Standards of ethical behavior are universal worldwide.
Economic development is hindered by widespread corruption.
To ensure they are upholding ethical standards, international firms should focus exclusively on obeying the laws of their host countries
Intellectual property rights developed in one country are guaranteed throughout the world.
Ethical dilemmas are similar to legal questions in that there are clear-cut right and wrong behaviors in every international business situation.
Failure to adopt CSR behaviors can have have highly detrimental effects on a company.
CSR practices improve employee perceptions of a company, thereby reducing turnover.
Research shows that corporate executives throughout the world uphold both profitability and social responsibility as business values.
The most advanced companies monitor their suppliers to ensure that their suppliers use sustainable practices.
Practicing sustainability typically increases production costs but has the benefit of smoothing out relations with foreign governments.
The five approaches to analyzing ethical dilemmas often lead to similar solutions.
Multinational businesses typically develop several codes of ethics, each designed to guide their companies in different situations.
A company’s code of ethics is a cure for all of its ethical dilemmas.
Considering one’s instincts is a good practice when resolving ethical dilemmas.
In resolving ethical dilemmas, the opinions of individuals involved are more important than the facts of the situation.
the abuse of power to achieve illegitimate personal gain
acts makes it illegal for U.S. firms to offer bribes to foreign parties in order to secure or retain business?
the U.S. Foreign Corrupt Practices Act
Under prevailing legislation, firms that bribe foreign parties to secure business can be fined ________.
In the United States, what prison term can be assessed for managers who bribe foreign parties to secure or retain business?
up to five years
Each of the following is helpful for reducing corruption except ________.
A) consistently enforced anticorruption laws
B) governments committed to above-the-board practices
C) highly transparent accounting systems
D) independence from the global economy
independence from the global economy
Which of the following countries would be least likely to experience rampant corruption?
A) a country with minimal laws against corruption
B) a country that widely publicizes its financial accounting
C) a country run by a military dicatorship, with no elected leaders
D) a country with high trade barriers and limited regional commerce
country that widely publicizes its financial accounting
Moral principles and values governing behavior regarding right and wrong are known as
Which of the following is an example of a corporate human rights violation?
A) operating a factory that pollutes the air
B) selling a defective product
C) operating a sweatshop factory
D) failing to make foreign tax payments
operating a sweatshop factory
The process of reproducing assets without compensating those who originally created them is known as
Which of the following protects books and software from unauthorized use?
A ________ is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention.
The Nike “Swoosh” is an example of a(n) ________.
A copyright is granted for ________ but not for ________.
works of art; manufacturing processes
A firm is hired by an entertainment company to investigate piracy of its entertainment software in countries abroad. The firm develops a list of countries to investigate based with estimated piracy levels of 90% or higher. Which of the following is most likely on the firm’s list?
Which of the following countries has the highest level of piracy in records and music?
In India, estimated losses from copyright piracy are greatest in which of the following industries?
A) entertainment software
B) records and music
D) business software
In Russia, estimated losses from copyright piracy total ________.
A) $3,596 million
B) $2,224 million
C) $1,691 million
D) $225 million
An international human rights organization recommends that its member countries review their human rights policies on a periodic basis to ensure that their governments are upholding ethical standards for the treatment of prisoners. Which of the following represents the most effective reasoning in support of the organization’s recommendation?
A) Ethical policies and practices tend to remain consistent within the same country over time.
B) Nations should only enforce ethical standards that have been approved by other nations.
C) Nations should enforce those ethical standards that have been adopted in other nations.
D) Ethical standards change over time, so national policies should be updated as necessary.
Ethical standards change over time, so national policies should be updated as necessary.
An ethical relativist would most likely argue that ethical truths are ________.
A) consistent in application
B) different from group to group
C) based on ancient principles
D) absolute across societies
different from group to group
An individual who believes in ethical normativism views ethical truths as ________.
B) constantly changing
C) dependent on societal norms
D) superior in certain countries
Each of the following represents a core CSR value except ________
A) eliminating child labor
B) guarding against corruption
C) protecting the environment
D) inhibiting labor unions
inhibiting labor unions
The stakeholders of a company include all of the following except ________.
A) loyal customers of the company’s main competitor
B) members of the company’s board of directors
C) the company’s CEO and senior managers
D) individuals who are company shareholders
loyal customers of the company’s main competitor
In a meeting of its senior management, a cigarette company reviews its plans to expand into several emerging markets. One executive suggests that targeting these markets may raise potential CSR concerns. Other attendees at the meeting dismiss the idea. Which of the following is the most effective response the executive could give to support his point regarding CSR concerns?
A) Women are an untapped group of potential cigarette consumers in emerging markets.
B) The GDPs of target countries may suffer from the burden of increased health care costs.
C) Cigarette sales have declined in many of the advanced economies in recent years.
D) Advertising that portrays smoking as “hip” will be most likely to appeal to young consumers.
The GDPs of target countries may suffer from the burden of increased health care costs.
39) Which of the following would most likely be considered an appropriate action for a multinational company in meeting its global corporate social responsibility obligations?
A) lowering production costs for specific manufactured items
B) improving the efficiency of assembly line operations
C) developing a strategic plan to enter an emerging market
D) offering jobs to assist local workers in rising out of poverty
offering jobs to assist local workers in rising out of poverty
Which of the following makes it more difficult for companies to implement global CSR measures?
A) The UN Convention on the Rights of the Child defines specific standards for global CSR.
B) Most international companies agree on the importance of improving access to quality education.
C) Company stakeholders often have conflicting expectations regarding business accountability.
D) Solutions to social and environmental problems are typically clear cut for headquarter managers.
Company stakeholders often have conflicting expectations regarding business accountability
The practice of meeting humanity’s needs without harming future generations is known as
Which of the following would most likely be considered a sustainable business practice?
A) reducing the overall tax liability of a corporation
B) developing a patented process to produce steel
C) using solar energy to power manufacturing plants
D) enforcing mandatory drug testing among employees
using solar energy to power manufacturing plants
A firm that avoids using sweatshops is pursuing which of the following types of sustainability interests?
Which of the following is an example of an environmental sustainability interest?
A) providing employees educational opportunities
B) developing public works in a community
C) optimizing diversity in hiring
D) minimizing pollutants in manufacturing
minimizing pollutants in manufacturing
A firm that focuses on job creation in its local market is pursuing which of the following types of sustainability interests?
Which of the following standards for examining ethical dilemmas reflects the view that the best ethical action is one that provides the greatest balance of good over harm?
A) common good approach
B) utilitarian approach
C) virtue approach
D) fairness approach
Which of the following standards for examing ethical dilemmas reflects the view that actions should be based on the welfare of the entire community or nation?
A) rights approach
B) utilitarian approach
C) common good approach
D) virtue approach
common good approach
Which of the following standards for examing ethical dilemmas reflects the view that actions should protect and respect the human dignity of everyone involved?
A) fairness approach
B) virtue approach
C) utilitarian approach
D) rights approach
Which of the following is true of a business code of ethics?
A) It guides employee behavior in all situations.
B) It guides employee behavior in some, but not all, situations.
C) It is usually a poor guide for employee behavior.
D) It is a cure-all for ethical dilemmas.
It guides employee behavior in all situations.
A business code of ethics functions as which of the following?
A) mission statement
B) moral compass
C) strategic plan
D) map of goals and objectives
When applying the four-step framework for making ethical decisions, which step should managers take first?
A) evaluate alternatives
B) get the facts
C) recognize the ethical problem
D) implement a decision
recognize the ethical problem
In the four-step framework for making ethical decisions, when should a decision be implemented and evaluated?
A) immediately after the facts of the situation are obtained
B) as the first step in the decision-making process
C) immediately after all relevant persons have been consulted
D) after alternative courses of action have been evaluated
after alternative courses of action have been evaluated
When using the four-step framework for making ethical decisions, which step involves investigating which individuals have a stake in the outcome?
A) get the facts
B) implement a decision
C) evaluate alternatives
D) recognize the ethical problem
get the facts
When using the four-step framework for making ethical decisions, which approach to evaluating actions is being used by a manager who questions whether an action embodies character strengths he values?
A) rights approach
B) virtue approach
C) common good approach
D) utilitarian approach
When making decisions regarding ethical business actions, managers should do which of the following?
A) focus predominantly on whether the actions uphold accepted standards of fairness
B) focus mainly on the company’s obligations to produce profits for its shareholders
C) place the highest emphasis on the company’s ability to benefit the common good
D) balance their obligation to shareholders with contributions to the public good
balance their obligation to shareholders with contributions to the public good
Which of the following is a policy platform for companies committed to sustainability and CSR?
A) the Organization for Economic Cooperation and Development
B) the United Nations Global Compact
C) the International Economic Development Council
D) the Global Competitiveness Report
the United Nations Global Compact
Corporate managers must adhere to the laws of the country in which they do business.
Most democracies also include elements of socialism.
Market forces and free trade are encouraged in democracies and are supported by legal systems that apply fair and equal treatment to all citizens.
Common law originated in Rome and can be found in France, Germany, and Latin America.
Like most legal systems, Islamic law evolves with changing times to better meet the needs of Islamic society.
Government agencies, institutions, and public officials influence the manner in which foreign firms conduct business.
The European Union impacts international trade and business because of its ability to enact and enforce laws and regulations.
Expropriation is the term used to describe a host-country government seizing the assets of a foreign corporation and providing no compensation in return.
Embargoes are a policy tool used to forbid trade with particular countries.
A foreign firm’s entry strategy, operations, and performance are often dictated by foreign investment laws.
Manufacturers and sellers face legal penalties and lawsuits due to product safety and liability laws that ensure accountability for damage, injury, or death from defective products.
Employees working in foreign nations are used by firms to evaluate the political and cultural environment for any potential risks or threats which might harm the firm and its international interests.
The protection of intellectual property rights is guaranteed and enforceable in nearly every country in the world.
All of the following are ways that firms can benefit from a foreign market’s political and legal systems except ________.
A) tax holidays
C) legal protection
D) cash incentives
) legal protection
A company’s potential loss of profitability caused by a nation’s political or legal setting is known by which of the following terms?
A) commercial risk
B) currency risk
C) cross-cultural risk
D) country risk
Country risk is also referred to as which of the following?
A) political risk
B) multilateral risk
C) government risk
D) legal factor risk
An individual from a country with a high degree of political risk might most likely be from which of the following?
An individual from a country with a low degree of political risk might most likely be from which of the following?
Which of the following helps explain why India was once characterized by high country risk?
A) Taxes and financial incentives benefit Indian businesses over foreign firms.
B) Indian business leaders distrust most European corporations.
C) Political leaders enacted laws targeted against foreign firms.
D) Indian leaders fear the modern influences of American firms.
Political leaders enacted laws targeted against foreign firms.
A political system includes each of the following except ________.
A) lobbying groups
B) trade unions
C) legislative bodies
D) investment banks
The three major types of current political systems are ________.
A) totalitarianism, socialism, and democracy
B) socialism, democracy, and monarchy
C) totalitarianism, liberalism, and fascism
D) democracy, republicanism, and oligarchy
totalitarianism, socialism, and democracy
Which of the following is not a typical principal function of a political system
A) regulate private sector investments
B) establish stability based on laws
C) provide protection from external threats
D) govern the allocation of valued resources
regulate private sector investments
Which of the following countries is considered primarily socialist?
Totalitarian states are characterized by all of the following except ________.
A) dictator-led state political party
B) state-supported religious ideology
C) state-regulated public behavior
D) free flow of information in the mass media
free flow of information in the mass media
Which of the following is the underlying principle of socialism?
A) The welfare of individuals far outweighs the welfare of society.
B) The well-being of the group supersedes the well-being of individuals.
C) The rights of individuals should be balanced with societal needs.
D) The state should protect itself from individual and group interests.
The well-being of the group supersedes the well-being of individuals.
Which form of government is characterized by private property rights and limited government?
What has been the impact of social democracy on international business relations in some European countries?
A) Regulations have forced foreign firms to invest elsewhere.
B) Politically conscious foreign firms invest in socialist nations.
C) Low income tax rates have encouraged an influx of FDI.
D) Political stability decreases the country risk of socialist nations.
Regulations have forced foreign firms to invest elsewhere.
Which of the following is an element of socialism often found in democratic societies?
A) government subsidies for foreign firms
B) government sponsored businesses
C) government regulation of the public sector
D) government control of information technology
government regulation of the public sector
Which of the following pairs of nations are on opposite ends of the political freedom scale?
A) New Zealand and Chile
B) China and Syria
C) Japan and South Africa
D) Cuba and Sweden
Cuba and Sweden
A command economy can be characterized by all of the following except ________.
A) a totalitarian based environment
B) limited government intervention
C) state-driven industrial development
D) extensive bureaucratic system
limited government intervention
Which of the following countries is considered a mixed economy?
C) United States
An effective legal system is characterized by which of the following?
A) ineffectual government restrictions
B) systematically enforced laws and regulations
C) political involvement in business transactions
D) state-mandated judiciary organizations
systematically enforced laws and regulations
Which of the following terms is used to refer to the existence of a legal system based on clear rules and fair enforcement?
A) civil law
B) socialist law
C) culture of law
D) rule of law
rule of law
The U.S. Securities and Exchange Act encourages business transactions by
A) protecting public companies from government scrutiny
B) evaluating the inner-workings of privately owned firms
C) requiring public companies to disclose their financial status
D) shielding investors from bankruptcy and excessive taxation
requiring public companies to disclose their financial status
The Middle East is an example of a region primarily ruled by which of the following legal systems?
Legal precedents and past practices are characteristic of which legal system?
Common law can best be described as a system ________.
A) designed from political and legislative regulations
B) derived from religious texts and systems
C) developed and recorded in a systematic manner
D) based on legal interpretations of judges
based on legal interpretations of judges
Which of the following types of organizations would wield the greatest power over a firm attempting to do business in Canada?
A) Canada’s Ministry of Foreign Affairs
B) World Trade Organization
C) North American Free Trade Area
D) Organization for Economic Cooperation and Development
Canada’s Ministry of Foreign Affairs
Which of the following is a typical complaint of host-country competitors against foreign firms?
A) Foreign firms burden the host-country with infrastructure requirements.
B) Foreign firms do not have to obey host-country laws and regulations.
C) Foreign firms receive financial support from host-country governments.
D) Foreign firms lure local workers away from host-country businesses.
Foreign firms receive financial support from host-country governments.
Boycotts and protests have the potential to harm businesses by
A) preventing businesses from shipping their products to foreign markets
B) reducing sales and requiring additional public relations activity
C) destroying the ability of a firm to carry on normal business operations
D) raising concerns about a firm’s foreign operations by initiating lawsuits
reducing sales and requiring additional public relations activity
All of the following industries are particularly vulnerable to the threat of terrorism except
United States laws limit foreign investments that might affect which of the following areas?
A) immigration reform
B) labor negotiations
C) national security
D) rate of inflation
The ban on cigarette advertisements in France falls under which of the following categories?
A) environmental laws
B) product and liability laws
C) foreign investment laws
D) marketing and distribution laws
marketing and distribution laws
Repatriation laws affect MNEs that earn profits in foreign countries by
A) enforcing strict stipulations on cross-border transactions and joint ventures
B) limiting the amount of net income and dividends that can be transferred to the home-country headquarters
C) restricting the amount of money that can be re-invested into the foreign facility
D) imposing restrictions on the distribution of products from the foreign facility
limiting the amount of net income and dividends that can be transferred to the home-country headquarters
Which of the following terms is used to refer to the application of home-country laws to conduct outside of national borders?
A) anti-boycott regulations
D) international contracts
Which of the following is the term for a process used by managers to assess potential risks and threats to a firm?
B) Sarbanes reform
A manager who wished to learn about country risk in a host country would most likely consult which of the following?
A) analysis records of competitor firms
B) employees working in the host country
C) host country nationals working abroad
D) employees working in the parent country
employees working in the host country
Which of the following is the least adversarial method of resolving a contractual dispute?
An economy is categorized as advanced, developing, or emerging based on per capita income and level of economic development.
Governments in developing economies often mismanage revenue and expenditures, which leads to additional economic issues.
Foreign direct investment is high in developing economies despite the bureaucratic difficulties that many firms face.
The transition economies of China and Russia have attracted FDI because of privatization.
Demands for automobiles and computers by the middle class in emerging markets constitute the majority of total U.S. exports.
Emerging markets, such as Brazil, serve as manufacturing bases for MNEs seeking low-wage labor for mining, manufacturing, and assembly operations.
Outsourcing enables foreign firms to increase efficiency and obtain competitive advantages.
Per-capita GDP adjusted for purchasing power parity provides a less accurate estimate of an emerging market’s potential than the per-capita GDP adjusted for market exchange rates.
In order to determine the potential of an emerging market, firms should consider a nation’s income distribution, unemployment rate, and rate of urbanization.
The Chinese yuan is significantly undervalued, at 49 percent below its fair-value benchmark with the dollar.
The lack of confidence held by foreign investors in Russia stems from the nation’s unstable political conditions and its favoritism towards local firms.
In emerging markets, foreign firms benefit from the large number of well-qualified business partners available for networking and marketing purposes.
Family conglomerates in the areas of construction, banking and manufacturing frequently dominate emerging market economies.
The connections and knowledge held by family conglomerates makes them useful to foreign firms trying to enter emerging markets.
By investing in the modernization of emerging and developing markets, advanced economy MNEs can develop long-term profit-generating opportunities.
Which of the following is representative of a developing economy?
Nations having the poorest infrastructures and lowest personal incomes are called ________.
A) developed countries
B) newly industrialized countries
C) emerging markets
D) developing countries
Advanced economies account for what percentage of the world population?
All of the following are typical characteristics of advanced economies except ________
A) democratic governments
B) capitalist economies
C) medium trade volume
D) few trade restrictions
medium trade volume
Which of the following is typically correlated with developing economies?
A) large elderly population
B) few natural resources
C) lack of cultural history
D) poor education systems
poor education systems
Which of the following economies is typically characterized by stagnant productivity?
A) advanced economy
B) transition economy
C) developing economy
D) emerging markets
Firms are most often prevented from doing business in developing economies by ________.
A) small pools of labor
B) government regulations
C) regional integration
D) terrorism and war
All of the following characterize emerging markets except ________.
A) highly developed industry
B) high trade volume
C) expanding middle class
D) improved living conditions
highly developed industry
When Bulgaria and Romania joined the EU they improved their economies because they had to do which of the following?
A) attain additional government subsidies
B) modify their political infrastructure
C) implement EU monetary and trade policies
D) compete for business against large EU nations
implement EU monetary and trade policies
privatization of state-owned industries
Which of the following entry methods is especially appealing to foreign firms entering the markets of transition economies?
A) joint ventures with local businesses
B) the purchase of former state enterprises
C) collaborative ventures within blocs
D) exporting and importing products
the purchase of former state enterprises
Emerging markets are important in international business and trade due to their high representative percentage in which of the following categories?
All of the following are typical characteristics of emerging markets except ________.
A) low inward foreign direct investment
B) rapid industrialization
C) moderate competition
D) rapidly declining trade barriers
low inward foreign direct investment
29) Which of the following nations is the largest emerging market?
30) Which of the following is one of the reasons that emerging markets act as manufacturing bases for global MNEs?
A) minimal trade restrictions
B) low-wage, skilled labor pool
C) well-developed infrastructure
D) strong intellectual property laws
low-wage, skilled labor pool
South Korea has become a global leader in which of the following industries?
Outsourcing certain value-added activities with foreign suppliers is known as ________.
All of the following are examples of global sourcing except ________.
A) Mexican autoworkers manufacture generators in Mexico for General Motors
B) Japanese workers are employed at a Toyota plant in central Japan
C) Microsoft employs skilled workers in India for computer programming
D) Massachusetts General Hospital employs doctors in the Philippines to read x-rays
Japanese workers are employed at a Toyota plant in central Japan
Which of the following explains why per-capita GDP converted at market exchange rates inaccurately depicts the potential of an emerging market?
A) The market exchange rate does not take into consideration distribution and production costs for each nation.
B) Products and services in emerging markets are priced significantly lower than they are in advanced economies.
C) The per-capita GDP converted using PPP exchange rates provides a precise measure of consumer buying potential.
D) Products manufactured in emerging markets are priced less than products that are imported outside of an economic bloc.
Products and services in emerging markets are priced significantly lower than they are in advanced economies.
Purchasing power parity tells us ________.
A) what a unit of local currency can buy in its home country
B) the value of goods and services that can be purchased with one unit of a country’s currency
C) the relative ability of two countries’ currencies to buy the same basket of goods in those two countries
D) what a currency can actually buy in real terms
the relative ability of two countries’ currencies to buy the same basket of goods in those two countries
Which of the following best describes the concept of purchasing power parity (PPP)?
A) In emerging markets, the ability to buy goods and services depends on the influx of FDI from international MNEs.
B) The fluctuation in exchange rates disrupts international trade because the value of goods and services is inconsistent.
C) In the future, a world currency will create equality in the global marketplace and eliminate disparity.
D) Eventually, the exchange rate of two currencies will be equalized and the same goods will have the same price in two countries.
D) Eventually, the exchange rate of two currencies will be equalized and the same goods will have the same price in two countries.
The GDP per capita of Country A is less than that of the United States. Which of the following reflects the GDP per capita of Country A?
C) $48, 900
If the GDP per capita of Country A is adjusted for purchasing power parity (PPP), the country’s revised GDP is higher than that of the United States. Which of the following could be the GDP of Country A, adjusted for PPP?
Which of the following terms is used to refer to unofficial economic transactions?
In purchasing power parity terms, which nation has the highest per-capita GDP?
D) South Korea
Which of the following will most likely be the result of an increased number of middle-class households in emerging markets?
A) a vital market economy
B) a decrease in GDP
C) urbanization decline
D) multi-income families
a vital market economy
Computer software counterfeiting is especially prevalent in which of the following emerging markets?
An emerging market’s lack of transparency may suggest which of the following?
45) Which of the following is a benefit to foreign firms that form alliances with local companies in emerging markets?
A) protection against bribery
B) more rapid customs clearance
C) information about the local market
D) strategies for exporting goods
information about the local market
All of the following are typical characteristics of family conglomerates except ________.
A) highly diversified
B) wholly owned or controlled by the government
C) known in South Korea as chaebols
D) easier access to capital than most firms
wholly owned or controlled by the government
Which of the following best explains why a family conglomerate (FC) might pose a challenge to firms trying to enter emerging markets?
A) FCs have superior knowledge in manufacturing and distribution.
B) FCs pay no tariffs in exchange for providing employment opportunities.
C) FC owners often hold positions of power within national governments.
D) FCs may control large market shares in several industries within a nation.
FCs may control large market shares in several industries within a nation.
Which of the following best explains the growth of family conglomerates in emerging markets?
A) domestic investment
B) foreign investment
C) competitive market
D) government protection
Which of the following is a benefit to a foreign firm collaborating with a family conglomerate in an emerging market?
A) reduced capital requirements
B) improved taxation status
C) protected intellectual property
D) limited counterfeiting risks
reduced capital requirements
Which of the following terms is used to refer to a government entity’s request for bids from suppliers?
Which of the following characteristics best equip new emerging market MNEs to compete against MNEs that have long-term experience in the global market?
A) brand recognition, large market share, and skilled workers
B) low-cost labor, family conglomerates, and government support
C) market research, customer service, and brand loyalty
D) government funding, high wages, and value-chain diversification
low-cost labor, family conglomerates, and government support
All of the following characterize the Grameen Bank except ________.
A) over 2,500 branch banks
B) provides small loans
C) started in India in 1974
D) concept of the Gates Foundation
concept of the Gates Foundation
Which of the following best summarizes the argument in favor of microfinance?
A) Microfinance ultimately leads to greater tax revenues for national governments.
B) Microfinance don’t need to be paid back in the event the borrower goes bankrupt.
C) Microfinance allows the underprivileged to create businesses and improve their lives.
D) Microfinance alleviates the pressure on MNEs to support developing economies.
Microfinance allows the underprivileged to create businesses and improve their lives.
Which of the following trends supports improving economic conditions in Africa?
A) direct investment from abroad
B) high unemployment
C) a decline in Botswana’s diamond trade
D) the substantial infrastructure for landline telephones
direct investment from abroad
Governments intervene in international trade and investments in order to protect the interests of foreign investment firms.
U.S. tariffs on imported steel in the early 2000s inadvertently increased production costs for firms that use steel, such as Ford, Whirlpool, and General Electric.
Trade and investment restrictions are often supported by special interest groups.
Some governments impose trade barriers on specific products and services if the import poses a threat to the national culture.
Nations with economies based on agriculture and textile manufacturing generate more economic revenue than nations dependent on high-tech industries.
A countervailing duty slows the import of products or services and hinders the investment activities of firms.
In order to support domestic steel manufacturers, the U.S. Government has intervened by imposing anti-dumping duties on the import of less expensive steel.
Currency controls harm companies that export products, but favor companies that rely heavily on imported parts and components.
Average tariffs have declined over time.
The import tariffs on clothing and shoes into the United States often exceed 20 percent, which results in billions of dollars a year for the U.S. government.
Soon after gaining independence from Britain, India adopted a model of free trade and opened its markets to international trade and investment.
Stifled by inefficient state-run industries following the establishment of a communist government in 1949, China is now a leading exporter of manufactured goods.
Products assembled in foreign trade zones are subject to reduced duties and taxes.
Maquiladoras along the northern Mexico border enable foreign firms to take advantage of low-cost labor, government incentives, and favorable taxes.
The purpose of protectionism is to protect ________.
A) domestic industries from foreign competitors
B) foreign firms from domestic competition
C) domestic exports from high production costs
D) foreign and domestic firms from labor unions
domestic industries from foreign competitors
) Which of the following is the term for checkpoints at the ports of entry in each country where government officials inspect imported products and levy tariffs?
A) domestic lines
A government policy that impedes trade through means other than explicit taxes is known as a ________.
C) price restriction
D) nontariff trade barrier
nontariff trade barrier
Which of the following is a nontariff trade barrier?
A) import duty
B) franchise tax
D) export duty
A quantitative restriction on specific imports for a set period of time is known by which of the following terms?
C) investment barrier
D) country risk
All of the following are country risks in international business except ________.
A) government bureaucracy
B) inadequate law enforcement
C) government mismanagement
D) currency exchange rate
currency exchange rate
Which of the following is often a result of protectionist policies?
A) higher prices of domestic goods
B) lower prices of domestic goods
C) shortage of domestic goods
D) surplus of domestic goods
higher prices of domestic goods
Which of the following is a rationale for governments imposing offensive trade and investment barriers?
A) the protection of domestic industries
B) the promotion of national security
C) the pursuit of public policy objectives
D) the support of special interests
the pursuit of public policy objectives
Advocates of government intervention in international trade argue that blocking imports will ________.
A) reduce manufacturing and distribution costs
B) protect home-country employment opportunities
C) encourage manufacturers to outsource jobs
D) limit intellectual property theft
protect home-country employment opportunities
Tariff-based trade barriers can benefit young domestic-based companies by ________.
A) allowing them time to expand and become competitive
B) providing them with government subsidies
C) instigating the growth of a solid infrastructure
D) generating domestic and international sales
allowing them time to expand and become competitive
Governments impose export controls for the purpose of ________.
A) improving available opportunities for domestic sales
B) limiting the number of exported products to certain countries
C) preventing the export of security-related products to specific nations
D) restricting the export of products to all nations during wartime
C) preventing the export of security-related products to specific nations
Nations that initiate strategic policies for the development of high value-adding industries often do all of the following except ________.
A) subsidize investments in high-tech industries
B) invest in the public education system
C) encourage citizens to save money
D) fund large-scale public works projects
fund large-scale public works projects
The Chinese government’s policy of requiring foreign firms to enter the Chinese market via joint ventures is intended to ________.
A) limit the amount of FDI
B) create jobs for Chinese workers
C) protect China’s national security
D) stimulate foreign investment
create jobs for Chinese workers
How much money is estimated to be lost in trading opportunities every year due to trade barriers?
A) $1 billion
B) $10 billion
C) $100 billion
D) $200 billion
Which of the following is an effect of administrative and bureaucratic procedures?
A) generates government revenue
B) slows down the import of products
C) blocks the entry of imported products
D) reduces the quantity of available goods
slows down the import of products
Which of the following terms is used to refer to the worldwide classification system used to determine a product’s tariff?
A) harmonized tariff
B) protective tariff
C) revenue tariff
D) specific tariff
Tariffs which are ad valorem are ________.
A) based on the weight or size of the imported product
B) assessed as a percentage of the imported product’s value
C) intended to provide a steady flow of income for the government
D) levied on specific imported and exported products
assessed as a percentage of the imported product’s value
Mexico eliminated nearly all tariffs on product imports from the United States as a result of which of the following?
Which of the following is considered a major driver of market globalization?
A) tariff reductions
B) government subsidies
C) countervailing duties
D) prohibitive tariffs
Nontariff trade barriers have increased in popularity in part because they ________.
A) generate profits for foreign firms
B) can be concealed from the WTO
C) are easy for governments to enforce
D) reduce smuggling along borders
can be concealed from the WTO
An import license can best be defined by which of the following?
A) an expensive requirement for new importing firms
B) a government fee to facilitate import processing
C) a complicated system of establishing quotas
D) a costly government permit to import goods
D) a costly government permit to import goods
The rules of origin requirement can best be defined as which of the following?
A) a voluntary quota in which a firm agrees to limit some exports
B) a formal permission must be obtained to import specific goods
C) a certain amount of production must occur within an economic bloc
D) a set number of exports must originate from either a bloc or a region
a certain amount of production must occur within an economic bloc
Which of the following is a frequent problem in national customs agencies?
A) a shortage of customs agents in airports
B) inconsistent product classification
C) arbitrary tariffs and duties
D) customs agents who fail to understand contemporary trade issues
B) inconsistent product classification
Which of the following is occasionally used to offset subsidies?
A) prohibitive tariffs
B) investment incentives
C) countervailing duties
D) antidumping duties
Which of the following is an example of a government procurement policy?
A) requiring airline carriers to offer reduced rates for government travel
B) imposing additional import taxes on non-domestic made products
C) offering tax breaks to manufacturers that purchase domestic components
D) requiring government cars be purchased from domestic automakers
requiring government cars be purchased from domestic automakers
The Index of Economic Freedom uses all of the following criteria in its assessment except ________.
A) rule of law
C) level of trade barriers
D) level of business regulation
41) Which of the following countries has the highest degree of economic freedom?
42) Which of the following countries has the least amount of economic freedom?
A) South Korea
C) North Korea
What is the primary ethical concern regarding the import of products from poor countries?
A) poor nations face higher tariffs than developed nations
B) nations lacking economic freedom cannot afford to export
C) emerging nations lack the revenue to pay high tariffs
D) impoverished countries face more import regulations
poor nations face higher tariffs than developed nations
All of the following occurred as a result of the Smoot-Hawley Tariff Act except ________.
A) bank closures
B) record high tariffs
C) normal trade relations
D) fewer farm exports
normal trade relations
) Import substitution failed during the 1950s in Latin America because ________.
A) products manufactured domestically were not of the same quality as imports
B) protected enterprises required constant subsidizing and never competed globally
C) high quotas and tariffs did not generate enough revenue to support the government
D) local manufacturing firms required parts and labor from other nations
protected enterprises required constant subsidizing and never competed globally
Each of the following nations enjoyed success as a result of export-led development except ________.
A) North Korea
B) Hong Kong
Tariffs helped Japan rise from poverty after World War II by ________.
A) subsidizing automobile and shipbuilding firms
B) encouraging the development of importing firms
C) increasing revenue for national strategic policies
D) protecting the nation’s infant industries
protecting the nation’s infant industries
Which of the following entry strategies do most firms use if high tariffs are not an issue?
C) joint ventures
Firms use foreign trade zones in order to ________.
A) stimulate local economic growth and development
B) take advantage of favorable customs regulations
C) create employment opportunities for locals
D) meet quota demands established by the government
take advantage of favorable customs regulations
Which of the following is a method used by some manufacturers to avoid paying high tariffs?
A) produce a small number of high-quality items
B) produce a large number of less expensive items
C) employ low-cost workers in the export location
D) ship products to fewer international locations
produce a small number of high-quality items
Many firms have successfully lowered trade and investment barriers by ________.
A) entering joint ventures with competitors
B) petitioning the World Trade Organization
C) lobbying foreign and domestic governments
D) obtaining advice from customs attorneys
lobbying foreign and domestic governments