Which of the following is not characteristic of globalization?
National economies are turning into independent economic systems.
Material culture is starting to look similar the world over.
Perceived distance is shrinking due to advances in transportation and telecommunications.
Barriers to cross-border trade and investment are declining.
Globalization has _____ the opportunities for a firm to expand its revenues by selling around the world and _____ its costs by producing in nations where key inputs are cheap.
Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by encouraging all of the following except:
privatizing state-owned enterprises.
welcoming investment by foreign businesses.
Identify the incorrect statement concerning globalization.
It has been blamed for unemployment in developed nations, environmental degradation and the Americanization of popular culture.
It has created new threats for businesses accustomed to dominating their domestic markets.
It is transforming industries and is highly welcomed by those who believed their jobs were protected from foreign competition.
According to most economists it is a very beneficial process where gains outweigh the losses by a wide margin.
In the U.S., _____ percent of firms that export are small companies employing fewer than 100 people.
Interdependent political, economic, and legal systems of a country make up its:
_____ is consistent with the notion that an individual's right to do something may be restricted because it runs counter to "the good of society" or "the common good."
According to _____, socialism can only be achieved through violent revolution.
_____ is/are best defined as shared assumptions about how things ought to be.
_____ are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like.
the norms that are seen as central to the functioning of a society and its social life.
the routine conventions of everyday life.
abstract ideas about what a group believes to be right, good, and desirable.
the social rules and guidelines that prescribe appropriate behavior in particular situations.
The theory of _____, developed by Michael Porter, focuses on the importance of country factors, in addition to factor endowments, such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.
national competitive advantage
The theory of _____ makes a crude case for government involvement in promoting exports and limiting imports.
By lowering production costs, _____ help domestic producers compete against foreign imports.
In the United States, the only firms allowed to import cheese are certain trading companies, each of which is allocated the right to import a maximum number of pounds of cheese each year. Identify the trade restriction being imposed by the United States.
Ad valorem tariff
A quota rent is:
a quota on trade imposed by the exporting country.
levied as a fixed charge for each unit of a good imported.
levied as a proportion of the value of the imported good.
the extra profit producers make when supply is artificially limited by an import quota.
Which of the following is not a reason why firms prefer to acquire existing assets rather than undertake green field investments?
Foreign firms are acquired because those firms have valuable strategic assets.
Firms make acquisitions because they believe they can increase the efficiency of the acquired unit by transferring capital, technology, or management skills.
Even though green field investments are comparatively less risky for a firm, acquisitions always yield higher profits.
Mergers and acquisitions are quicker to execute than green field investments.
The rise in FDI in the services sector is a result of all of the following except:
the general move in many developed countries away from manufacturing and toward services.
accelerating regulations of services.
many services cannot be traded internationally.
many countries have liberalized their regimes governing FDI in services.
Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.
Perfect markets theory
Small markets theory
An agreement between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other is referred to as:
regional economic integration.
In 1991, Argentina, Brazil, Paraguay, and Uruguay implemented an agreement known as:
Which of the following is true of a common market?
All barriers to the trade of goods and services among member countries are removed and each country maintains its own policy toward nonmember countries.
It involves the free flow of products and factors of production between member countries and adoption of individual external trade policies.
It has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members.
It eliminates trade barriers between member countries and adopts a common external trade policy and a common currency.
The rate at which one currency is converted into another is the:
The _____ helps us to compare the relative prices of goods and services in different countries.
When two parties agree to exchange currency and execute the deal immediately, the transaction is a:
If lots of people want euros and euros are in short supply, and a few people want Japanese yen and yen are in plentiful supply, the euro is likely to _____ against the yen.
If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen?
The dollar will appreciate against the yen
The dollar will depreciate against the yen
The exchange rates will remain the same
The yen will appreciate against the dollar
A _____ means the value of the currency is fixed relative to a reference currency.
pegged exchange rate
dynamic exchange rate
floating exchange rate
fixed exchange rate
The gold standard had its origin in the use of _____ as a medium of exchange, unit
of account, and store of value.
the U.S. dollar
the British pound
The great strength claimed for the gold standard was that it contained a powerful mechanism for achieving _____ by all countries.
interest rate parity
equal tariff levels
Market makers are:
financial service companies that connect investors and borrowers.
those who want to borrow money including individuals, companies, and governments.
nonbank financial institutions who want to invest money.
high net worth individuals with surplus cash to reinvest.
All of the following are benefits of global capital markets, except:
they increase the supply of funds available to borrowers.
that the risk to the investment portfolio is reduced to below what could be achieved in a purely domestic capital market.
they provide a wider range of investment opportunities to investors.
they have higher cost of capital as compared to purely domestic capital markets.
Which of the following statements is not true?
The way to increase the profitability of a firm is to create more value.
The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
The more value customers place on a firm's products, the higher the price the firm is able to charge for those products.
The price a firm charges for a good or service is typically more than the value the customer places on that good or service.
The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because:
the customer's disposable income is significantly higher than what the market demands.
the customer captures some of that value in the form of a consumer surplus.
regulatory mechanisms ensure that the customer is not overcharged for products/services.
marketers implement psychological pricing tactics to ensure that customers perceive the prices to be low.
Which of the following is an example of a primary activity in a firm's value chain?
Research and development
When companies disperse different stages of the value chain to those locations around the world where perceived value is maximized or where the costs of value creation are minimized, companies create:
a differentiated organization.
a location economy curve.
economies of scale.
a global web of value creation activities.
For U.S. firms, the most comprehensive source of export opportunities information is the:
Small Business Administration.
U.S. Department of Commerce.
Federal Trade Commission.
A "best prospects" list:
gives the names and addresses of potential distributors in the domestic market.
is provided by the United States and Foreign Commercial Service Agency.
can provide a firm free, customized market research survey on any product.
provides information gathering, technical assistance, and export subsidies.
According to Levitt, which of the following statements is true?
Technology drives the world toward a converging commonalty.
There are accustomed differences in national preferences.
The multinational corporation operates in a number of countries at low relative costs.
The global corporation operates with resolute consistency at high relative costs.
Which of the following statements is false?
Product reliability may be a more important attribute in most advanced countries.
Consumers in highly developed countries tend to build a lot of extra performance attributes into their products.
Consumers in the most developed countries are often not willing to sacrifice their preferred attributes for lower prices.
Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind.