International Business Management test bank Chapter 6 PDF

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International Business Management test bank Chapter 6...

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International Business, 7e (Griffin/Pustay) Chapter 6 International Trade and Investment 1) Which of the following is a characteristic of most Mittelstand firms? A) emphasis on low price guarantees B) reliance on global supply chains C) dependence on foreign investors D) specialization in product niches Answer: D Diff: 2 Skill: Concept Objective: 1 2) The term ________ refers to the voluntary exchange of goods, services, assets, or money between one person or organization and another. A) sales B) transaction C) trade D) strategic management Answer: C Diff: 1 Skill: Concept Objective: 1 3) Since World War II, world trade has ________. A) grown slightly B) shrunk slightly C) shrunk significantly D) grown dramatically Answer: D Diff: 1 Skill: Concept Objective: 1 4) In 2009, total international merchandise trade accounted for about ________ percent of the world's GDP. A) 12 B) 21 C) 44 D) 59 Answer: B Diff: 2 Skill: Concept Objective: 1

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5) In 2009, China accounted for nearly ________ of the world's merchandise exports. A) 10% B) 25% C) 40% D) 55% Answer: A Diff: 2 Skill: Concept Objective: 1 6) Ellis, a manager at an MNE, is studying international trade theories. In his current position, Ellis would most likely use this knowledge to ________. A) lobby for trade policy changes B) identify promising new markets C) predict factors that motivate trade D) analyze foreign exchange markets Answer: B Diff: 2 Skill: Application Objective: 1 7) During which century were the first theories of international trade developed? A) sixteenth B) seventeenth C) eighteenth D) nineteenth Answer: A Diff: 3 Skill: Concept Objective: 2 8) The first theories of international trade used ________ as a unit of analysis. A) individual countries B) country clusters C) regions D) continents Answer: A Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade

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9) What type of trade were the early country-based theories of international trade most useful in understanding? A) services B) brand name goods C) commodities D) high-tech goods Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 10) All of the following are examples of differentiated products except ________. A) lumber B) cameras C) shampoo D) automobiles Answer: A Diff: 1 Skill: Concept Objective: 2 11) The theory of ________ maintains that a country's wealth is measured by its holdings of gold and silver. A) mercantilism B) neomercantilism C) competitive advantage D) comparative advantage Answer: A Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 12) According to mercantilism, what should a country's primary goal be? A) protecting citizens from unfair labor practices B) encouraging imports to prevent resource depletion C) promoting exports to enlarge gold and silver holdings D) ensuring sufficient labor for low-wage jobs in the textile industry Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade

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13) Which of the following benefited the LEAST from mercantilist policies? A) monarchs B) local politicians C) individual consumers D) domestic manufacturers Answer: C Diff: 2 Skill: Concept Objective: 2 14) In the U.S., sugar growers, steel companies, and the AFL-CIO are supporters of mercantilist policies. These groups are best characterized as ________. A) protectionists B) communists C) isolationists D) federalists Answer: A Diff: 2 Skill: Application Objective: 2 15) Who is the father of free market economics? A) David Ricardo B) Michael Porter C) Adam Smith D) John Dunning Answer: C Diff: 1 Skill: Concept Objective: 2 16) Which of the following statements is most likely true? A) Japan eliminated all protectionist policies after WWII. B) Nearly all countries have some neomercantilist policies. C) China is one of the few countries with protectionist policies. D) EU countries are supportive of U.S. neomercantilist policies. Answer: B Diff: 3 AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade

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17) Adam Smith was best known as an advocate of ________. A) low-cost manufacturing B) free-market economics C) mercantilism D) labor unions Answer: B Diff: 1 Skill: Concept Objective: 2 18) What did Adam Smith believe about the ultimate effects of mercantilist policies on the health of a country's economic situation? A) Mercantilist policies strengthen an economy by protecting against competition. B) Mercantilist policies result in strong rates of unemployment. C) Mercantilist policies reduce the wealth of a country as a whole. D) Mercantilist policies harm special interest groups. Answer: C Diff: 3 Skill: Concept Objective: 2 19) Mercantilism ________. A) suggests that a country should export those goods for which it is more productive than other countries and trade for those goods for which other countries are more productive B) maintains that a country's wealth is measured by its holdings of gold and silver C) suggests that a country will have a comparative advantage in producing products that intensively use resources it has in abundance D) argues that most trade in manufactured goods should be between countries with similar per capita incomes Answer: B Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 20) Which theory suggests that a country should export those goods and services for which it is more productive than other countries and import those goods and services for which other countries are more productive? A) mercantilism B) comparative advantage C) absolute advantage D) specialization of countries Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade

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21) Which statement is asserted by the theory of absolute advantage? A) A country should export those goods for which it is more productive than other countries and trade for those goods for which other countries are more productive. B) A country should import goods from developing economies in order to maximize returns on profit and economies of scale. C) A country will have a comparative advantage if it makes products that rely on global supply networks. D) Most trade in manufactured goods should be between countries with similar per capita incomes. Answer: A Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 22) The primary flaw in the theory of absolute advantage is that the theory ________. A) confuses the acquisition of treasure with the acquisition of wealth B) looks only at relative productivity differences rather than competitive differences C) suggests that no trade will occur when one country has an absolute advantage in multiple products D) incorporates the concept of opportunity cost in determining which goods a country should produce Answer: C Diff: 3 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 23) Which theory suggests that a country should produce and export those goods and services for which it is relatively more productive than other countries are and import those goods and services for which other countries are relatively more productive? A) relative advantage B) comparative advantage C) absolute advantage D) specialization of countries Answer: B Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 24) The ________ of a good is the value of what is given up to get the good. A) relative cost B) opportunity cost C) absolute cost D) discount cost Answer: B Diff: 1 Skill: Concept Objective: 2

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25) Which theory incorporates the concept of opportunity cost? A) comparative advantage B) mercantilism C) absolute advantage D) factor endowments Answer: A Diff: 1 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 26) Which theory promotes the notion of specializing in what you do relatively best? A) country similarity B) comparative advantage C) product life cycle D) absolute advantage Answer: B Diff: 1 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 27) Which theory answers the question, "What determines the products for which a country will have a comparative advantage?" A) relative advantage B) absolute advantage C) relative factor endowments D) specialization of countries Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 28) Which theory listed below is also called the Heckscher-Ohlin theory? A) relative advantage B) comparative advantage C) relative factor endowments D) specialization of countries Answer: C Diff: 2 Skill: Concept Objective: 2

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29) The Heckscher-Ohlin theory ________. A) suggests that a country should export those goods for which it is more productive than other countries and trade for those goods for which other countries are more productive B) states that a country should produce and export those goods for which it is relatively more productive than other countries and import those goods for which other countries are relatively more productive than it is C) suggests that a country will have a comparative advantage in producing products that intensively use resources it has in abundance D) argues that most trade in manufactured goods should be between countries with similar per capita incomes Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 30) Leontief predicted that if the Heckscher-Ohlin theory held, then the U.S. would ________. A) import capital-intensive goods B) import products such as steel C) export products such as shoes D) export bulk chemicals Answer: D Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 31) Which of the following was determined by Leontief? A) U.S. exports were less capital intensive than imports. B) U.S. exports were more capital intensive than imports. C) Relative factor endowments were not a factor in determining trade patterns. D) Specialization was not a factor in determining imports and exports. Answer: A Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade 32) Which factors of production did Leontief focus on? A) land and labor B) land and technology C) capital and labor D) labor and technology Answer: C Diff: 1 Skill: Concept Objective: 2 Learning Outcome: Compare and contrast theories of international trade

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33) The country similarity theory suggests that most trade in manufactured goods should be between countries with similar ________. A) labor costs B) per capita incomes C) natural resources D) cultures and languages Answer: B Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 34) Germany exports BMWs to the United States, and the United States exports Dell Computers to Germany. This is an example of ________. A) mercantilism B) diversification C) interindustry trade D) intraindustry trade Answer: C Diff: 2 Skill: Application Objective: 3 35) Japan exports Toshiba Computers to the United States, and the United States exports Apple Computers to Japan. This is an example of ________. A) mercantilism B) diversification C) interindustry trade D) intraindustry trade Answer: D Diff: 2 Skill: Application Objective: 2 36) The country similarity theory ________. A) suggests that a country should export those goods for which it is more productive than other countries and trade for those goods for which other countries are more productive B) states that a country should produce and export those goods for which it is relatively more productive than other countries and import those goods for which other countries are relatively more productive than it is C) suggests that a country will have a comparative advantage in producing products that intensively use resources it has in abundance D) argues that most trade in manufactured goods should be between countries with similar per capita incomes Answer: D Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 9 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

37) Which international trade theory originated in the marketing field? A) new trade theory B) product life cycle theory C) country similarity theory D) theory of competitive advantage Answer: B Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 38) Which of the following is not one of the stages in the international product life cycle theory? A) new product B) modified product C) maturing product D) standardized product Answer: B Diff: 2 Skill: Concept Objective: 3 39) In which stage of the international product life cycle does the innovating firm's country become a net importer of the product? A) new product stage B) maturing product stage C) standardized product stage D) never Answer: C Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 40) In the ________ stage of the international product life cycle, the product becomes commodity-like and price becomes very important. A) new product B) maturing product C) standardized product D) international product Answer: C Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade

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41) Which theory suggests that trade flows can be determined by firms making the necessary research and development expenditures? A) global strategic rivalry theory B) national competitive advantage theory C) international product life cycle theory D) country similarity theory Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 42) What is the primary focus of the new trade theory developed by Krugman, Helpman, and Lancaster? A) protecting intellectual property rights B) expanding research and development C) developing economies of scale D) exploiting the experience curve Answer: C Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 43) ________ argued that firms struggle to develop some sustainable competitive advantage which they then exploit to dominate the global marketplace. A) Porter B) Vernon C) Heckscher and Ohlin D) Krugman and Lancaster Answer: D Diff: 2 Skill: Concept Objective: 3 44) Taylor Helmets has been able to lower the average cost of producing a bicycle helmet as it increases the number of helmets it manufactures each day. Taylor Helmets is most likely benefitting from ________. A) opportunity costs B) economies of scope C) economies of scale D) competitive advantages Answer: C Diff: 2 Skill: Application Objective: 3

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45) Which theory of international trade explains that success in international trade comes from the interaction of four country- and firm-specific elements? A) national competitive advantage B) country similarity C) absolute advantage D) relative factor endowments Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 46) Who developed the theory of national competitive advantage? A) Adam Smith B) Raymond Vernon C) Michael Porter D) Eli Heckscher Answer: C Diff: 2 Skill: Concept Objective: 3 47) Which of the following is not one of the four elements discussed in the theory of national competitive advantage? A) factor conditions B) opportunity costs C) firm strategy, structure, and rivalry D) related and supporting industries Answer: B Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 48) Which of the following factors are not included in Porter's view of factor endowments? A) land B) capital C) work ethic of workforce D) educational level of workforce Answer: C Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade

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49) Porter's theory of national competitive advantage can best be described as a ________. A) country-based theory B) firm-based theory C) hybrid of country-based and firm-based theories D) government-focused theory based on economies of scale Answer: C Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 50) Firm-based theories of international trade are best at explaining trade in all of the following types of products except ________. A) aluminum B) televisions C) bulldozers D) stereo equipment Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Compare and contrast theories of international trade 51) ________ represents passive holdings of securities such as foreign stocks, bonds, or other financial assets. A) Foreign direct investment B) Foreign portfolio investment C) Capital investment D) Controlling ownership Answer: B Diff: 1 Skill: Concept Objective: 4 52) Which type of investment involves the acquisition of foreign assets for the purpose of controlling them? A) Foreign direct investment B) Foreign portfolio investment C) Capital investment D) Controlling ownership Answer: A Diff: 1 Skill: Concept Objective: 4

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53) Which of the following is a form of foreign direct investment? A) foreign stock ownership B) foreign bond ownership C) participation in a joint venture D) mutual fund ownership Answer: C Diff: 1 Skill: Concept Objective: 4 54) Foreign portfolio investments are most likely motivated by the desire for ________. A) risk reduction B) controlling ownership C) active management D) immediate globalization Answer: A Diff: 2 Skill: Concept Objective: 4 Learning Outcome: Explain the implications of foreign direct investment for both host and home country 55) The most important source of FDI for the United States is ________. A) Canada B) Mexico C) the U.K. D) China Answer: C Diff: 1 Skill: Concept Objective: 5 56) The ________ suggests that a firm owning a valuable asset that creates a competitive advantage domestically can use that advantage to penetrate foreign markets through FDI. A) national competitive advantage B) comparative advantage C) relative factor endowments D) ownership advantage theory Answer: D Diff: 1 Skill: Concept Objective: 5 Learning Outcome: Explain the implications of foreign direct investment for both host and home country

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57) Which theory explains why a firm would choose to enter a foreign market via FDI rather than exploit its ownership advantages internationally through other means? A) eclectic theory B) internalization theory C) relative factor endowments D) national competitive advantage Answer: B Diff: 2 Skill: Concept Objective: 5 Learning Outcome: Explain the implications of foreign direct investment for both host and home country 58) ________ are the costs of negotiating, monitoring, and enforcing a contract. A) Opportunity cost...