question

The notion that national economies are relatively self-contained entities is on the rise

answer

False -We are moving away from a world in which national economies were relatively self-contained entities

question

The shift toward a more integrated and interdependent world economy is referred to as globalization

answer

True

question

The merging of historically distinct and separate markets into one huge global marketplace is known as the globalization of markets.

answer

True

question

The majority of U.S. firms that export are large multinationals that employ 500 or more people

answer

False

question

The most global markets currently are markets for industrial goods and materials that serve a universal need the world over.

answer

True

question

Outsourcing is a process that is limited to manufacturing enterprises.

answer

False can also be services

question

Because of their nature, service activities cannot be outsourced to other companies

answer

False they can be services

question

One of the UN central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development

answer

True

question

Underlying the trend towards greater globalization is technological change and a decline in barriers to the free flow of goods, services, and capital

answer

True

question

According to the United Nations most changes between 1992 and 2005 to laws governing FDI have resulted in a less favorable environment for FDI

answer

False

question

According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950

answer

True

question

The expansion of world trade implies that nations are becoming less dependent on each other for important goods and services

answer

False

question

In the period 1950-1990, the world GDP showed a consistent decline as opposed to the volume of exports

answer

True

question

During the period 1990 - 2000, the volume of total exports was more than twice the world GDP

answer

True

question

Declining barriers to cross-border trade and investment cannot be taken for granted

answer

True

question

The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports all imply that firms are finding their home markets protected from foreign competitors

answer

False

question

Moore's Law predicts that the power of microprocessor technology doubles and its cost of production falls by half every 18 months

answer

True

question

Efficiency gains associated with containerization have caused transportation costs to fall dramatically

answer

True

question

Today global communication networks and global media are creating a worldwide culture

answer

True

question

In the early 1960s, the United States was by far the world's dominant industrial power. However by 2006, it lost its dominant position and now, is no longer the world's largest industrial power

answer

False

question

By 2008, the U.S. had seen its share of exports fall to almost half its share in the 1960s

answer

True

question

According to forecasts, a further relative decline in the share of world output and world exports accounted for by the United States and other long-established developed nations is unlikely

answer

False

question

A current trend in international business is the growth of medium-sized and small multinationals, known as mini-multinationals

answer

True

question

Today, the risks involved in doing business in countries such as Russia are low, but so are the returns

answer

False

question

If the free market reforms in China continue for two more decades, China may move from Third World status to industrial superpower status even more rapidly than Japan did

answer

True

question

Current trends indicate that the world is moving rapidly towards an economic system that is more favorable for international business

answer

True

question

Many economists, politicians, and business leaders believe that the shift toward a more integrated and interdependent global economy is a positive trend

answer

True

question

The antiglobalization effort is created and supported only by a small group of hard-core anarchists

answer

False

question

Studies have shown that wage rates for unskilled workers in many advanced economies have fallen in recent years

answer

True

question

Some critics argue that outsourcing has caused wage rates of poorer Americans to fall significantly over the past quarter of a century

answer

True

question

Recent evidence indicates that the solution to the problem of stagnant incomes among the unskilled is to be found in increasing society's investment in education to reduce the supply of unskilled workers

answer

True

question

A source of concern of critics of free trade is that it usually encourages firms from advanced countries to move manufacturing facilities to less developed countries that lack adequate regulations to protect labor and the environment from abuse

answer

True

question

According to supporters of free trade, as countries get richer they enact tougher environmental and labor regulations

answer

True

question

According to critics of globalization, today's interdependent global economy limits a nation's national sovereignty

answer

True

question

Critics of globalization suggest that over the last century, the gap between the rich and poor nations of the world has shrunken

answer

False

question

Debt continues to be a major burden for poorer nations as they strive to get ahead

answer

True

question

Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honor debts that their corrupt and dictatorial predecessors incurred and mismanaged long ago

answer

True

question

An international business is any firm that engages in international trade or investment

answer

True

question

The managers of an international business must decide whether it is ethical to adhere to the lower labor and environmental standards found in many less developed nations

answer

True

question

In general, managing an international business is a more complex task than managing a business that serves only the local market

answer

True

question

A country's political economy and culture are independent of each other

answer

False

question

It is not possible to have democratic societies that emphasize a mix of collectivism and individualism

answer

False

question

The communists believed that socialism could be achieved by democratic means, and turned their backs on violent revolution and dictatorship

answer

False

question

In an individualist society, the welfare of society is best served by letting people pursue their own economic self-interest

answer

True

question

The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based

answer

False

question

There is a global trend of societies shifting from individualism toward collectivism

answer

False

question

It is possible to have a democratic state where collective values predominate

answer

True

question

It is possible to have a totalitarian state that is hostile to collectivism and where some degree of individualism is encouraged

answer

True

question

The most practical form of democracy is direct democracy

answer

False

question

Most modern democratic states practice representative democracy

answer

True

question

In a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more

answer

True

question

The number of command economies has fallen dramatically since the demise of communism in the late 1980s

answer

True

question

Because international businesses are headquartered in different countries, a nation's legal system is usually of very little interest to international business managers

answer

False

question

A country's legal system can affect the attractiveness of a country as an investment site and/or market

answer

True

question

Collectivist inclined totalitarian states tend to be pro-private enterprise and pro-consumer

answer

False

question

In democratic states where individualism is the dominant political philosophy, states tend to enact laws that severely restrict private enterprise

answer

False

question

) Judges under a civil law system have less flexibility than those under a common law system

answer

True

question

In a common law system, judges have the power to interpret the law

answer

True

question

A civil law system tends to be more adversarial than a common law system

answer

False

question

Contracts under a civil law system tend to be very detailed with all contingencies spelled out

answer

False

question

The United Nations CIGS establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations

answer

True

question

All of the world's larger trading nations have ratified CIGS

answer

False

question

To facilitate international business, property rights are defined in a consistent way across countries

answer

False

question

The rule of law minimizes corruption in all countries

answer

False

question

High levels of corruption significantly reduce the foreign direct investment, level of international trade, and economic growth rate in a country

answer

True

question

The Foreign Corrupt Practices Act allows for grease payments

answer

True

question

Thanks to the World Intellectual Property Organization, enforcement of intellectual property rights is strong across the globe

answer

False

question

GNI and PPP data are useful because they provide a dynamic analysis of economic development

answer

False

question

The HDI is based on life expectancy at birth, educational attainment, and whether average incomes are sufficient to meet the basic needs of life in a country

answer

True

question

In a planned economy, the state owns all means of production

answer

True

question

There is a strong relationship between economic freedom and economic growth

answer

True

question

The general assertion that nations that invest more in education will have higher growth rates has been proved false

answer

False

question

Since the 1980s, the political economy of many nations has seen a shift away from centrally planned and mixed economies toward more free market economic models

answer

True

question

One of the reasons for the spread of democracy is the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms

answer

True

question

According to political scientist Samuel Huntington's thesis, global terrorism is a product of the tension between civilizations and the clash of value systems and ideology

answer

True

question

Transformation from centrally planned command economies to market-based economies can be attributed to the fact that command and mixed economies failed to deliver the sustained economic performance achieved by countries adopting market-based systems

answer

True

question

Economic freedom necessarily equates with political freedom

answer

False

question

Deregulation involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate

answer

True

question

Today, global changes in the political economy are characterized by free markets and democracy, with command economies and totalitarian dictatorships having completely disappeared

answer

False

question

With regard to political factors, a company may have to pay off politically powerful entities in a country before the government allows it to do business there

answer

True

question

In today's world of global communications, rapid transportation, and global markets, cultural differences have ceased to exist

answer

False

question

Culture is static

answer

False

question

Values are abstract ideas about what a group believes to be right, good, and desirable

answer

True

question

A society is another name for a country

answer

False

question

A country is defined as a system of values and norms that are shared among a group of people and that when taken together constitute a design for living

answer

False; culture

question

People who violate folkways are considered to be evil or bad

answer

False

question

Folkways include rituals and symbolic behavior

answer

True

question

The bow that is given by a Japanese business executive to another business executive is an example of symbolic behavior

answer

True

question

Mores have much greater significance than folkways

answer

True

question

If a country is characterized as having a single homogenous culture, then its national culture also is homogenous and not a mosaic of subcultures.

answer

False

question

The values and norms of a culture are evolutionary

answer

True

question

A society's social structure refers to its basic social organization

answer

True

question

Individualism has led to a high degree of managerial mobility between companies resulting in managers who have good general skills but lack company-specific experience

answer

True

question

The emphasis on individualism in the United States may raise the costs of doing business due to its adverse impact on managerial stability and cooperation

answer

True

question

The group is the primary unit of organization in Western societies

answer

False

question

As demonstrated by Japan, the primacy of the group is always beneficial

answer

False

question

The term social strata refers to the extent to which individuals can move out of the strata into which they were born

answer

False

question

The most rigid system of stratification is a class system

answer

False

question

A caste system is a closed system of stratification in which social position is determined by the family into which the person is born.

answer

True

question

A class system is a rigid form of social stratification in which the position a person has by birth cannot be changed through his/her own achievements or luck

answer

False

question

Historically, upward mobility could be achieved in a single generation in Britain

answer

False

question

China's Communist rule strengthened class divisions

answer

True

question

An antagonistic relationship between management and labor classes may result in higher costs of production

answer

True

question

Confucianism can be accurately characterized as a religion

answer

False

question

Several sociologists have argued that of the three main branches of Christianity—Catholic, Orthodox, and Protestant—the latter has the most important economic implications

answer

True

question

Muslim countries are likely to be receptive to international business as long as those businesses behave in a manner that is consistent with Islamic ethics

answer

True

question

The protection of the right to private property is embedded within Islam

answer

True

question

A mudarabah contract banking method of Islamic banks is similar to a profit-sharing scheme

answer

True

question

Unlike Hinduism, Buddhism does not support the caste system

answer

True

question

Guanxi is an important mechanism for building long-term business relationships and getting business done in China

answer

True

question

Since English is often thought of as the global language of business, it is not important for an American business executive to learn foreign languages

answer

False

question

Unspoken language refers to nonverbal communication

answer

True

question

Hofstede's power distance dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities

answer

True

question

Members of high uncertainty avoidance cultures were characterized by a greater readiness to take risks and less emotional resistance to change

answer

False

question

There is a one-to-one correspondence between culture and the nation-state

answer

False

question

Culture is a constant; it does not evolve over time

answer

False

question

During the past decade, countries with high individualism and low Confucian dynamics such as the United States have attained high growth rates

answer

True

question

People who take food or safety for granted tend to be xenophobic, are wary of political activity, have authoritarian tendencies, and believe that men make better political leaders than women

answer

False

question

American culture has changed and it is easier now for women to gain senior management positions than men

answer

False

question

Cultural change is unidirectional, with national cultures converging toward some homogenous global entity.

answer

False

question

Mercantilism advocated that countries should encourage exports and imports

answer

False

question

A situation where a government does not attempt to influence, through quotas or duties, what its citizens can buy from another country or what they can produce and sell to another country is known as free trade

answer

True

question

According to the theories of Smith, Ricardo, and Heckscher-Ohlin, if a country can produce a product by itself, it should not import that product

answer

False

question

Limits on imports are often in the interests of domestic consumers, but not domestic producers

answer

False

question

The Heckscher-Ohlin theory emphasizes the interplay between the proportions in which the factors of production are available in different countries and the proportions in which they are needed for producing particular goods

answer

True

question

The Heckscher-Ohlin theory has proven to be a powerful explanation of world trade patterns

answer

False

question

New trade theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can only support a limited number of firms

answer

True

question

Ricardo noted the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products

answer

False

question

Adam Smith's basic argument is that a country should produce goods at home even if it can buy at a lower cost from other countries

answer

False

question

When a gain by one country results in a loss by another, there is a positive-sum game

answer

False

question

According to the theory of comparative advantage, it is in a country's best interest to maintain a trade surplus and to export more than it imports

answer

False

question

Smith's theory of international trade suggests that when one country has an absolute advantage in the production of all goods, the country might not derive any benefit from international trade

answer

True

question

According to Ricardo, there may be cases when it makes sense for a country to buy goods from another country that it can make more efficiently itself

answer

True

question

While popular in its time, Ricardo's theory is no longer a major intellectual weapon for those who argue for free trade

answer

False

question

The theory of comparative advantage suggests that trade is a zero-sum game in which all countries that participate realize economic gains

answer

False

question

Diminishing returns to specialization occurs when lesser units of resources are required to produce each additional unit

answer

False

question

Political opposition to the adoption of a free trade regime typically comes from those whose jobs are most at risk

answer

True

question

Because of diminishing returns, it is not feasible for a country to specialize to the degree suggested by the simple Ricardian model

answer

True

question

In general, economic studies suggest that countries that adopt a more open stance toward international trade enjoy higher growth rates than those who keep their economies closed to trade

answer

True

question

The Heckscher-Ohlin theory argues that free trade is not beneficial to most nations

answer

False

question

The Heckscher-Ohlin theory gains predictive power once the impact of differences of technology on productivity is controlled for

answer

True

question

Raymond Vernon suggested that the wealth and size of the U.S. market gave U.S. firms a strong incentive to develop new consumer products

answer

True

question

A central point in Vernon's product life-cycle was that demand for new products tends to be solely based on price factors

answer

False

question

Historically, the product life-cycle theory seems to be an inaccurate explanation of international trade patterns

answer

False

question

Because a growing number of new products are now introduced simultaneously in the United States, Japan, and the advanced European nations, Vernon's product life-cycle is limited in explaining world trade patterns.

answer

True

question

Economies of scale are unit cost reductions associated with a large-scale output

answer

True

question

Trade is mutually beneficial, according to new trade theory, because it allows for the specialization of production, the realization of scale economies, and the production of a greater variety of products at lower prices

answer

True

question

New trade theory suggests that nations may benefit from trade even when they do not differ in resource endowments or technology

answer

True

question

New trade theory and the Heckscher-Ohlin theory are in complete agreement with regard to world trade patterns

answer

False

question

According to Porter, four broad attributes of a nation shape the environment in which local firms compete including supply conditions, factor endowments, regulation, and advanced factors

answer

False

question

Porter argues that favorable demand conditions will result in competitive advantage unless the state of rivalry is sufficient to cause firms to respond to them

answer

False

question

Factor endowments lie at the center of the Heckscher-Ohlin theory

answer

True

question

According to Porter, the characteristics of home demand are particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality

answer

True

question

Porter suggests that different nations are characterized by different management ideologies, which either help them or do not help them to build national competitive advantage

answer

True

question

Porter's diamond of competitive advantage has proven to be a powerful predictor of world trade patterns

answer

False

question

From a profit perspective, it makes sense for a firm to disperse its productive activities to those countries where, according to the theory of international trade, they can be performed most efficiently

answer

True

question

Assembly of electronic components is a relatively labor-intensive process requiring only low-skilled labor, and cost pressures are intense. As a result, final assembly may be carried out in a country such as the United States

answer

False

question

According to the new trade theory, firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product

answer

True

question

The theories of international trade claim that promoting free trade is generally in the best interest of an individual firm, although it may not always be in the best interests of a country

answer

False

question

Porter's theory of national competitive advantage suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production

answer

True

question

A firm becomes a multinational enterprise when it undertakes foreign direct investment

answer

True

question

If a firm that makes bicycles in Germany acquires a French bicycle producer, Greenfield investment has taken place

answer

False

question

The amount of FDI undertaken over a given time period is known as the flow of FDI

answer

True

question

The total accumulated value of foreign-owned assets at a given time is the inflow of FDI

answer

False

question

FDI is seen by executives as a means of circumventing future trade barriers

answer

True

question

The total amount of capital invested in factories, stores, office buildings and the like is referred to as the stock of FDI

answer

False

question

Historically, most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the markets of other advanced countries

answer

True

question

Other things being equal, the greater the capital investment in an economy, the more favorable its future growth prospects are likely to be

answer

True

question

The largest source country for FDI has been China

answer

False

question

In developing countries, about one-third of FDI is in the form of mergers and acquisitions

answer

True

question

Licensing involves the establishment of a new operation in a foreign country

answer

False

question

As compared to exporting and licensing, FDI may be more expensive and risky

answer

True

question

Internalization theory is also known as the market imperfections approach

answer

True

question

One of the problems of licensing is that it may result in a firm's giving away valuable technological know-how to a potential foreign competitor

answer

True

question

Licensing gives a firm tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability

answer

False

question

An oligopoly is an industry composed of a limited number of large firms

answer

True

question

When two or more enterprises encounter each other in different regional markets, national markets, or industries, regional competition occurs

answer

False

question

According to Vernon, location-specific advantages can help explain the rationale for and the direction of FDI

answer

False

question

Dunning, in the eclectic paradigm theory, suggests that a firm must establish production facilities where foreign assets or resource endowments necessary to the production of the product exist

answer

True

question

Classical economics and the international trade theories of Adam Smith and David Ricardo form the basis for the free market view

answer

True

question

The free market view argues that FDI is a benefit to both the source country and to the host country

answer

True

question

Pragmatic nationalism traces its roots to Marxist political and economic theory

answer

False

question

Countries adopting a pragmatic stance pursue policies designed to maximize the national benefits and minimize the national costs

answer

True

question

An aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants

answer

True

question

Foreign direct investment can make a positive contribution to a host economy by supplying capital, technology, and management resources that would otherwise not be available and thus boost that country's economic growth rate

answer

True

question

There is research supporting the view that multinational firms often transfer significant technology when they invest in a foreign country

answer

True

question

Jobs created in local suppliers as a result of the MNE's investment and jobs created because of increased local spending by employees of the MNE are examples of direct employment effects of FDI

answer

False

question

Host country citizens that are employed by an MNE following an FDI are an example of an indirect effect of FDI.

answer

False

question

A country's balance of payments accounts keep track of both its payments to and its receipts from other countries

answer

True

question

A current account deficit exists when a country imports more than it exports

answer

True

question

Under a 1997 agreement sponsored by the WTO, outward investment has increased competition and stimulated investment in the modernization of telephone networks around the world, leading to better service

answer

False

question

Host governments sometimes worry that the subsidiaries of foreign MNEs may have greater economic power than indigenous competitors

answer

True

question

FDI does not benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports of capital equipment, intermediate goods, or complementary products

answer

False

question

The term "offshore production" refers to FDI undertaken to serve the home market

answer

True

question

Countries cannot prohibit national firms from investing in certain countries for political reasons

answer

False

question

The two most common methods of restricting inward FDI are ownership restraints and performance requirements

answer

True

question

The WTO has been very successful in efforts to initiate talks aimed at establishing a universal set of rules designed to promote the liberalization of FDI

answer

False

question

Licensing is a good option for firms in high-tech industries where protecting firm-specific expertise is of paramount importance

answer

False

question

Typically, licensing will be a common strategy in oligopolies where competitive interdependence requires that multinational firms maintain tight control over foreign operations so that they have the ability to launch coordinated attacks against their global competitors

answer

False

question

The product life-cycle theory and Knickerbocker's theory of horizontal FDI tend to be very useful from a business perspective because the theories are more descriptive than analytical

answer

False

BADM 380 Test 1 Bank T/F – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards