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INTERNATIONAL BUSINESS PRACTICE TEST
Question 1 : The country of Dalima has long been a substantial exporter of agricultural goods, reflecting its unusual abundance of arable land; in contrast, its continental neighbor, Bundeeza, has excelled in the export of goods produced in labor-intensive manufacturing industries. The export policies of the two countries is best explained by A. mercantilism. C. theory of absolute advantage. B. Heckscher-Ohlin theory. D. theory of comparative advantage. Question 2 : The creation of a single market through regional economic integration offers significant opportunities because markets that were formerly protected from foreign competition are increasingly open. A. True B. False Question 3 : The country of Argonia and the country of Berylia imposed tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Argonia now begins to import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a higher cost. Thus, Argonia benefits from this transaction. This is known as A. strategic pricing. C. Protectionism. B. trade creation. D. trade diversion Question 4 : The Republic of Marunia believes that it is in its best interests to maintain a trade surplus, to export more than it imports. In so doing, the Republic of Marunia hopes to accumulate gold and silver, and consequently, increase its national wealth, prestige, and power. Which of the following influences the Republic of Marunia's approach to international trade? A. new trade theory C. product life circle theory B. mercantilism D. neo-Ricardian trade theory Question 5 : Globalization opponents argue that "exporting jobs" to low-wage nations has contributed to A. an increase in the income levels in those nations that "export" the jobs. B. lower standards of living in those countries to which the jobs are exported. C. higher living standards in those countries that "export" the jobs. D. higher unemployment in wealthy advanced economies such as the United States.
Question 6 : Which of the following factors is taken into consideration by David Ricardo's theory of comparative advantage in order to explain the pattern of international trade? A. absolute advantage of a country with reference to natural resources B. proportions in which the factors of production are available C. international differences in labor productivity D. ability of firms to capture first-mover advantages Question 7 : Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade? A. comparative advantage C. new trade B. Heckscher-Ohlin D. absolute advantage Question 8 : Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in turn exports chemicals and medicines t Argonia. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates A. the significance of trade barriers. B. a zero-sum game. C. the advantages of mercantilism. D. a positive-sum game. Question 9 : The new trade theory states that A. differences in technology may lead to differences in productivity, which in turn drives international trade patterns. B. differences in labor productivity between nations underlie the notion of comparative advantage. C. world trade in certain products may be dominated by countries whose firms were first movers production. D. the locus of global production initially switches from the United States to other advanced nations Question 10 : New trade theory stresses that in some cases countries specialize in the production of particular products because of underlying differences in factor endowments. A. True B. False
C. Regional economic integration benefits producers because they do not have to adapt to a more competitive environment. D. Agreements designed to promote freer trade within regions have failed to produce gains from trade for all member countries. Question 18 : As a result of the formation of a free trade area between six member countries in the Pacific Rim, the member country of Rimho found that its lower-cost external suppliers were replaced by higher-cost suppliers within the free trade area. This is an example of A. strategic pricing. B. trade diversion. C. synergy. D. trade creation. Question 19 : The six member countries of the Murasian Common Market are unhappy with the outcome of their economic integration. They want something that entails a closer economic integration and cooperation than a common market and want to pursue a common currency. They should form a(n) A. customs union. C. free trade area. B. command economy. D. economic union. Question 20 : SMEAN is an economic union of six geographically close countries. Which of the following is true with regard to SMEAN? A. It involves the free flow of products and factors of production among member countries. B. It allows member countries to have their own individualized currency. C. There are restrictions on immigration, emigration, or cross-border flow of capital among member countries. C. There are restrictions on immigration, emigration, or cross- boarder flow of capital among member countries. D. It has a central political apparatus that coordinates the economic, social, and foreign policy of the member-states. Question 21 : The countries of Mesomia, Candera, Blauthop, and Rochus are committed to removing all barriers to the free flow of goods and services between each other but want to pursue independent external trade policies. The countries have in mind a(n) A. free trade area. C. common market. B. customs union. D. economic union.
Question 22 : Supporters of globalization insist that dislocation in the form of lost jobs is a trade- off that will ultimately lead to the economy being better off. Which of the following is being justified in this case? A. rise of communism B. high tariff on imports of manufactured goods C. protectionism and retaliatory trade policy D. free trade of goods and services Question 23 : In a free trade area, all barriers to the trade of goods and services among member countries are removed and a common external trade policy is adopted. A. True B. False Question 24 : According to Geert Hofstede, high power distance cultures were found in societies that tried to play down inequalities of power and wealth as much as possible. A. False B. True Question 25 : According to Adam Smith, market mechanism, rather than government policy, should determine a country's imports and exports. A. True B. False Question 26 : ABC Company, which is headquartered in the United States, has production plants in Mexico and Vietnam. According to this information, ABC company is A. a multinational enterprise C. against globalization. B. engaging in the globalization of markets. D. engaging in international trade. Question 27 : West Electronic Corporation sources goods and services for its electronics products from different locations around the globe in an attempt to take advantage of differences in the cost and quality of labor and land, This practice demonstrates the A. dislocation of a developing nation's economy. C. globalization of markets. B. restriction on foreign direct investment. D. globalization of production. Question 28 : According to Michael Porter, government can influence each of the four components of Porter's diamond-either positively or negatively. A. True B. False
D. Tariff barriers determine the flow of goods and services between nations. Question 34 : Which of the following components of Porters diamond is particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality? A. factor endowments B. firm strategy C. demand conititions D. supporting industries Question 35 : Salcia is a country that depends heavily on domestic products. The Saloian government decide onthe products that can be imported and ensures that any product that can be produced at home is not imported. A major part of Salela's traite is concentrated on exporting agricultural produce and textiles. Which of the following influences Salcia's approach to international trade? A. leontief's paradox C. new trade theory B. mercantilism D. Product life cycle theory Question 36 : According to the Heckscher-Ohlin theory, the pattern of international trade is determined by differences in A. diminishing returns. C. labor productivity B. factor endowments D. trade barriers. Question 37 : Which of the following supports the economic case for regional economic integration? A. International institutions such as the World Trade Organization have been moving the world away from a free trade regime. B. The greater the number of countries involved in a free trade agreement, the fewer the perspectives that must be reconciled. C. Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement D. It is difficult to establish a free trade and investment regime among a limited number of adjacent countries as compared to the world community. Question 38 : Rituals and symbols are the most visible manifestations of a culture and constitute the outwardexpression of deeper values. A. True B. False
Question 39 : Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by this form of trade between Cadmia and Rhodia? A. absolute advantage C. Heckscher-Ohlin B. mercantilism D. product life-cycle theory Question 40 : Palladia specializes in the production of beef and produces beef more efficiently than any other country. It buys wheat, which it produces less efficiently than beef, from Rhodia, even though it produces wheat more efficiently than Rhodia. Which of the following theories of international trade supports Palladia's decision to buy wheat from Rhodia? A. Samuelson critique C. Ricardo's theory of comparative advantage B. mercantilism D. Adam Smith's theory of absolute advantage II. CASE STUDY : (40 marks) In his 2016 presidential campaign, Donald Trump repeatedly criticized the North American Free Trade Agreement (NAFTA) as an unfair deal in which Americans had been taken to the cleaners by Mexico. Trump claimed that NAFTA had cost American manufacturers millions of jobs, even though there is little evidence to suggest this is the case. After becoming president, Trump stuck to his word and initiated a renegotiation of NAFTA Trump's anti-NAFTA stance sent shockwaves through industry on both sides of the border. Since NAFTA was signed in 1994, trade between the United States, Canada, and Mexico has tripled to $1.3 trillion. In 2017, the United States exported $342 billion of goods and services to Canada, and $277 billion to Mexico, while importing 5339 billion from Canada and $35 bilion from Mexico. The 13.5 ran a $2.8 billion surplus in trade with Canada, and a 569 billion defich with Mexico, Canada and Mexico are now the largest export markets for ese United States, accounting for a third of all US exports, and the largest sources of imports behind China The renegotiation of NAFTA was complicated by the fact that multilayered supply chains now span both sides of the US-Mexico border. Nowhere is this more true than in the automobile industry. Auto parts manufactured in the United States may be shipped to plants in Mexico, where finished cars are assembled and then shipped back to the United States for final sale (the converse also occurs, with parts manufactured in Mexico being shipped to U.S. final assembly plants) in 2017, U.S. producers exported $21 billion of finished automobiles and automotive parts to Mexico, but imported $84 billion in autos and parts from Mexico. Without that $ billion trade deficit in autos and auto parts, the United States would be running only a $6 billion trade deficit with Mexico
QUIUZLET
- Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States? The US has a special adv in producing new products made with innovative technologies
- Which of the following terms best represents a situation in which a government does not attemp to influence through quotas or duties what its citizens can buy from other countries? Free trade
- The difference btwn Ricardo’s theory and the Heckscher- Ohlin theory is that the Heckscher-Ohlin theory argues that the pattern of International traade is determined by differences in national factor endowments
- Considered to the 1 st^ theory of the international trade, the principle assertion of mercantilism is that gold and silver are the mainstays of a country’s wealth ans essential to vigorous commerce
- In zombia, it takes 10 resources to produce 1 ton of coca and 13.5 to produce 1 ton of rice. In South Curmudgea, it takes 40 resources to produce 1 ton caca and 20 ton rice. Zombia has a comparative adv over South Curmudgea in coca. This follws the theory of comparative adv and we can say that engaging free trade benefits all countries that participate on it. Which of the following is incorrect assumption on which this conclution is based? We have assumed contant returns to scale
- Which of the following asserts that countries should simultaneously encourage exports and discourage imports? Mercantilism
- The New trade theory states that World trade in certain products may be dominated (trội hơn) by countries whose firms were 1st^ movers in their production
- According to Herscher- Ohlin theory, the pattermn of International trade is determined by differences in factor endowments
- Government intervention in International trade can take a form of reducing restrictions on Inport and adopting policies that promte Export
- Franching is essentially the service industry version of licensing, although it takes much longer term commitments than licensing
- Which of the following is true about regional economics integration? Regional economics integration is good for consumer because it lower prices
