By definition, a(n) ____ satisfies consumer wants and needs.
a) payable
b) product
c) survey
d) prototype
Derishia has a toothache and has set up an appointment with Dr. Smiley, her dentist. She isn’t looking forward to the trip, but she knows that Dr. Smiley can’t fix her tooth unless she pays him a visit. This illustrates the _____ characteristic of services.
a) inseparability
b) tangibility
c) artificiality
d) compoundability
All of the following are characteristics of services EXCEPT
a) variability.
b) permanence.
c) inseparability.
d) intangibility.
What do Uno’s Pizzeria and LensCrafters have in common?
a) They provide pure services.
b) Their products are examples of intermediate goods.
c) They offer pure goods.
d) Their products are a mix of goods and services.
What do gasoline for a car, ketchup for french fries, and a lady’s scarf have in common?
a) They are pure goods.
b) They are inseparable services.
c) They are all in the growth stage of their product life cycle.
d) They are “mixed message” products.
A product has three product layers. They are the
a) implied benefit, explicit benefit, and combined benefit.
b) physical form, intangible form, and perceived form.
c) core benefit, actual product, and augmented product.
d) external layer, internal layer, and environmental layer.
At the most fundamental level, a consumer buys a product to obtain
a) status.
b) its implicit benefit.
c) a core benefit.
d) a lifestyle enhancement.
The physical good or delivered service that provides a core benefit is called the
a) pure product.
b) actual product.
c) promised product.
d) augmented product.
The difference between consumer products and business products is
a) consumer products are for personal use and business products are for a business’s operation and/or production.
b) consumer products offer a service component while business products do not offer a service component.
c) consumer products are specialty products and business products are shopping products.
d) consumer goods tend to be consumed quickly, thus having short product lives. Business goods tend to last much longer.
Consumer product classifications include
a) tangible products, augmented products, limited-use products, and intangible products.
b) accessories, maintenance goods, and material goods.
c) convenience products, shopping products, specialty products, and unsought products.
d) primary products, intermediate products, and final products.
_____ consist(s) of small ticket items that businesses consume on an ongoing basis but are not needed to develop a final product.
a) Maintenance, repair, and operating products
b) Accessory equipment
c) Convenience goods
d) “Category B” inventory items
Utilized by businesses, _____ include(s) small, movable capital purchases, designed for a relatively short productive life.
a) unsought products
b) accessory equipment
c) raw materials
d) installations
With their extended hours and numerous locations in a given community, 7-Eleven stores offer _____ to consumers, who find it easy to stop in and make this type of purchase.
a) unsought products
b) shopping products
c) specialty products
d) convenience products
Expensive products that consumers purchase infrequently and are unwilling to accept substitutes for are _____. On the other hand, _____ are widely distributed and widely promoted by the product producers.
a) unsought products; shopping products
b) specialty products; convenience products
c) pure goods; pure services
d) consumer products; business products
When purchasing raw materials, businesses are most concerned with
a) price and service.
b) quantity and brand.
c) customization.
d) image.
Kelly has a conundrum: he has an amazingly earth-friendly product that nobody is buying. In his zealotry for mother earth he forgot to ask himself what the real world applications might be for a reusable hemp toilet roll. What might the problem be, from a product perspective?
a) Perhaps he needs to tweak it a little bit; make it more mainstream. Maybe, just maybe, it should be made of cotton, for instance.
b) His product has negative interest. Since it’s an unsought product, he really ought to ratchet down the green zealotry and try something less extreme.
c) He has a specialty product. He should conduct some primary research so that he can locate his target demographic.
d) He has a shopping product. Since it’s a premium product, he should raise the price and place the product at Sharper Image.
Cigarettes have become very expensive in the past ten years or so, due to punitive government taxation. They are still sold primarily at convenience stores and enjoy highly dispersed placement, however. In addition, they are usually sold to lower class members of society. In light of all of this, how can we (re)classify cigarettes as a product?
a) They are unsought products.
b) They are specialty products.
c) They are shopping products.
d) They are still convenience products.
Successful product differentiation requires that the
a) differences must be real rather than merely perceived.
b) marketers put most of their efforts into developing an appropriate brand name.
c) product must not only be different from those of competitors, it must also be better.
d) products have both higher quality and lower cost than those of the competition.
Shasta is a plucky young girl who has chosen to make her mark in outdoor fashion and what she defines as “practical clothing.” As she prepares to take her ensemble to market, she reflects on what she believes is the defining feature: In order to achieve market differentiation, she has constructed her clothing line primarily of highly reflective and bright materials. In her mind, the clothing line will contribute to society by reducing the risk of silly people becoming lost in the woods by making them highly visible to search and rescue operations. In her effort to grab market differentiation by the horns, what has she probably ignored?
a) Typically, outdoors men do not like to walk around looking like Zardo Zap, the tin-foil-bedecked alien from The Wiggles children’s program. It does keep them safer, however, and her efforts to change the world are noble.
b) Clearly, she has her own ideas about the relationship between product features and customer benefits. Perhaps if she made the reflective features optional and focused on comfort and utility, she could gain both differentiation and market share.
c) She should focus on the aspects of quality that the products possess. If she can convince the customer that the price will be forgotten long before quality becomes apparent, she will have a success on her hands.
d) She needs to finance her efforts with enough cash to enable her to buy enough time to build brand equity. The Green movement is evidence enough that people will believe anything if it is forcibly advertised enough times.
When marketers characterize quality, they are concerned with two dimensions. The dimension that refers to how well the product performs its core function is _____, while the dimension that refers to how well the product repeatedly performs is _____.
a) reliability; product differentiation
b) product consistency; variability
c) the level of separability; the quality level
d) the quality level; product consistency
_____ are the characteristics of the product that companies offer the consumer. If a product is well-designed, each element corresponds to meaningful _____.
a) Product features; customer benefits
b) Product layers; product perceptions
c) Pure services; sensory experience
d) Hedonic attributes; product categories
Filbertina, a company that markets nuts and other healthy snack foods, has always tried to project an upscale image. However, the company has decided to develop another product line of less expensive snacks. Marketing manager, Joseph Hampton, generally supports the strategy but is concerned that the new line will decrease sales of the company’s current brand. Joseph worries about the possibility of:
a) market diffusion.
b) cannibalization.
c) brand confusion.
d) brand dispersion.
A product _____ is a group of products offered by a firm that are closely related to each other, either in terms of how they work, or the customers they serve.
a) mix
b) line
c) spectrum
d) category
_____ occurs when established brands from different companies join forces in an effort to market the same product.
a) Cannibalization
b) Convenience products
c) Cobranding
d) Diffusion
_____ involves purchasing the right to use another company’s brand name or symbol.
a) Diffusion
b) Line extension
c) Branding
d) Licensing
Airlines recently announced it would serve Starbucks coffee on its flights. This is an example of
a) creating a private label.
b) brand extension.
c) joint venturing.
d) cobranding.
We see the Nike Swoosh on athletic shoes, as well as on an assortment of athletic apparel for almost every sport. Lately, the company has begun branching out into several entirely new product categories, such as MP3 players. This indicates that Nike has decided to pursue a strategy of
a) brand equity.
b) line extension.
c) cobranding.
d) brand extension.
Wallace manufactures tarpaulins for various uses. His are the absolute industry standard, featuring high-end, weather-resistant fabrics and oversized titanium grommets. He wants a larger market share and to do that he needs to offer tarps as convenience or shopping products, not just as specialty products. Wallace decides to manufacture plastic tarps with cheap grommets for sale at every retail outlet he can find. But he doesn’t want to rebrand and start over; he’d rather play on the strength of the name he’s already built for himself. Which choice best reflects the direction in which he is taking his company?
a) Wallace is performing a line extension.
b) Wallace is performing a brand extension.
c) Wallace is repackaging his product.
d) Wallace is cobranding.
The global recession decreased the sale of _____ brands and increased the sale of _____ brands.
a) store, national
b) national, store
c) private label, manufacturers’
d) national, manufacturers’
_____ involves making slight modifications to existing products in an effort to distinguish a product from the competition.
a) Continuous innovation
b) Discontinuous innovation
c) Dynamically continuous innovation
d) Disconnected innovation
The fact that your favorite ice cream company regularly releases new flavors indicates that it is following a strategy of _____. Sampling the ice cream in the store is part of what will diffuse the product more quickly because of its _____.
a) dynamically continuous innovation; complexity
b) continuous innovation; trialability
c) discontinuous innovation; complexity
d) dynamically discontinuous innovation; trialability
With the invention of the telephone, Alexander Graham Bell created a completely new way for people to communicate over long distances. His invention demonstrates
a) bleeding edge innovation.
b) nonderivative innovation.
c) dynamically continuous innovation.
d) discontinuous innovation.
The stages of the new product development process are
a) idea generation, idea screening, analysis, development, testing, and promotional planning.
b) idea generation, idea screening, analysis, development, testing, and commercialization.
c) idea generation, idea screening, market research, focus groups, intercept surveys, and observation research.
d) idea generation, idea screening, market research, development, testing, and observation research.
BMW is busy working on rolling out a new model. They’ve worked everything out “on paper” and pared down a list of groundbreaking new ideas, and culled that into a working prototype that is ready for testing. Not only will their internal team of experts run the new car through its paces in this stage of development, but it will also be tested by consumers in limited informal groups. What stage of the new product development process is BMW at?
a) idea screening
b) commercialization
c) testing
d) development
The more difficult it is for consumers to grasp what a product does and how it works, the slower that product’s _____ tends to be.
a) movement through the product life cycle
b) rate of diffusion
c) business cycle
d) rate of market separability
One reason Apple’s iPhone might have high diffusion rate is because
a) its use is highly observable.
b) it involves highly complex technology.
c) it represents discontinuous innovation.
d) most consumers view cell phones as convenience goods
As gas prices rise, hybrid vehicles are being considered by more consumers. This is because the _____ of hybrid cars rises in comparison to standard cars when gasoline becomes more expensive.
a) separability
b) trialability
c) relative advantage
d) variability
Researchers have identified five product characteristics that affect the rate of adoption and diffusion. Which of the following is NOT one of these five characteristics?
a) stability
b) trialability
c) observability
d) compatibility
The _____ is a theoretical model that includes the stages of introduction, growth, maturity, and decline.
a) product life cycle
b) product diffusion cycle
c) product adoption cycle
d) product sustainability cycle
In the introduction stage of the product life cycle, marketing efforts are focused on
a) building customer awareness of the product.
b) reinforcing brand positioning.
c) dynamic innovation.
d) protecting market share from competitors.
Ian has decided to start a business installing voice over Internet protocol (VOIP) software on computers that allows individuals to make phone calls via the Internet. To get his business up and running, Ian has decided to place an ad in the paper. He does not have any money, so he has to put the cost of the ad on his credit card. Ian will spend more money than he will make in the first three months due to the fact that his VOIP business is in the _____ stage of its life cycle.
a) decline
b) maturity
c) growth
d) introduction
A product in the _____ stage is experiencing periods of rising sales and profits.
a) introduction
b) growth
c) maturity
d) decline
In the growth stage of the product life cycle, competition
a) is virtually nonexistent because competitors had enough time to introduce their own products.
b) will begin as competing firms introduce their own versions of the product.
c) has already become well-established, with many weaker firms already leaving the market.
d) will spur major price cuts that dramatically cut into profits.
If a product increases its sales during the _____ stage, it is doing so by capturing market share from competitors.
a) introduction
b) growth
c) decline
d) maturity
All of the following are ways to extend the product life cycle EXCEPT
a) change the look of the product’s packaging.
b) find new uses for the product.
c) change the product
d) change the marketing mix
Due to technological changes, pagers and videocassettes are slowly phasing out. These products are in the _____ stage of the product life cycle.
a) recession
b) secondary
c) decline
d) retrograde
As a product moves through the stages of the product life cycle, marketers normally will find that
a) sales and profits tend to increase at a constant rate.
b) they must adjust their marketing strategies to reflect changing market conditions.
c) they can maximize profits by sticking to a consistent marketing strategy.
d) sales peak well before profits.
In marketing, promotion refers to
a) the paid placement of advertising where consumers shop.
b) communication intended to influence consumer purchase decisions through information, persuasion, and reminders.
c) efforts that focus more on building goodwill among all stakeholders than on generating immediate sales by final consumers.
d) any activities designed to increase sales that don’t involve advertising or personal selling.
Generally speaking, marketers can directly control the promotional tools they use. The tool that they cannot directly control is
a) the development of a marketing plan.
b) publicity.
c) personal selling.
d) advertising messages and their placement in the media.
The manager of your local Starbucks is trying to increase store traffic on Friday nights from 8 to 10 p.m. She has decided to offer live music by local musicians and to promote this change mostly through publicity and word-of-mouth. Which of the following statements about this decision is most accurate? The use of publicity and word-of-mouth
a) is likely to be ineffective because it does not create as powerful an impact as advertising.
b) will increase promotional expenses dramatically.
c) is likely to have a powerful impact, but the manager will have little direct control over the message it creates.
d) will only work if it creates a different message than the message that is created by the store’s other promotional tools.
On average, people spend a total of ___ hours a week surfing the Web and watching TV.
a) 30
b) 32
c) 62
d) 50
Although technology can help marketers reach larger target markets, it also presents new challenges such as
a) technology-savvy consumers who can control whether the message is received.
b) consumers who move around too much.
c) store owners who do not display promotional material on time.
d) consumers wanting more information than is available.
Which of the following is the most accurate statement about trends affecting promotion?
a) Promotional strategies that worked well in the past are likely to be successful in the future.
b) Promotion is likely to become much less important in the future.
c) Changes in technology have made it important for firms to focus their promotional efforts on passive forms of entertainment.
d) Changes in technology are creating both major threats and major new opportunities for those creating promotional messages.
The idea behind integrated marketing communication is to
a) make sure every advertising medium is used to the fullest possible extent.
b) channel every customer to the sales department.
c) hit each potential customer with a highly personalized “package” of advertising messages.
d) create a unified message across multiple channels of communication.
Companies use _____ to coordinate their messages through every promotional vehicle.
a) virus detection software
b) a positioning statement
c) integrated marketing communication
d) promotional channels
Amy is working with a proprietary primary data set that was commissioned directly by her office. For reasons of competitive secrecy, she has not allowed any of her staff or subordinates access to it as they work on a new ad campaign. Why might this be a particularly bad idea?
a) Secrets within corporations are perfectly fine, but Amy should consider that there’s more to life than having her firm be first-to-market.
b) Amy’s paranoid behavior is perfectly justifiable in the modern era. Competitors would eat up her advantage along with her and her company.
c) Amy would do well to be mindful of how successful coordination of communication works best when it flows both ways vertically, as well as laterally.
d) The new ad campaign can be guided successfully in secrecy. The military operates this way all the time.
To create a coordinated marketing message, marketers must have information about the consumer, the
a) message, the market, and the competition.
b) competition, the product, the market, and the strategy of the organization.
c) message, the competition, and the intent of the product’s use.
d) competition, the message, the market, and the store selling the product.
A firm’s _____ is a brief statement articulating how the marketer wants the target market to envision his or her product relative to the competition.
a) promotional prospectus
b) consumer vision statement
c) brand statement
d) positioning statement
In promotion, the positioning statement
a) is the same as the tag line on a message.
b) can be found in magazine print and TV ads for the same product.
c) is always word-of-mouth.
d) describes the marketer’s intent—what he or she wants the consumer to envision about the product as compared to the competition.
Dale owns a heavy-haul trucking company specializing in the transportation of dimensional lumber products and other building materials. His company is typically cheaper and faster than his competitors. He’s looking for the right positioning statement. Which might be best?
a) “Breaking the speed limit for you.”
b) Dale’s trucking provides better service at lower cost.
c) Faster service, lower cost, no job too big.
d) “Haulin’ planks, baby.”
As the head of a new product development team at McDonald’s, you’ve worked hard to come up with healthy new foods to put on the company’s menu. Now you want to promote your new menu options. In order to differentiate your new menu from the competition, your _____ must reflect your vision for a healthier lifestyle.
a) big idea
b) positioning statement
c) personal selling effort
d) discontinuous innovation
In the promotional effort, a positioning statement
a) marks the beginning of the creative development process.
b) is the end result of the firm’s creative development process.
c) usually translates directly into the firm’s advertising message.
d) is the same thing as the firm’s “big idea.”
As a distinctive concept attached to one particular product, the _____ is a phrase that is typically based on either a rational or an emotional premise.
a) positioning statement
b) promotional message
c) big idea
d) hook
The big idea that results from a successful creative development process is
a) usually based on a humorous exaggeration of the firm’s core values.
b) a meaningful, believable, and distinctive concept that cuts through the clutter of promotional messages.
c) a message that is easily transferable to other cultures.
d) a single key concept that is both rational and emotional in its appeal.
Who holds the record for the most humorous Super Bowl ads?
a) Frito Lay
b) Big Daddy
c) Budweiser
d) E-trade
Which of the following is an example of a big idea based on a rational premise?
a) Budweiser: “Whassssuuup?!?!
b) GE: “We bring good things to life”
c) “Got Milk?”
d) Motel 6: “We’ll leave the light on for you.”
DeBeers, the diamond distributor, ran ads in Japan using a marketing strategy that proved popular in the West. The result was
a) extremely effective, demonstrating that Japanese culture is becoming more “Westernized.”
b) ineffective, because the ad showed Japanese women responding in unrealistic ways when their husbands gave them diamonds.
c) a government reprimand for inappropriate advertising.
d) extremely effective, despite the fact that it had to overcome initial resistance from Japanese diamond merchants.
_____ is the paid integration of branded products in movies and on television.
a) Advertising
b) Publicity
c) Promotional mix
d) Product placement
Internet advertising has seen tremendous growth in the last year. Industry expert eMarketer estimates U.S spending on Internet advertising will double by 2013 in the area of
a) paid search advertising.
b) online video advertising.
c) social media advertising.
d) search engine optimization.
If a company wanted to get the most bang for its advertising buck, what might be the best idea?
a) television ads
b) a viral Web campaign
c) a full-page newspaper ad
d) NASCAR sponsorship
The emerging promotional tool with the most impressive return on investment is
a) social media.
b) paid search advertising.
c) search engine advertising.
d) online video advertising.
Apple and Lady Gaga have a shared interest in the paid integration of branded products into movies and online videos known as
a) advergaming.
b) sponsorship.
c) product placement.
d) trade promotions.
Marketers see product placement as a way to prevent consumers from skipping their ads while watching TV. Media experts estimate that product placement in TV shows will be close to ____ by 2014.
a) doubling
b) tripling
c) quadrupling
d) fading away
_____ integrates advertising of branded products into interactive games.
a) Intertising
b) E-vertising
c) Adactive promotion
d) Advergaming
Procter & Gamble’s Tremor marketing group has had a great deal of success with its use of
a) buzz marketing.
b) sponsorship arrangements.
c) advergaming.
d) integrated marketing approaches.
Ellen is in charge of developing a promotional strategy for a new product her company will soon introduce. She thinks word-of-mouth promotion is likely to be very effective and wants to keep the cost of the campaign relatively low. A key component of her campaign is likely to be
a) television advertisements.
b) sponsorships of major sporting events.
c) magazine advertisements.
d) buzz marketing.
Sponsorships are one of the
a) fastest growing categories of promotional spending.
b) newest forms of product promotion.
c) least effective promotional channels when it comes to reaching a specific target market.
d) promotional channels that are slowly losing favor as more firms turn to the Internet to reach their target audience.
The fastest growing category of promotional spending is
a) search engine optimization.
b) product placement.
c) social media.
d) sponsorship.
_____ is the nonpersonal, paid communication a company places to influence consumer purchases.
a) Advergaming
b) Advertising
c) Publicity
d) A sponsorship
_____ are items consumers receive free of charge in return for making a purchase.
a) Samples
b) Premiums
c) Coupons
d) Rebates
_____ reduce the risk of purchasing something new by allowing consumers to try the product before making a purchase.
a) Samples
b) Rebates
c) Coupons
d) Premiums
_____ offer consumers immediate price reductions.
a) Rebates
b) Samples
c) Coupons
d) Premiums
BOGO—Buy One, Get One free—at Payless Shoes is a great example of what kind of promotion?
a) trade promotion
b) samples
c) promotional promotion
d) premium promotion
_____ are used to encourage consumers to purchase higher-priced items and are commonly used in the car and electronics industries.
a) Premiums
b) Coupons
c) Rebates
d) Samples
Creating top-ten lists, establishing an industry Hall of Fame, or launching a petition drive are all ways that marketers can
a) make effective use of push strategies.
b) engage in secondary advertising.
c) improve the morale of the sales force.
d) generate publicity.
One of the major advantages of publicity is that it
a) is often viewed by consumers as more credible than advertising.
b) gives marketers the maximum possible control over the message.
c) targets the intended audience more accurately than other promotional tools.
d) has the power to stimulate an immediate desire to buy the product.
In its broadest sense, _____ refers to an organization’s ongoing efforts to create positive relationships with its consumers, employees, suppliers, the community, the general public, and the government.
a) publicity
b) advertising
c) sales promotion
d) public relations
The purpose of missionary selling is to
a) create goodwill by providing information and assistance to customers.
b) introduce a brand new product that is unknown to customers.
c) market an existing product in new countries.
d) stimulate interest in a product among new customers who are not part of the original target audience.
The sales process follows six key stages, but before the process begins, salespeople must have
a) an understanding of the product, industry, and competition.
b) completed sales training in the use of effective prospecting techniques.
c) an understanding of sales channel marketing tactics.
d) an understanding of missionary, personal, and consultative selling practices.
You are a salesperson for a local company. You’ve just finished presenting your sales message to a consumer. The next step in the selling process is to
a) close the sale by asking for payment.
b) follow up with additional opportunities.
c) handle objections.
d) provide the potential customer with brochures, videos, or other materials that reinforce your message.
MBI’s sales strategy is based on having its sales representatives take the time to develop lasting relationships with their customers. The focus is on obtaining a thorough understanding of the needs of each customer so that the representatives can provide practical ways to meet these needs with MBI’s products and services. This is an example of a form of promotion known as
a) preemptive selling.
b) consultative selling.
c) tactical promotion.
d) customer advocacy.
The stage of the selling process where the salesperson actually asks the customer to make the purchase is known as
a) prospecting.
b) closing.
c) qualifying.
d) following up.
Tim is not a well-rounded salesman. He is still in training, and hasn’t closed a whole lot of sales to begin with. But when he scored a huge order, his focus was on getting it out the door, and he forgot what is perhaps the most important step. What is it?
a) follow-up
b) handle objections
c) team selling
d) prepare
In the business world, social responsibility refers to
a) decisions individuals make about what is right and wrong.
b) attempts to earn the highest possible return for the owners of a business.
c) the obligation of a business organization to contribute to society.
d) the obligation to obey the law.
A nation’s legal system provides businesses with _____ for examining ethical standards.
a) a starting point
b) very little useful guidance
c) comprehensive guidelines
d) a way to distinguish between ethical issues and nonethical issues
The function of laws in the United States is to establish and enforce _____ that apply to everyone in society.
a) social norms
b) financial norms
c) advanced standards
d) ethical norms
The Drof Motor Company has created an exciting new vehicle, the Terminator. One reason that the company is so excited about this vehicle is that once the 60,000-mile warranty ends, the vehicle will begin to experience mechanical problems generating more service income for the company. This behavior is
a) legal and unethical.
b) legal and ethical.
c) illegal and unethical.
d) illegal and ethical.
Why bother about ethics?
a) If a company and its officers are unethical, their behavior could impact the bottom line.
b) Ethics are largely irrelevant in a society where right and wrong shift their meaning depending upon the situation.
c) One should be more concerned about what is legal than what is ethical.
d) The idea of doing good ought to be worthy for its own sake, especially today.
_____ apply to everyone across a broad spectrum of situations regardless of political, religious, class, and ethnic divisions.
a) Transnational ethical standards
b) Universal ethical standards
c) Ethical citizenship
d) Ethical touchpoints
The goal of universal ethical standards is to
a) demonstrate to employees that most ethical dilemmas fall neatly into a handful of categories.
b) allow the United States to establish legal standards that are applicable to all firms.
c) help people base ethical decisions on relative standards.
d) provide guidelines that apply to everyone across a broad spectrum of situations.
A company with international operations may rely on universal ethical standards to guide
a) legal decisions in the nations where they operate.
b) decision making across a broad spectrum of situations.
c) ethics in a wide range of operational areas, except those issues that result from differences due to religious preferences and gender issues.
d) all decisions because ethical standards should never vary from one operation to the next, even if the operations are in several nations. B
A nonprofit, nonpartisan organization, Character Counts has created a set of universal ethical standards that transcend cultures. Which of the following is not a universal ethical standard?
a) religion
b) citizenship
c) caring
d) respect
Janet reasons, “It’s wrong to lie, However, it’s okay to overstate my expense account on my last trip because I really need the money, and the company hasn’t given me a raise in the past year.” This is an example of an employee who applies _____ to fit the situation at hand.
a) a universal code of ethics
b) relative ethical standards
c) a value-weighted ethical approach
d) pragmatically justified code of ethics B
The nonprofit, nonpartisan organization Character Counts has worked with educators, community leaders, and experts in the field to establish a set of
a) core ethical values that transcend political, ethnic, class, and religious differences.
b) legal standards for ethical business behavior, which it is urging all states to adopt in order to reduce the complexity of ethical compliance.
c) simple rules that can be used to solve common ethical dilemmas.
d) ethical benchmarks that can be used to rate companies during a social audit.
As a technology driven company, Google, Inc.’s corporate code of conduct is quite simple, “Do No Evil.” Google, Inc. is using _____ that applies to everyone across the organization to ensure ethical behavior.
a) the principle of reciprocity
b) a stakeholder value statement
c) a universal ethical standard
d) a statement of beliefs
_____ are the moral principles that govern behavior, while a(n) _____ occurs when the behavior results in a choice among alternatives, each of which has negative consequences.
a) Codes of conduct; fatal error
b) Social responsibilities; universal ethic
c) Business ethics; code of ethics
d) Ethics; ethical dilemma
Business ethics and individual ethics differ based on the fact that
a) business ethics focus on profits while individual ethics focus on discretionary income.
b) individual ethics focus on work-life balance, while business ethics focus on staying within the legal limits of the law.
c) business ethics focus on the application of right and wrong in a business setting, while individual ethics are one’s personal standards of right and wrong.
d) individual ethics focus on personal contributions, while business ethics focus on stockholder contributions.
A couple of weeks ago, your boss had a private conversation with you. She explained that the company’s financial performance is poor, and the firm is looking at the possibility of layoffs. She then asked for you to help her determine whether positions in your division should be cut—and if so, which ones. After analyzing the situation, you believe that cutting jobs would almost certainly improve the company’s profitability. However, several of the workers who are most likely to be cut are good friends, and you know they would suffer significant financial hardship if they lost their jobs. Your report to your boss is due tomorrow. It appears that you are facing a(n)
a) ethical lapse.
b) ethical dilemma.
c) situation that requires the use of relative ethical standards.
d) ethical moot point.
It often takes a pharmaceutical firm 15 or more years to develop a new drug. The sales from these new drugs must recover the expenses of research and development. Many of these pharmaceutical firms want to support socially responsible causes. When they are asked to lower the price of drugs distributed to third world nations, it becomes a(n) _____. Do they forego profits for investors and to fund additional research in order to help those in need?
a) cause-related quest
b) philanthropic concern
c) ethical dilemma
d) patent fiasco
You are a manager for a large financial services firm whose brokers trade stocks and bonds for individual customers. Your boss has provided you with your team’s sales goals for the following six months. You know that the fastest way to achieve the lofty numbers is to recruit experienced brokers from competitor firms to join your firm. These professionals are likely to bring loyal clients who initiate a lot of trades, making you a clear winner in the eyes of top management.
The current brokers in your department are good. They’ve worked hard and done everything you’ve asked of them. But they are young and inexperienced. There is a good chance they can achieve the sales goals, but it’s not a sure thing. If you seek to recruit new brokers, your current brokers will move down in the ranks and will earn smaller commissions.
a) This action is certain to have legal consequences, so you should clear it with your human resources department.
b) This is an example where your values and top management’s values are clearly in sync. You should follow the easier route to achieving your sales goals because profit is the highest ethical goal in any organization.
c) A manager should always consider his team of employees first and go down with the ship, if need be.
d) This describes an ethical dilemma between your personal goals and your responsibility as a manager of others.
Which of the following would be described as an ethical dilemma?
a) Johnny, the accountant, has been cooking the books for about five years and is now in danger of being found out.
b) Sarah got caught pilfering office supplies. Her justification was that the Bible says you’re not supposed to muzzle the ox that treads the grain. Her manager replied that she shouldn’t bite the hand that feeds. Now her job may be at stake.
c) Horatio is in middle management and has to assign a project to his team. He wants the best results he can get, but also knows that the company will roll out a new downsizing strategy after the project is turned in, and most of his team will be terminated. Now one of them has asked him for advice about a confidential job offer from a competitor.
d) Consuela has always wanted to be a used car salesperson. She envisions that it would be an easy way to gain power over people, and she enjoys that.
Chris just signed off on a large corporate bank loan that infuses badly needed capital into his fledgling startup company. As a matter of tax planning, his strategy has always been to categorize anything he can as a business expense—from games of golf, to meals where the company is even briefly mentioned, to a company lease on a new BMW. But the bank loan was specifically written to provide capital for his current project, and with payments and interest included, he really can’t afford much else. Which answer is the most true?
a) Chris is being irrational.
b) Once the loan is written and funded, it doesn’t matter what Chris does with it. He’s not doing anything wrong.
c) Chris may be engaging in illegal behavior because he is, in effect, lying to the bank.
d) Chris’s behavior is both stupid and unethical, because he is being dishonest while simultaneously diverting funds from the project that will enable his company to survive.
Rapper MC Chillz Lite has a multi-platinum record on the charts. He has built his Hip Hop empire from the ground up on his line of signature assault weapon toys and sugar-free candy. As he relaxes in his enormous house, he gets a call from his agent, who wants him to volunteer at the local Boys and Girls Club. He agrees, but when he arrives there he finds the cash box unattended and steals about $200 before volunteering and leaving. A few days later, his agent calls asking for information about the incident, and MC Chillz Lite accuses the Director of the Boys and Girls Club of falsely accusing him of theft and threatens litigation. He does not know that they have him on camera stealing. What are the ethical implications?
a) You are who you are when nobody is looking. MC Chillz Lite not only discredited himself, but also damaged his own company. In addition, he besmirched the reputation of a large charity organization.
b) If MC Chillz Lite can get away with it, who cares? Lots of other people do this kind of thing everyday, so what does it matter?
c) Since MC Chillz Lite is so rich and such a self-made man, people are just jealous of that and want to take him down for no reason. So what if he slipped up?
d) MC Chillz Lite ought to pay back the money he stole, but continue the lawsuit on the basis of defamation of character. Sometimes people hate for no good reason.
Mary found out that there is a management position available at competitor’s store and has applied for it. During the interview process, the prospective new employer asks Mary if she has access to her company’s client list. The prospective new employer implies that Mary would be guaranteed the position with a sizable compensation package if she would be willing to bring the client list with her. Mary really could use the extra money. Mary has encountered an ethical dilemma, what should she do?
a) Mary should take the position and bring the client list. No one has loyalty to his or her current company anymore.
b) Mary should decline to bring the client list with her, since this request is unethical.
c) Mary should say she would bring the client list to be hired for the position, but not actually bring it.
d) Mary should accept the position, but only bring part of the client list. Her new employer would never know the client list was not complete.
AIG’s CEO, Edward Liddy, demonstrated his lack of personal commitment to high ethical standards by
a) flying his employees on corporate jets to visit Washington, D.C.
b) giving himself a generous financial retirement package.
c) giving the $85 billion back to the FED.
d) spending more than $440,000 of the company’s bailout money on a sales retreat. D
The role of the CEO in setting the ethical tone for a company is
a) less important than the role of the company’s chief ethics compliance officer.
b) no greater and no smaller than the role of every other employee of the company; where ethical behavior is concerned; everyone has an equal responsibility.
c) limited to making sure that the written code of ethics is enforced throughout the organization.
d) to establish high ethical standards, clearly communicate these standards, and demonstrate a strong personal commitment to them.
A unifying written document that articulates a firm’s ethical priorities is described as the company’s
a) human resources brochure.
b) compliance manual.
c) social contract.
d) code of ethics.
A _____ establishes expectations for ethical behavior at all levels of the organization.
a) code of integrity
b) social responsibility
c) business ethic
d) code of ethics
Research indicates that the organizational culture
a) has very little impact on the individual employee’s ethical behavior.
b) has significant influence on the individual employee’s ethical behavior.
c) influences the behavior of individual employees only if it involves clearly illegal behavior, such as stealing or committing fraud.
d) will tolerate ethical abuses on the part of top management, but not ethical abuses committed by middle management or lower-level managers.
The purpose of a written code of ethics is to
a) satisfy the requirements of the Sarbanes-Oxley Act.
b) eliminate the need for top management to monitor ethical behavior, thus giving these managers more time to deal with other issues.
c) provide guidance to help employees make sound ethical decisions across a range of situations.
d) explain how the organization will go about satisfying its social responsibilities to each major type of stakeholder.
According to research by the Ethics Resource Center (ERC), the most important influence on ethical behavior in the workplace is
a) organizational culture.
b) enforcement of federal laws.
c) a well written code of ethics.
d) random punishment of employees who violate ethical norms.
Motors. On several occasions he has noticed company executives behaving legally but unethically. When he mentioned this behavior and inquired about the company’s code of ethics to a coworker she just laughed, “Code of ethics? There is no code of ethics—this is just how this place operates—get used to it.” Based on research done by the Ethics Resource Center, Ram Rod Motors will likely experience
a) ethical lapses throughout the organization, since organizational culture greatly influences the conduct of employees.
b) no impact, since ethical behavior starts and ends with the individual.
c) little affect, since the actions witnessed by Homer Watkins are legal.
d) a sizable increase in revenue, since the products made by Ram Rod Motors are in demand.
Homer Watkins is in middle management at Ram Rod
As Chair of the Board of Directors, Susan Waskal is concerned about the ethical standards at InKlone, Inc. She has asked you to create a standard by which employees have the information they need to make ethical decisions across a range of situations. Susan has asked you to create a(n)
a) mission statement.
b) ethical resource database.
c) code of ethics.
d) statement of right and wrong.
Which of the following is NOT an important step in the successful implementation of a code of ethics?
a) Establish different standards for workers in different regions or countries in order to take cultural differences into account.
b) Ensure that top management repeatedly and forcefully emphasizes the importance of ethical behavior.
c) Be sure that outside parties, such as supplies, distributors, and customers understand the code.
d) Set up a system that allows workers to report illegal or unethical behavior anonymously.
When an organization develops a code of ethics, research has indicated that it is important to integrate the code of ethics into which of the following areas?
a) new employee orientation only, since employees are new they will pay better attention
b) new employee orientation as well as ongoing training
c) upper management only, since lower-level employees do not have access to sensitive data
d) vendors and suppliers
A person who reports illegal or unethical behavior within an organization is known as a
a) horn tooter.
b) whistle-blower.
c) stakeholder.
d) grandstander.
With the passage of the Sarbanes-Oxley Act, the U.S. government now provides more protection to workers who engage in
a) risky types of green investing.
b) whistle-blowing.
c) dangerous occupations.
d) union organizing campaigns.
A code of ethics should include
a) executive exemptions, because they make decisions based on information other employees don’t often have.
b) executive buy-in and top management communication and leading by example.
c) vague representations of ethical st andards, since everybody is different.
d) a tolerant approach to enforcement.
Pat has noticed some of his company’s sales representatives behaving in an unethical manner with clients. He intends to report this ethical lapse through his company’s anonymous ethics hotline. If he reports this unethical behavior, he would be a
a) whistle-blower.
b) scab.
c) bell-ringer.
d) ringleader.
_____ concern(s) the obligation of a business to contribute to society.
a) Business ethics
b) Relative ethics
c) Social responsibility
d) Antitrust enforcement
The outdoor clothing company Patagonia, Inc. pledges one percent of the company’s annual revenue to environmental causes around the world. Founders of the company believe they have an obligation to contribute to society. This is an example of
a) social responsibility.
b) ethical relativity.
c) moral responsibility.
d) self-motivated ethics.
The primary duty of socially responsible companies to their investors is to
a) consistently pursue the maximum possible profit each and every period.
b) expand the business to achieve a monopoly position.
c) seek to generate long-term profits while meeting responsibilities to all stakeholders.
d) meet its legal requirements to accurately report on its financial performance
The spectrum of socially responsible behavior of firms may vary from
a) no profits, to reasonable profits, to generous profits.
b) no contributions, to responsive contributions, to proactive contributions.
c) intangible ideas, to tangible ideas, to durable ideas.
d) developing innovative business initiatives, to reactive business dealings, to proactive business dealings.
Stakeholders are
a) customers and competitors who interact with the business.
b) vendors and suppliers who do not provide services to the business.
c) the direct competitors of the business.
d) groups or individuals with a personal interest in the performance and actions of a business.
Companies that want to develop socially responsible objectives
a) should seek out other firms in their area and imitate their approach.
b) should focus their attentions on meeting the needs of investors, because the only legitimate social responsibility of a firm is to protect the interests of those who have invested money in the company.
c) should scan the competitive environment.
d) should identify key stakeholders and consider their priorities.
A canoe and recreation club recently filed suit against a number of manufacturing plants located along the Missouri River. In the suit, the club claimed that the plants failed to adequately treat the waste that is being dumped into the streams and waterways, thus adversely affecting the recreatonal opportunities available to club members. The canoe and recreation club is an example of a(n) _____ of the manufacturing companies that operate these plants.
a) quasi-customer
b) stakeholder
c) supplier
d) external user
The _____ of a company that produces gourmet coffee include its employees, coffee bean growers who supply the company, people who drink its gourmet coffee, and the people who live in the community where the company produces the coffee.
a) stockholders
b) investors
c) philanthropists
d) stakeholders
Ben & Jerry’s is recognized for being a socially conscious trendsetter. As a socially responsible company, this maker of high-quality ice cream is likely to focus on
a) putting the needs of other stakeholders above the needs of the owners and employees of their company.
b) finding the proper balance between earning profits and meeting responsibilities to other stakeholders.
c) providing its ice cream at the lowest possible price.
d) partnering with nondairy manufacturers.
The spectrum of how firms address issues concerning social responsibility ranges
a) from firms that never contribute to socially responsible causes to firms that choose to integrate social responsibility into their strategic plans.
b) from firms that tolerate social ambiguity in their strategic plans to firms who never tolerate social ambiguity in their strategic plans.
c) from employees who choose not to support social causes in any way to those who donate not only money to social causes but also their own time and effort.
d) from firms that do not spend any profits on socially responsible causes to firms that are willing to be unprofitable for the sake of socially responsible causes.
Harbor Paint Products, Inc. proactively implemented an incentive program that rewarded employees for soliciting customer feedback on its new deck stain product. Outside sales professionals, inside customer service representatives, and partner retail associates were asked to contribute a minimum of seven customer impressions (positive or negative) each week into a company marketing data base. The program promoted
a) the use of new technology for efficiency.
b) the creation of worthy jobs.
c) consumerism and safe work environments.
d) consumerism and the right to be heard.
_____ is the social movement supporting the consumer’s right to be informed, to be safe, to choose, and to be heard.
a) Cause-related marketing
b) Consumerism
c) Social marketing
d) Customers First
Socially responsible employers
a) act in compliance with all employment laws.
b) embrace diversity in the workplace by respecting and valuing each employee.
c) advocate balance between work and family commitments.
d) all of the above.
Consumerism is a widely accepted social movement. Proponents of this movement believe _____ is a right of all consumers.
a) the right to the lowest price
b) the right to purchase an extended warranty
c) the right to be informed
d) the right to return the product in seven days for a full refund
In regard to social responsibility, _____ is the most ethically responsive economic system.
a) a centrally planned economy in which the State can enforce morality
b) pure capitalism
c) communism, ensuring equal results for all
d) a free market economy based on capitalism, steered by ethical people, is the most agile economic system ever conceived
Which scenario is preferable, ethically speaking, for stakeholder groups?
a) An unsafe pharmaceutical is released to the public because controlled testing is too expensive. Besides, all the other Big Pharma companies are doing it, and the FDA just looks the other way at what amounts to industry norms. Investors would freak and the stock price would plummet if testing procedures were altered now—it’s simply too late.
b) Toys manufactured in China are coated in toxic paint. Executives know of this, but decide to delay action until their hand is forced by the press, if that ever happens—because the company really needs this product to sell big if it is to survive the recession.
c) Organic juice manufacturer Odwalla finds e.coli bacteria in its product, but not before it hits the market. Several people become ill, and one little girl dies. The CEO shuts down all production, recalls all product, conducts an investigation to fix the problem, resumes production, and attends the girl’s funeral all before FDA intervention occurs.
d) The local coffee shop uses Styrofoam cups because they’re cheap and insulate the coffee better. They do sell their used coffee grounds to gardeners, however.
Deliberately designing a product to fail in order to shorten the time between consumer purchase and repurchase is known as
a) planned obsolescence.
b) repurchase-driven marketing.
c) market-timing production.
d) cause-related marketing.
When a company designs a product to fail in order to shorten the time between consumer repurchases. This practice is referred to as
a) planned destruction.
b) planned elimination.
c) early retirement.
d) planned obsolescence.
D Fizzle is the chief executive officer of Pop Rocks Mining Company. He has convinced the company’s board of directors to implement a program which reduces the company’s impact on the environment in which it operates, although this program will negatively impact the company’s net income in the short term. The company is making an effort to meet the needs of all
a) shareholders.
b) community members.
c) stakeholders.
d) regulatory bodies.
In 2009, Amazon remotely and abruptly deleted some digital editions of books from the Kindle devices of customers who had already purchased them. Amazon chose to handle this situation by
a) refunding the purchase price and issuing a personal apology by the founder and CEO.
b) only refunding the purchase price.
c) only issuing a public apology.
d) doing nothing.
Corporate _____ is the donation of time and/or money to nonprofit organizations in an effort to support charitable causes.
a) responsibility
b) philanthropy
c) remuneration
d) marketing
J.H. Marshall, the CEO of ANS Oil Drilling, Inc., has decided to set aside $100,000 of company profit each year to donate to nonprofit organizations in the local area. These donations are an example of
a) corporate responsibility.
b) stakeholder philanthropy.
c) corporate philanthropy.
d) stakeholder responsibility
The goal of _____ is to meet the needs of the current generation without harming the ability of future generations to meet their needs.
a) universal ethical standards
b) corporate responsibility
c) socially optimal pricing
d) sustainable development
____ is the use of marketing partnerships between businesses and nonprofit organizations. The partnerships are designed to spike sales for the company and raise money for the nonprofit organization.
a) Consumerism
b) Sustainable development
c) Cause-related marketing
d) Corporate philanthropy
____ focuses on business contributions to the community through the actions of the business itself rather than donations of money and time.
a) Cause-related marketing
b) Corporate philanthropy
c) Corporate responsibility
d) Middle management
Firms that participate in cause-related marketing
a) usually find that benefits fall short of costs but pursue these efforts anyway.
b) usually can take advantage of significant tax deductions.
c) often find that such programs help build their brands and increase sales.
d) do so primarily to avoid increased government regulation of their activities.
Recently, Estée Lauder announced that it will donate a portion of each sale of its Gwyneth Paltrow-endorsed perfume to breast cancer research. This is an example of
a) new product extensions.
b) marketing development.
c) green marketing.
d) cause-related marketing.
Quest Systems, a local information technology firm, donates old computer equipment to a recycling company. Quest is demonstrating
a) corporate standards.
b) corporate philanthropy.
c) corporate responsibility.
d) cause-related marketing.
Which of the following actions best demonstrates the practice of corporate responsibility?
a) A company donates $10,000 to a local charity.
b) The CEO of a corporation announces that his company has increased its profit margin to investors for the sixth straight year.
c) A company changes its business practices to serve its low-income customers better .
d) A company gives its employees paid time off to work for nonprofits.
Home Depot employs more Olympic hopefuls than any other U.S. company through its Olympic Job Opportunities Program. The business offers athletes full-time pay and benefits for a flexible 20-hour work week in order to accommodate demanding training schedules. This is an example of:
a) corporate philanthropy.
b) corporate development.
c) corporate code of ethics.
d) corporate responsibility.
Doing business to meet the needs of the current generation without harming the ability of future generations to meet their needs is called
a) sustainable development.
b) cause-related marketing.
c) green marketing.
d) the carbon footprint.
In an effort to embrace _____, a large community college system recently built a new “green” campus where facilities were designed and constructed to use energy and water more efficiently in order to conserve the environment and its resources for future generations.
a) new product development
b) profitable land-use
c) sustainable development
d) cause-related marketing
McDonald’s has worked hard to reduce waste by shipping orange juice as frozen concentrate, reducing orange juice packaging by 75%. The company has developed an extensive recycling program. These actions are examples of
a) sustainable development.
b) social audit.
c) corporate code of environmentalism.
d) sustainability audit.
In regard to sustainability, which scenario is the most ethical?
a) Environmental concerns dealing with carbon footprint and global warming ought to take precedence over profitability, even if the company goes out of business—gross polluters will be weeded out this way, and run out of business for good.
b) Green is in, and people are clamoring for all things environmentally responsible. Oil companies, if they know what is good for them, ought to find ways to transition to other technologies or face backlash from consumers who will simply refuse to buy gas anymore.
c) The government should draft new aggressive regulations that allow for tighter controls on businesses and how they impact the environment. Global warming is a frightening reality, and only government can solve the crisis.
d) Companies should be proactive in how their operations could impact all stakeholders, environmental concerns included.
Developing and promoting environmentally sound products and practices to gain a competitive edge is called
a) sustainable development.
b) cause-related marketing.
c) green marketing.
d) consumerism.
PepsiCo recently calculated the carbon footprint for its Tropicana orange juice brand and was surprised to learn that one-third of its emissions came from
a) distributing the orange juice.
b) corporate operations.
c) applying fertilizer to the orange groves.
d) purchased electricity, heat, and steam
While most consumers care about the environment, green marketing has presented a tough challenge for the following reason:
a) consumers find environmentally sensitive products difficult to use.
b) green products are not sold in most communities.
c) consumers will not sacrifice price, performance or convenience to buy green products.
d) green products are cheaper but not as effective as other products.
Many large corporations track three different types of emissions. All of the following emissions are tracked EXCEPT
a) emissions from employee homes.
b) emissions from vending machines.
c) emissions from employee commutes.
d) emissions from fertilizer.
Transparency International’s yearly index of “perceived corruption” showed which country has the lowest score, suggesting that rampant corruption is part of their business culture?
a) China
b) India
c) United States
d) Russia
Globalization has made ethics and social responsibility _____ for workers at every level.
a) less complicated
b) easier to monitor
c) even more complicated
d) a nonissue
2008 Transparency International indicated that firms from ____ were most likely to offer or accept bribes.
a) Russia, China, and Mexico
b) United States, China, and Mexico
c) United States, Canada, and Mexico
d) Russia, Japan, and Mexico
A study by Transparency International of bribery by firms operating in foreign countries found that U.S. multinational firms were
a) among the least likely to pay bribes.
b) less likely to pay bribes than Russian, Chinese, or Mexican companies but more likely to pay bribes than companies from most Western European nations.
c) among the most likely to pay bribes.
d) less likely to pay bribes than German, French, and Spanish firms, but more likely to pay bribes than Chinese, Japanese, and Italian firms.
_____ are among the most challenging issues faced by companies and individuals that are involved in international businesses.
a) Unethical behaviors of worldwide suppliers
b) Socially irresponsible vendors
c) Cause-related marketing issues
d) Bribery and corruption
The Foreign Corrupt Practices Act
a) protects American consumers from fraudulent foreign business practices.
b) imposes penalties on foreign firms that try to bribe U.S. officials.
c) forbids U.S. companies from offering bribes when engaged in foreign business transactions.
d) clearly states that all gifts that the representatives of a firm receive abroad constitute a form of bribery.
A study by Transparency International suggests that most of the world’s poorer nations have business cultures that
a) do an excellent job of encouraging entrepreneurship.
b) are characterized by rampant corruption.
c) strongly encourage ethical behavior.
d) believe profits are immoral.
What does a living wage mean globally?
a) enough to support an individual
b) enough to support a family
c) enough to subsist day-to-day
d) companies must base their decision on their own values and the laws of both the U.S. and their host country
Which of the following is most ethical, globally speaking?
a) Low wages and working conditions for unskilled labor in developing countries are relative. If it is socially acceptable for a worker to earn less than he would in America, but his wage is fair, there is no harm being done.
b) What is happening in developing countries is the enslavement of the world’s lower class, and it should be stopped at any cost.
c) Unskilled workers in India should earn at least an American minimum wage.
d) Workers earning low wages in developing countries turn to the sex trade for relief.
Socially responsible companies should establish codes of conduct for their ______ that set clear policies for human rights, wages, safety, and environmental impact.
a) employees
b) customers
c) competitors
d) vendors
Establishing a code of conduct for vendors in foreign nations
a) is the easiest way for American firms to ensure these vendors produce products that meet U.S. consumer expectations.
b) requires American firms to deal with a wide range of issues involving human rights, wages, worker safety, and environmental protection.
c) is more likely to be successful if the company works through the foreign government’s legislative body.
d) is a nice idea in practice, but so far no American firms have been able to actually establish a comprehensive code.
Which of the following serves as a good example of a proactive socially responsible approach toward global marketing?
a) Offering bribes to those international clients who accept large gifts as common business practices.
b) Establishing codes of conduct for vendors, setting clear policies for human rights policies, wages, safety rules, and environmental impact.
c) Partnering with the low-cost providers of goods and services, because this strategy serves the interests of stakeholders and stockholders.
d) Providing one’s customers with the best value at the lowest cost and doing what it takes to make that happen.
During the 1990s, Levi Strauss discovered that two of its suppliers were not living up to their code of conduct. Instead of firing the workers, Levi Strauss developed a creative win-win situation. The type of worker issues the leaders of Levi Strauss were concerned with included
a) child labor.
b) the migration of workers from agrarian jobs to urban jobs.
c) the formation of labor unions.
d) religious preferences.
A(n)_____ is the systematic evaluation of how well a firm is meeting its goals of ethics and social responsibility.
a) social audit
b) SRPC (Social Responsibility Progress Checklist)
c) social-commercial correlation analysis
d) balanced performance report
The double bottom line social audit procedure
a) measures both sales and profits.
b) measures both a firm’s financial performance and its efforts to meet social responsibilities.
c) develops financial rewards for managers whose fundraising contributions to community-based organizations exceed expectations.
d) indicates a preference for meeting profit goals and de-emphasizes any company social contributions that would cut into profits.
In today’s business environment many businesses are monitoring themselves conducting a systematic evaluation of how well the business is meeting its ethics and social responsibilities. This process is referred to as a(n):
a) annual audit.
b) social progress report
c) annual activist progress check.
d) social audit.
Explain the steps involved in a social audit, in proper order.
a) Establish a double bottom line, set goals, determine how to meet them.
b) Set goals, determine how to meet them, and establish a double standard of excellence that allows for multiple ways to achieve success and minimize failures.
c) Set goals, determine how to meet them, establish a double bottom line that allows for balance between profit and social responsibility.
d) Define the company’s PR strategy, formulate an action plan for damage control, and find a way to help customers feel served.
Ethical challenges in business include all of the following, EXCEPT
a) ethical dilemmas.
b) individual ethics.
c) social responsibility.
d) code of ethics.
Key areas of interest for a company’s office of ethics and compliance would include all of the following EXCEPT
a) mitigating employee-filed lawsuits.
b) monitoring employee use of the Internet.
c) setting goals for a social audit.
d) overseeing corporate compliance with legislation.
Compared to the U.S., the nations of China and India have
a) much larger populations, but are lagging in terms of economic growth.
b) larger populations and more rapid economic growth.
c) higher per capita GDPs.
d) very limited market potential.
A comparison of economic indicators among the six most populous nations indicates that the
a) U.S. has by far the largest per capita GDP.
b) U.S. has the fastest rate of economic growth.
c) economy of Brazil is growing the fastest.
d) size of the Chinese economy is the second largest, but it is growing very slowly.
Since 1946, advances in technology and the overall decline in worldwide trade barriers have resulted in
a) more market opportunities but companies are experiencing greater market competition.
b) countries like China and India have experienced no economic growth.
c) trade in commodities such as oil and corn is becoming nonexistent as all countries move to produce technology-related products.
d) the U.S. has experienced persistent balance of payments surplus.
Based on the size of its population, which of the following countries presents the most attractive market opportunities?
a) Costa Rica
b) Norway
c) Singapore
d) China
Although many U.S. firms want to expand their sales in nations with high populations, they face some challenges in doing so, including the fact that in many of these nations the
a) purchasing power of most citizens is very low.
b) governments strongly favor socialist economic policies.
c) rate of economic growth is much slower than the growth of less populous nations.
d) citizens aren’t as interested in material goods as U.S. citizens
The nation with the highest number of cell phone users is
a) the United States.
b) Russia.
c) China.
d) Japan.`
In countries like China and India, the availability of cell phones
a) lags far behind their availability in South America.
b) has enabled these nations to greatly improve telecommunications without investment in conventional landlines.
c) is quite high at present, but further growth in cell phone usage seems to be limited by the fear of citizens that the government will monitor their private conversations.
d) is quite high at present, but further growth in cell phones usage is likely to be limited by stringent government regulations.
Cell phone penetration is skyrocketing in many developing nations. Which of the following developing nations decided to forgo the conventional phone service of landlines by moving directly to cell phone networks?
a) Japan
b) Europe
c) United States
d) Africa
The number of cell phones in India is
a) extremely low, and unlikely to increase.
b) currently much lower than in China, but has been growing rapidly in recent years—a trend that is likely to continue.
c) the largest in the world, and is expected to continue growing rapidly.
d) the fifth largest among the world’s nations, but the growth rate is expected to slow considerably over the next few years.
In China and India, conventional landline telephone networks
a) make up the vast majority of all phone connections.
b) are no longer considered a necessity as these nations move directly to cell phone networks.
c) have provided the infrastructure for their Internet backbone and so remain a top investment priority.
d) represent the best hope to have a truly connected economy given the lack of sophisticated cell phone technology in these nations.
What are some of the current business opportunities in the world economy?
a) Finding new ways to use fossil fuels in developing nations is an important aspect of the global economy.
b) Underdeveloped nations can leapfrog technologies by eliminating unnecessary steps in the chain of development.
c) The U.S. economy is the world’s standard bearer, with low taxes and regulation. The cost of doing business here is second to none.
d) Countries like Vietnam will not prosper unless they get on board with UN resolutions on climate change. This is the key to good business.
Imports and exports enhance international trade, while creating growing opportunities for nations. Which of the following is NOT a benefit of global trade?
a) inflow of new ideas
b) access to factors of production
c) reduced risk
d) less competition
Which of the following is a benefit of global trade to producers?
a) protection from competitive pressures
b) inflow of innovative ideas
c) simplified operations
d) ability to avoid ethical issues
Relative to other nations, the United States appears to have an advantage in the amount of
a) low cost labor.
b) petroleum.
c) capital.
d) uranium.
The logic behind international trade, in regard to the factors of production, is
a) an intergovernmental body such as the UN should regulate international trade so that a more equitable distribution of trade results. Developed nations should not be allowed to “run the table” by dictating terms to poorer nations.
b) if an underdeveloped country has the factor of a skilled labor force in abundance, it should withhold this resource and create demand, thereby driving up wages and increasing the quality of life for its citizens.
c) international trade allows increased access to the factors. For instance, the U.S. has capital, India and China have inexpensive skilled labor, and OPEC nations have vast reserves of natural resources.
d) if there is an imbalance of trade between nations, treaties should be drafted and signed so as to allow the equalization of factors in the international community.
India and the Philippines consistently attract sizeable amounts of foreign investment for services performed in the domestic market and sold internationally. The main reason for this foreign interest is that
a) these countries have outstanding infrastructure, with world class transportation and power supply facilities.
b) these nations have large numbers of highly educated workers who are paid much less than American workers.
c) The dollar’s value is higher in the Asian market than in the American market.
d) the average income of consumers in these nations is among the highest in the world, so these markets have a lot of potential.
Companies with a worldwide presence such as Toyota and Sony actually thrived when the Japanese economy entered a deep, sustained economic slump in the 1990s for the following reason:
a) global trade reduced their dependence on the Japanese economy.
b) travelers to Japan continued to buy their products.
c) the Japanese government fixed the Yen to the United States Dollar.
d) although the Japanese economy suffered, the Japanese continued to buy their products.
As the Director of Global Markets for Two Hot to Handle, Inc. Oznur Kaya is always looking to expand the company into large and growing international markets. Two Hot to Handle, Inc. benefits from international trade in all of the following ways EXCEPT
a) the international market provides employees with travel opportunities.
b) reduced risk.
c) inflow of innovation.
d) better access to factors of production.
Ross has two different projects he would like to work on this weekend; he wants to paint the spare bedroom or perform some minor repairs on his old ’83 Chevy. Unfortunately, he doesn’t have time to do both this weekend. The fact that Ross must give up one thing in order to do something else illustrates the concept of
a) diminishing returns.
b) opportunity cost.
c) comparative advantage.
d) the hierarchy of needs.
The global trade recovery began in 2010. What one underlining factor may dampen the recovery over the long term?
a) housing market
b) bank failings
c) continued big business bailouts
d) low employment
With a given amount of labor and other resources, producers in the nation of Alphania can produce either 100 widgets or 50 wackets. Thus, in Alphania two widgets must be given up to produce each wacket. Using the same amount of labor and resources, producers in Betania can produce 40 widgets or 40 wackets—so one widget must be given up for each wacket produced. Based on this information,
a) Alphania has a comparative advantage in producing both goods.
b) Betania has an absolute advantage in producing both goods.
c) Alphania has a comparative advantage in producing wackets but Betania has an absolute advantage in producing wackets.
d) Betania has a comparative advantage in producing wackets.
The size of the Chinese population gives the country a(n) _____ as compared to the United States since it can produce more of a good than other nations, using the same amount of resources.
a) opportunity cost
b) comparative advantage
c) innovation advantage
d) absolute advantage
A country has a comparative advantage in the production of a good if it can produce that good _____ than other nations.
a) at a lower dollar cost
b) at a lower opportunity cost
c) using more labor and less capital
d) using fewer natural resources
What best defines comparative advantage?
a) a static relationship between nations, wherein one has an opportunity cost advantage over another
b) a static relationship between nations, wherein one can produce more of a good than another
c) a nonstatic relationship between nations, wherein one can produce more of a good than another
d) a nonstatic relationship between nations, wherein one has an opportunity cost advantage over another
The prime minister of Equalia has asked that you prepare a report on the nation’s competitive strengths and weaknesses. In your report, you detail the nation’s comparative advantage in certain industries but warn the prime minister that the nation’s advantage is not static. Due to this fact, you recommend that the prime minister:
a) place special emphasis on investing in infrastructure and institutions of higher education in order to maintain its comparative advantage.
b) not worry about specifics since the invisible hand will guide the economy.
c) focus only on exports and try to restrict imports, since imports result in an outflow of currency.
d) seek loans from the World Bank in an effort to host the upcoming Olympic games.
When the total value of exports is higher than the total value of imports, a country experiences a
a) trade exchange.
b) trade surplus.
c) trade deficit.
d) countertrade.
A trade ____ occurs when a country imports more goods and services than it exports.
a) deficit
b) surplus
c) dividend
d) credit
What is the balance of trade?
a) a measurement of the difference between exports and imports
b) a measure of the total flow of money into or out of a country
c) the measurement of the barter of products for products
d) the relative value of one currency to that of another
A review of the recent experience of the United States economy in the global markets reveals that the United States has
a) had a positive impact on the nations’ currency
b) maintained a trade surplus with all nations except China.
c) run a persistent trade deficit since the 1970s.
d) attracted little foreign capital.
The net result of all money that flows into and out of a nation due to international payments is measured by the nation’s
a) balance of trade.
b) surplus account.
c) balance of payments.
d) net national payment.
Changes in the amount of foreign aid the U.S. provides to developing nations would directly affect
a) the U.S. balance of payments, but would not directly influence its balance of trade.
b) the U.S. balance of trade, but would not directly affect its balance of payments.
c) both the U.S. balance of payments and its balance of trade by roughly equal amounts.
d) neither the U.S. balance of payments nor its balance of trade.
When comparing a nation’s balance of trade with its balance of payments, it is important to realize that
a) the balance of payments includes the balance of trade, but it also includes other financial flows such as foreign borrowing and lending.
b) the two concepts should yield the same value, because the value of goods traded must equal the total payments made to buy those goods.
c) these two concepts are totally unrelated, so such a comparison is not really meaningful.
d) the balance of trade only includes exports and imports of goods, while the balance of payments includes exports and imports of both goods and services.
Suppose the value of the U.S. dollar strengthened considerably against the euro. Who would be most likely to benefit from this result?
a) European tourists traveling in America.
b) American manufacturers trying to expand their exports to European markets.
c) European firms exporting goods to America.
d) European firms operating production facilities in the United States.
Ron Merlot of the News Network on Cable (NNC) reported the price of Australian wine had greatly increased along with most other Australian-made products imported into the United States. Listening to this report, Maria Garcia can conclude the United States dollar has _____ when compared to the Australian dollar.
a) strengthened
b) been fixed
c) weakened
d) achieved parity
In late 2002, a euro cost $1.00 of U.S. currency. In late 2007, a euro cost $1.49. This indicates that the
a) U.S. dollar weakened relative to the euro.
b) U.S. dollar strengthened relative to the euro.
c) exchange rate between the dollar and the euro deviated significantly from its market equilibrium.
d) euro weakened relative to the U.S. dollar.
Which of the following groups does NOT benefit when a nation has a weak currency?
a) domestic firms that want to export goods to foreign markets
b) foreign firms that operate facilities within the nation
c) domestic firms with operations in foreign countries
d) foreign tourists who are visiting the country
_____ expresses the value of one nation’s currency in terms of another nation’s currency.
a) liquidity ratio
b) exchange rate
c) countertrade ratio
d) discount rate
When a country lacks hard currency, it must use _____ to complete international trade.
a) countertrade
b) importing
c) licensing
d) exporting
Companies that do business with customers in developing nations that lack access to hard currencies are likely to make extensive use of
a) goodwill payment schedules.
b) foreign exchange.
c) countertrading.
d) accumulated bank reserves.
What is countertrade?
a) a measurement of the difference between exports and imports
b) a measure of the total flow of money into or out of a country
c) the measurement of the barter of products for products
d) the relative value of one currency to that of another
In the late 1970s, Pepsi Cola wanted to enter the Russian marketplace but faced a significant hurdle. Due to the Russian lack of a tradable currency, Pepsi Cola would not be able to receive payment in the traditional sense. Ultimately a deal was struck in which Pepsi Cola traded Pepsi product for Russian-made vodka. This transaction is an example of
a) outsourcing.
b) countertrade.
c) balance of payments.
d) licensing.
International trade provides businesses with access to new customers through
a) onshoring and protectionism.
b) outsourcing, importing, exporting, licensing, franchising, and foreign direct investment.
c) embargoes and licensing.
d) networks of global franchising organizations.
Apple, Inc. has used foreign outsourcing to construct its iPod. The main advantage to foreign outsourcing is
a) the positive impact on a nation’s balance of payment.
b) increased risk of production.
c) improved product quality.
d) lower production cost.
What is the difference between outsourcing and importing?
a) Outsourcing is when a firm buys foreign products that have already been produced, and importing is when a firm contracts with foreign vendors to produce products.
b) Importing is when a firm licenses its product to a foreign firm for production, and outsourcing is when a firm buys foreign property for the express purpose of producing the product.
c) Importing is when a firm buys foreign products that have already been produced, and outsourcing is when a firm contracts with foreign vendors to produce products.
d) Outsourcing is when a firm licenses its product to a foreign firm for production, and importing is when a firm buys foreign property for the express purpose of producing the product.
Foreign outsourcing provides numerous benefits to companies involved in the process, but also to consumers. However, the process is not without issues. One key issue is
a) while the production cost are lower, the cost to ship the goods can be quite high.
b) quality control can be compromised.
c) environmental standards are more strict outside the United States.
d) foreign outsourcing will cause unemployment to rise causing an economic collapse.
Foreign _____ is contracting with foreign suppliers to produce products usually at a fraction of the cost of domestic production
a) outsourcing
b) importing
c) direct investment
d) market manipulation
A growing number of companies have begun outsourcing their customer service to foreign call centers. The primary reason is
a) greater customer satisfaction.
b) it is more efficient.
c) low cost.
d) better quality service.
Product defects have forced the U.S. to recall a host of toy products from China. The popular Polly Pocket dolls were recalled because they posed what problem?
a) toxic lead paint
b) eyeballs filled with kerosene
c) swallowing hazard
d) sharp corners
Buck Knight of Apollo Athletic Wear, Inc. was caught off guard when a reporter from a national media outlet questioned his company’s policy of outsourcing various stages of the production process. The reporter was concerned about the working conditions inside Apollo’s network of foreign suppliers that produce the company’s products. It appears that Buck Knight was unaware of the major pitfall of foreign outsourcing:
a) that companies using foreign outsourcing have an obligation to maintain ethical standards
b) that companies using foreign outsourcing give the customer the impression the product was produced in the United States
c) that companies using foreign outsourcing can pay labor rates in other countries, which exceed those in the United States when productivity rates are factored into the wage rate
d) that companies using foreign outsourcing can lead to the loss of company profits due to increased shipping cost
_____ is buying products from overseas markets that are manufactured overseas.
a) Importing
b) Exporting
c) Dumping
d) Outsourcing
_____ is the most basic level of international market development and involves shipping domestically produced products overseas.
a) Importing
b) Exporting
c) Franchising
d) Licensing
Foreign _____ involves a firm buying the rights to produce, promote, and use the domestic firm’s trademark/patents in a defined geographical area as long as there is agreement on specific operating procedures.
a) strategic contracting
b) licensing
c) exporting
d) outsourcing
Foreign licensing involves _____ risk and _____ control than foreign direct investment.
a) lower; less
b) higher; more
c) lower; more
d) more; less
Foreign _____ may help a domestic company enter a foreign market with little or no investment costs, but there are other control risks that should be taken into consideration.
a) franchising
b) licensing
c) direct investment
d) outsourcing
Pandy’s, an American restaurant chain, promotes its business in Latin America with the hopes of offering prospective buyers the opportunity to open and operate Pandy’s restaurants in their countries. Pandy’s corporate management offers financial and marketing assistance to ensure success within established guidelines. The prospective buyer is the _____ and Pandy’s Corporation is the _____.
a) franchisee; franchisor
b) franchisor; franchisee
c) licensee; licensor
d) licensor; licensee
Bean’s Crazy is a coffee shop specializing in organically grown coffee and bagels. The founders of the company are interested in quickly expanding into the international marketplace with little risk to their capital holdings. At a recent meeting, they asked you to come up with the best strategy for reaching the global market. After giving it much thought you suggest the company’s best option would be
a) outsourcing.
b) franchising.
c) foreign direct investment.
d) exporting.
Uberholtz, a German company, has granted Sistec, an American company, the right to manufacture Uberholtz’s product and use the Uberholtz trademark in return for a fee. Sistec is the _____
and Uberholtz is the _____.
a) franchisee; franchisor
b) franchisor; franchisee
c) licensee; licensor
d) licensor; licensee
Tanya Osborne, the chief executive officer of Osborne Computer recently announced she was considering using foreign licensing to enter the Chinese market. What is one problem Osborne Computer might experience when using foreign licensing as an international entry strategy?
a) Unethical licensees may become competitors in the future.
b) Lack of foreign exchange may hurt the license agreement.
c) Foreign licensing eliminates the need countertrade.
d) Environmental standards might be increased in the future.
McDonald’s uses foreign _____ to build its corporate presence worldwide.
a) licensing
b) direct investment
c) outsourcing
d) franchising
Fiat’s primary reason for acquiring the U.S auto giant Chrysler was to
a) gain a foothold in and more fully exploit the U.S market.
b) decrease Chrysler’s presence in the U.S.
c) increase Chrysler’s presence in Italy.
d) help the U.S. during the Great Recession.
A(n) _____ is an agreement among two or more two companies to join forces to pursue specific opportunities without actually merging their operations.
a) limited venture
b) joint venture
c) acquisition
d) collusive alliance
Honda’s construction of automobile assembly plants in the United States is an example of foreign _____ for Honda Corporation.
a) direct investment
b) outsourcing
c) importing
d) licensing
Define joint venture.
a) two or more companies sharing resources, risks, and profits without merging
b) a formal, long-term agreement
c) an agreement that is not all encompassing and is not entirely formal
d) when a strong firm buys a controlling interest in a weak firm without approval from its board
Language, customs, educational background, social values, and religious holidays need to be understood and respected by foreign businesses in considering
a) economic differences.
b) sociocultural differences.
c) political differences.
d) legal differences.
The South Korean automobile company Hyundai enjoys a 17% share of the passenger car market in India. They were able to beat the competition by changing subtle aspects of the Hyundais sold in India such as the roof lines to accommodate motorists wearing a turban. The company has shown that understanding a nation’s _____ can lead to business success.
a) political differences
b) economic differences
c) sociocultural differences
d) legal differences
Unilever was able to acquire 50% of its sales from rural India by selling their product
a) in large quantities in warehouse chains.
b) by vendors in small boats.
c) with online distributors.
d) in retail outlets who offer in it in tiny, individual quantities.
Key infrastructure challenges to consider when entering a foreign market include:
a) language, attitudes, and values.
b) laws and regulations the government creates.
c) transportation, communication, and energy.
d) civil war, riots, and economic viability.
To capitalize on the rapid growth and increase demand in India, _______ introduced a mobile phone that can be charged with solar power.
a) Apple
b) Samsung
c) Verizon
d) Nokia
_______ has experienced a rapid increase in the use of credit cards for purchases.
a) Asia
b) Vietnam
c) Thailand
d) Africa
As the chief of strategy for Paradigm Software, Bill Fence has decided the risks of software piracy in Indonesia are too high to justify a continued presence in that country. The barrier to international trade that Bill Fence is most concerned about is _____ in Indonesia.
a) heavy international trade restriction
b) economic difference
c) infrastructure
d) political climate
When the Congress of the United States passed an economic stimulus bill with the hope of jump starting the economy, one provision of the bill contained a “Buy American” provision. This provision is an example of a(n)
a) tariff.
b) nontariff barrier.
c) embargo.
d) quota.
As producers of sophisticated military hardware, companies like Boeing and General Dynamics are restricted from exporting to governments such as Cuba and North Korea. This total ban on exporting of sophisticated technology is an example of a(n)
a) embargo.
b) nontariff trade barrier.
c) tariff trade barrier.
d) voluntary export restraints.
Due to the rising prices of gasoline, Harleen is looking for a car with better gas mileage. She hopes to purchase the newest Preo, an imported car using hybrid technology. But Preos are hard to find, because the government in Harleen’s country has limited the number of them that can be imported each year. Harleen is witnessing the impact of a(n)
a) tariff.
b) quota.
c) voluntary export restriction.
d) embargo.
Nashika spent a two-week vacation in Africa and purchased more than $4,000 worth of African tribal art. Upon returning to the U.S., she was required to pay a(n) _____ on the artwork.
a) tariff
b) quota
c) embargo
d) customs charge
In 2002, the United States steel industry lobbied the United States government to place a tax on the importation of foreign-produced steel. The goal was to make imported foreign steel more expensive, thus giving economic relief to U.S. steel producers through a(n)
a) embargo.
b) nontariff trade barrier.
c) quota.
d) tariff.
Which type of protectionism would actually be advisable?
a) A trade embargo on goods produced by known sponsor-states of terrorist organizations.
b) A quota set by a government agency in Lithuania that limits imports of coffee.
c) High tariffs by the U.S. on crude oil produced by OPEC members.
d) VER requirements in Ethiopia that limit the export of coffee to the U.S. and Europe.
Paula Populist is a member of the United States Congress representing the City of Steelville and the surrounding area. She has argued that cheap foreign steel has hurt the major employer in her district, Steel City Steel. Paula is championing a bill in Congress to increase tariffs on imported steel. The likely impact of the tariff on imported steel is
a) lower prices of steel for United States consumers.
b) no impact since foreign currency exchange rates will offset the impact of the tariff.
c) higher prices of steel for United States consumers.
d) loss of jobs in the United States steel industry.
The purpose of the General Agreement on Tariffs and Trade (GATT) was to
a) encourage worldwide trade.
b) prevent wars based on trade issues.
c) create intellectual property regulations.
d) ensure that every nation receives its fair share of any revenues generated from international trade and tariffs.
Reasons to eliminate trade restrictions include all of the following EXCEPT
a) reduced prices and increased choices for consumers.
b) protect national security.
c) increase domestic jobs in industries with a comparative advantage.
d) use resources more efficiently.
Ministers of the World Trade Organization (WTO) meet every two years to address current world trade issues. With a global shift to services rather than goods, the WTO has and will continue to work toward controlling
a) the needs of farmers in Africa.
b) interest rates at the World Bank.
c) nothing, but will instead maintain the status quo.
d) piracy of intellectual property and reducing subsidies.
Decisions of the World Trade Organization in settling trade disputes are
a) applied only on a voluntary basis.
b) applied only in cases where it can show that both parties will benefit.
c) binding on all parties involved in the dispute.
d) only relevant to issues involving the World Bank.
If trade restrictions among nations were eliminated, economists predict
a) competition would increase, resulting in lower prices and increased choices for consumers.
b) the total volume of trade would decline.
c) all nations would experience an increase in their foreign debt.
d) revenues from tariffs would increase.
The _____ influences the global economy by providing technical advice to the governments of developing countries for projects in a range of areas including infrastructure and education.
a) International Monetary Fund
b) World Trade Organization
c) World Bank
d) General Agreement on Tariffs and Trade
The World Bank is an international cooperative comprised of 187 member countries who
a) promote international trade.
b) are referred to as the lender of last resort.
c) promote international economic cooperation and stable growth.
d) provide financial assistance with conditional low-interest loans.
The International Monetary Fund’s (IMF) basic mission is to promote international economic cooperation and stable growth. To achieve these goals, the IMF does all of the following EXCEPT
a) supports stable exchange rates.
b) provides technical advice on building a functioning court system.
c) facilitates a smooth system of international payments.
d) promotes international trade.
A small mountain kingdom in the south of Africa, Lesotho is primarily an agrarian economy. If its king and political leadership made decisions that sank the kingdom into unmanageable debt through loans it could not hope to repay, to which international body would the king appeal for debt forgiveness?
b) WTO
c) IMF
d) The World Bank
The International Monetary Fund (IMF) implemented a debt relief program to benefit
a) automobile manufacturers.
b) banks.
c) poor countries.
d) wealthy countries.
The three countries participating in the North American Free Trade Agreement (NAFTA) are
a) Panama, Canada, and the United States.
b) Canada, Nicaragua, and Mexico.
c) Canada, Mexico, and the United States.
d) Mexico, Panama, and Canada.
Trading blocs are groups of countries
a) that are freely trading.
b) that have reduced or eliminated tariffs allowing for a free flow of goods among member nations.
c) using a common currency in order to borrow from member nations.
d) prohibiting trade with nonmember nations.
NAFTA critics believe Mexico and Canada have contributed to the United States trade deficit because
a) our exports have grown faster than our imports.
b) our imports have grown faster than our exports.
c) our importing and exporting is static.
d) we no longer import goods from them.
What was the predicted result of NAFTA?
a) unfair job gains for Canada’s technology market
b) significant job loss for the U.S. economy
c) significant risk to the Mexican peso
d) Canadian currency fluctuations
What is the European Union?
a) a trade bloc
b) a world trade organization
c) a common market
d) a free trade alliance
The European Union created a common currency that 12, member states have since adopted. This common currency is referred to as the
a) franc.
b) European dollar.
c) euro.
d) shekel.

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