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Test Bank Instructors Multiple Choice 1. The form of economic integration where countries remove all barriers to trade among themselves and implement a common trade policy towards non-members is called: (a) A free trade area (b) A customs union (c) A common market (d) An economic union (e) A political union Answer: (b) 2. The form of economic integration where countries remove all barriers to trade among themselves, erect a common trade policy against non-members and allow free movement of capital and labour is called: (a) A free trade area (b) A customs union (c) A Maquiladora (d) An economic union (e) A common market Answer: (e) 3. Jane had finally convinced the Board of Directors to pursue international marketing activities in the developing world. While the Board agreed Jane was told that in order to limit the risk of failure she had to focus on those countries with higher levels of social and economic development. In order to identify such countries Jane should use: (a) The Purchasing Power Parity index (b) The Aggregate Welfare Measurement index (c) The Physical Quality of Life Index (d) The difference between consumer and producer surplus Answer: (c) 4. Opponents of Base of the Pyramid marketing argue that: (a) The poor spend most of their money on basic needs and have little left over for other products. (b) The poor are difficult to reach because they are geographically dispersed and culturally heterogeneous. (c) Firms need very high penetration rates to be successful.

(d)

All of the above

(e) (a) and (c) only Answer: (d) 5. ___________________ is one of the benefits of economic integration. It is defined as the substitution of imports from a beneficiary country within the bloc for domestic production from some other country within the bloc. (a) Trade expansion (b) Trade diversion (c) Trade creation (d) Trade inclusion (e) Trade symmetry Answer: (c) 6. Which of the following (if any) is a disadvantage of economic integration? (a) Trade diversion (b) Loss of sovereignty (c) Loss of jobs to low wage countries (d) All of the above (e) None of the above Answer: (d) 7. In a _______________ economy both private sector enterprise and the government are involved in making production and investment decisions and the ‘animal spirits’ of private companies are moderated by government regulation to protect the vulnerable in society as well as the environment. (a) Free enterprise (b) Socialist (c) Market socialist (d) Mixed Answer: (d) 8. The BRIC Countries refers to a group of four countries with rapidly developing economies which are gaining economic and political power on the world stage. Which country listed below is a member of this group? (a) Bolivia (b) Bangladesh (c) Belize (d) Bahrain (e) Brazil Answer: (e)

9. Which of the following (if any) is a phase in the business cycle experienced by free enterprise economies: (a) Growth (b) Recession (c) Recovery (d) All of the above (e) None of the above Answer: (d) 10. The term __________________ was coined to articulate concerns that the European Union, once formed, would raise trade restrictions against non-member countries and make it extremely difficult for foreign firms to reach consumers in member countries: (a) Fortress Europe (b) Troika (c) Eurozone (d) Eurobloc Answer: (a)

Short Answer Questions 1. How is income distribution measured? In assessing countries for foreign market expansion why is an analysis of income distribution important to the global marketer? 2. How does exchange rate instability impact the operations of the global marketing firm? 3. When evaluating countries for market entry why should the global marketer be concerned about excessive levels of national and household debt? 4. What is the rationale for global marketers targeting consumers at the base of the income pyramid? 5. What is the law of one price?...