.
- Total inflow of money − total outflow of money.
A: Total inflow of money − total outflow of money.

Q: Countries wishing to know the net of their exchange of goods rely on which equation?
- Gross Domestic Product
- Balance of Payments
- Currency Exchange Rate
- Balance of Trade
A: Balance of Trade

Q: When more goods and services are exported than imported it is known as a:
- trade deficit.
- balance of trade.
- trade imbalance
- trade surplus.
A: trade surplus.

Q: The U.S. imports more goods from China than it sells or exports to China. We are said to have a ________ with China.
- Trade Surplus
- Balance of Trade
- Trade Equality
- Trade Deficit
A: Trade Deficit

Q: Which factors are considered in Balance of Payments, but NOT in Balance of Trade?
- value of imports, value of exports
- phosphate imports from Australia
- quantity of exports
- services, foreign investments, loans and foreign aid, financial capital, and financial transfers
A: services, foreign investments, loans and foreign aid, financial capital, and financial transfers

Q: Countertrade is the exchange of goods and services without:
- recording the transaction.
- government regulation.
- adhering to trade regulations.
- exchanging currency.
A: exchanging currency.

Q: Exchanging goods or services in lieu of currency transactions is known as:
- trade surplus.
- balance of payments.
- trade deficit.
- countertrade.
A: countertrade.

Q: An agreement to purchase output from a foreign plant in exchange for providing capital and expertise to build the plant, is an example of:
- barter countertrade
- NAFTA
- WTO
- buyback countertrade
A: buyback countertrade

Q: A company acquires goods or products from another country and sells them in domestic markets. This is an example of:
- exporting.
- transfering.
- smuggling.
- importing.
A: importing.

Q: Exports are an important source of what for many countries?
- marketing ventures
- corporate connections
- debt
- revenue
A: revenue

Q: A company produces goods or products locally and sells them in foreign markets. This is called:
- importing.
- transferring.
- smuggling.
- exporting.
A: exporting.

Q: License agreements usually cover property that is ________, such as trademarks, images, patents, or production techniques.
- tangible
- published
- widely available
- intangible
A: intangible

Q: Jack has become a franchisee of a Sonic in his local community. This has enabled him to have access to ________, in order to sell the products under the Sonic name.
- all the company information from Sonic
- advertising
- financial capital
- the knowledge, processes, and trademarks of Sonic
A: the knowledge, processes, and trademarks of Sonic

Q: In both licensing and franchising situations, the licensee and franchisee:
- compete for competitive advantage.
- lose a competitive advantage.
- are at a financial disadvantage.
- gain a competitive advantage.
A: gain a competitive advantage.

Q: There are many ways that a business can reach the global market, the most intensive approach is through:
- Licensing Agreement.
- Franchise Agreement.
- exporting goods.
- Foreign Direct Investment.
A: Foreign Direct Investment.

Q: BMW’s vehicle-assembly facility in South Carolina represents a direct investment inside the United States by the German manufacturer. This facility is an example of:
- Franchise Agreement.
- Strategic Alliance.
- exporting agreement.
- Foreign Direct Investment.
A: Foreign Direct Investment.

Q: Because the level of commitment and investment associated with Foreign Direct Investments is so high, companies:
- realize it’s quick and easy to come to an agreement.
- involve only senior management throughout the decision process.
- view it as the best way to enter foreign markets.
- expend a great deal of time and effort scrutinizing potential opportunities.
A: expend a great deal of time and effort scrutinizing potential opportunities.

Q: Which of the following establishes a new business that is jointly owned by two or more otherwise independent businesses?
- a strategic alliance
- a franchise agreement
- a licensing agreement
- a joint venture
A: a joint venture

Q: The most common ________ involves two companies that are equal partners in the new firm, investing money and resources while sharing control of the newly formed firm.
- strategic alliance
- franchise agreement
- licensing agreement
- joint venture
A: joint venture

Q: Increasingly, businesses are getting their products and services into global markets via:
- partnership agreements with governments.
- product placements in movies.
- companies that specialize in exporting products
- licensing and franchise agreements.
A: licensing and franchise agreements.

Q: Businesses exist in an environment shaped by:
- neighboring territories.
- GATT.
- investors.
- culture.
A: culture.

Q: Displaying uncovered arms or legs in product packaging pictures is considered offensive in Mid-Eastern countries that observe Islamic law. This is an example of:
- language barriers.
- business norms.
- economic constraints.
- cultural customs and taboos.
A: cultural customs and taboos.

Q: Businesses intending to market their products globally should:
- disregard cultural differences—people are people.
- translate their packages to the local language.
- guess what consumers in foreign markets want.
- educate themselves to use cultural differences to their advantage.
A: educate themselves to use cultural differences to their advantage.

Q: The combined political and economic forces of a country are known as:
- economic freedom.
- combined economy.
- economic liberties.
- political economy.
A: political economy.

Q: Economists use the PPP measurement to compare countries’ varying standards of living to:
- the Gross National Income.
- historical trends.
- GDP.
- the cost of living in the U.S.
A: the cost of living in the U.S.

Q: Companies seeking to expand their products to global emerging markets will likely pursue:
- allies of Israel.
- the U.S. and Europe.
- Australia.
- Brazil, Russia, India and China.
A: Brazil, Russia, India and China.

Q: Governments maintain laws that regulate business practices in order to:
- make money from foreign investment.
- turn the tables on global trade.
- increase business investments.
- create a stable environment for business.
A: create a stable environment for business.

Q: Marketing communications are subject to which laws?
- contract law
- financial reporting
- trade agreements
- decency, censorship, and freedom of expression
A: decency, censorship, and freedom of expression

Q: When marketing products globally, businesses should:
- assume the laws of their home country apply.
- hire a patent attorney.
- assume foreign consumers respond the same to marketing messages.
- understand and conform to the laws of the countries in which they operate.
A: understand and conform to the laws of the countries in which they operate.

Q: Infrastructure needed to transport goods in a foreign country include:
- standards for air emissions, waste-disposal and hazardous-material handling.
- tractor trailers.
- reliable high-speed internet.
- roads, railways, and port systems.
A: roads, railways, and port systems.

Q: Your business plans to market its all-natural ingredient dog food to a foreign country. The shelf life of the product is a short 6 months from date of manufacture. Which of the following infrastructure considerations is a primary concern?
- Railroads
- Roads
- Port systems
- Storage facilities
A: Storage facilities

Q: Coca Cola embarked on a program to replenish all of the water it uses in drinks and made good on its promise five years early through 248 community water partnership projects in 71 countries. This is an example of:
- a complex permitting process.
- financial controls and systems.
- global expansion plan.
- a collaborative solution to doing global business more sustainably.
A: a collaborative solution to doing global business more sustainably.

Q: Trade tariffs and quotas are designed to protect:
- foreign aid.
- international trade.
- foreign producers.
- domestic producers.
A: domestic producers.

Q: The U.S. currently does not allow import of the world’s best cigars from Cuba, because the U.S. trade restrictions with Cuba constitute an ________.
- tariff
- World Trade Organization
- trade war
- embargo
A: embargo

Q: Import quotas ________.
- require local content.
- impose taxes on imports.
- regulate the quality of imports.
- set limits on the quantity or value of imports.
A: set limits on the quantity or value of imports.

Q: Pertaining to international trade, the acronym WTO stands for:
- Working Trade Organization.
- World Transaction Operations.
- World Tariff Organization
- World Trade Organization.
A: World Trade Organization.

Q: When it was formed the World Trade organization absorbed ________.
- the IMF.
- the World Bank.
- NAFTA
- all of GATT’s agreements.
A: all of GATT’s agreements.

Q: One of the main responsibilities of the World Trade Organization is to ________.
- provide loans for capital programs to developing countries.
- provide fixed exchange rate agreements between countries.
- provide loans to facilitate international trade.
- provide a forum for negotiations, agreements and settling disputes among nations.
A: provide a forum for negotiations, agreements and settling disputes among nations.

Q: Which of the following has primary responsibility for financing economic development on behalf of the international community?
- The International Monetary Fund
- The World Trade Organization
- United Nations
- The World Bank
A: The World Bank

Q: Which of the following has as its primary purpose promoting economic and social progress in developing countries:
- the International Monetary Fund.
- the General Agreement on Tariffs and Trade.
- United Nations
- the World Bank.
A: the World Bank.

Q: If Guatemala is seeking funding to invest in expanding production and exports that will grow its economy, then it would turn to:
- the International Monetary Fund.
- the World Trade Organization.
- United Nations.
- the World Bank.
A: the World Bank.

Q: In global finance the term IMF refers to ________.
- International Money and Finance
- Industrial Monetary Finance
- International Management Fund
- the International Monetary Fund
A: the International Monetary Fund

Q: If Mexico is seeking credit to stabilize its currency in a major economic disruption, then it would turn to:
- the World Bank.
- the Federal Reserve.
- the World Trade Organization.
- the International Monetary Fund.
A: the International Monetary Fund.

Q: Which organization seeks to provide capital investments for economic growth and infrastructure projects:
- World Bank.
- World Trade Organization.
- United Nations
- International Monetary Fund.
A: International Monetary Fund.

Q: The international monetary community created both the IMF and the World Bank because:
- the community could not agree and required a compromise.
- the U.S. established the World Bank solely as a check and balance of the power of the IMF.
- having two organizations would yield more funding.
- the two organizations create an important division of labor.
A: the two organizations create an important division of labor.

Q: Regional trade agreements are reciprocal trade agreements between:
- two or more companies in the United States.
- two or more states.
- two or more cities.
- two or more nations.
A: two or more nations.

Q: An example of a regional trade agreement is:
- Interstate Commerce laws.
- Common External Tariffs.
- General Agreement on Tariffs and Trade (GATT)
- North American Free Trade Agreement (NAFTA).
A: North American Free Trade Agreement (NAFTA).

Q: Global corruption data from Transparency International show that:
- wealthy people are more likely to pay a bribe than poor people.
- corruption is becoming less prevalent as global standards become more common.
- poor people are more likely to pay bribes than wealthy people.
- bribes have increased.
A: bribes have increased.

Q: Bribery is one of ________ examples of a corporation engaged in unethical behavior.
- the least common
- the only
- Least impactful
- the most common
A: the most common

Q: Although outright bribery is clearly unethical and illegal, there is a great deal of behavior that falls into a gray zone that can be:
- clearly understood.
- explained easily.
- ignored.
- difficult to analyze.
A: difficult to analyze.

Q: Which of the following are accurate statements about corruption in the global business environment?
- Foreign companies that do business with the US Government are not subject to the Foreign Corrupt Practices Act.
- Every country now enforces strict laws that govern and prevent bribery and corruption.
- Corruption is considered illegal and unethical in every country.
- In the United States companies must abide by the Foreign Corrupt Practices Act.
A: In the United States companies must abide by the Foreign Corrupt Practices Act.

Q: The FCPA applies only to bribes paid (or offered) to ________ to obtain or retain business or to develop an unfair competitive advantage.
- all employees
- domestic government officials
- foreign investors
- foreign government officials
A: foreign government officials

Q: If a bribe has been paid to a foreign government official to obtain or retain business, then it is a violation of the:
- U.S. Government Accounting Office.
- Organization for Cooperation and Development.
- World Bank’s Policies
- Foreign Corrupt Practices Act.
A: Foreign Corrupt Practices Act.

Q: The U.S. Government Accounting Office defines a sweatshop as any manufacturing facility that is guilty of ________ labor abuses such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, abusive discipline, sexual harassment, or violation of labor laws and regulations.
- one of the
- all of the following
- none of the following
- two or more
A: two or more

Q: A manufacturing company located in China that uses children and pays them less than the minimum wage, is considered by the U.S. Government Accounting Office to be a(n) ________.
- international company
- efficient manufacturing company
- lean manufacturing company
- sweatshop
A: sweatshop

Q: The term ________ refers to a factory that is guilty of some sort of labor abuse or violation, such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, unsafe working conditions, abusive discipline, sexual harassment, or violation of labor laws and regulations.
- manufacturing
- production line
- workshop
- sweatshop
A: sweatshop