1. What are the four factor endowments?
A. national resources, labor, physical capital and human capital
B. types of technology
C. material inputs used up in the process of production
D. international differences in climate
Answer
A. national resources, labor, physical capital and human capital
2. The Heckscher- Ohlin model is principally focused on what aspect of economics?
A. international trade
B. supply and demand
C. normative economics
D. production possibility frontier
Answer
A. international trade
3. A no-trade world will have which of the following characteristics:
A. countries will have same relative endowments of production factors
B. consumers across countries will have identical and homogenous tastes
C. there will be no distortions or externalities
D. all of the above
Answer
D. all of the above
4. Transportation cost of trade affects:
A. pattern of trade
B. boundaries between tradable and non-tradable goods
C. global supply chains
D. all of the above
Answer
D. all of the above
5. International Trade is most likely to generate short-term unemployment in:
A. industries in which there are neither imports nor exports
B. import-competing industries
C. industries that sell to domestic and foreign buyers.
D. industries that sell to only foreign buyers
Answer
B. import-competing industries
6. What was the first economic theory of international trade to be developed?
A. the theory of mercantilism
B. the theory of comparative advantage
C. the theory of absolute advantage
D. the heckscher-ohlin theory
Answer
A. the theory of mercantilism
7. According to Adam Smith, the trade between countries should happen ___
A. naturally according to the market forces
B. under government regulation
C. using factors that are available
D. only when a country has an absolute advantage
Answer
D. only when a country has an absolute advantage
8. If a nation has an open economy it means that the nation:
A. allows private ownership of capital.
B. has flexible exchange rates
C. has fixed exchange rates
D. conducts trade with other countries
Answer
D. conducts trade with other countries
9. International trade forces domestic firms to become more competitive in terms of
A. the introduction of new products
B. product design and quality
C. product price
D. all of the above
Answer
D. all of the above
10. The movement to free international trade is most likely to generate short-term unemployment in whichindustries
A. industries in which there are neither imports nor exports
B. import-competing industries.
C. industries that sell to domestic and foreign buyers
D. industries that sell to only foreign buyers
Answer
B. import-competing industries.
11. According to the principle of comparative advantage:
A. south korea should export steel
B. south korea should export steel and dvds
C. japan should export steel
D. japan should export steel and dvds
Answer
A. south korea should export steel
12. Country A has an absolute advantage in
A. product x
B. product y
C. neither x nor y
D. both x and y
Answer
B. product y
13. Globalization refers to:
A. lower incomes worldwide
B. less foreign trade and investment
C. global warming and their effects
D. a more integrated and interdependent world
Answer
D. a more integrated and interdependent world
14. Comparative Cost Trade Theory is given by
A. adam smith
B. david ricardo
C. gottfried haberle
D. heckscher ohlin
Answer
B. david ricardo
15. ___ is the payment method most often used in International Trade which offers the exporter bestassurance of being paid for the products sold internationally.
A. bill of lading
B. letter of credit
C. open account
D. drafts
Answer
B. letter of credit
16. Key controllable factors in global marketing are:
A. government policy and legislation
B. social and technical changes
C. marketing activities and plans
D. all of the above.
Answer
C. marketing activities and plans
17. The first phase of globalization started around 1870 and ended with ___
A. world war i
B. world war ii
C. the establishment of gatt
D. in 1913 when gdp was high
Answer
A. world war i
18. According to this theory, the holdings of a country’s treasure primarily in the form of gold constituted itswealth.
A. gold theory
B. ricardo theory
C. mercantilism
D. hecksher theory
Answer
C. mercantilism
19. The Theory of Absolute Cost Advantage is given by
A. david ricardo
B. adam smith
C. f w taylor
D. ohlin and heckscher
Answer
B. adam smith
20. The Theory of Relative Factor Endowments is given by
A. david ricardo
B. adam smith
C. c. f w taussig
D. ohlin and hecksher
Answer
D. ohlin and hecksher
21. The theory of comparative cost advantage is given by
A. david ricardo
B. adam smith
C. f w taussig
D. ohlin and heckscher
Answer
A. david ricardo
Multinational Enterprises
22. A multinational is a firm that controls and manages production facilities in
A. both developed and developing countries
B. at least two countries
C. one country but relies on multiple markets for the consumption of goods it produces
D. at least two developed countries and one developing country
Answer
B. at least two countries
23. Locational advantages are based on which combination of the following specific country characteristics
A. a large reserve of natural resources, a large local market and efficiency opportunities
B. a small reserve of natural resources, a large local market and efficiency opportunities
C. a small reserve of natural resources, a small local market and efficiency opportunities
D. a large reserve of natural resources, a small local market and efficiency opportunities
Answer
A. a large reserve of natural resources, a large local market and efficiency opportunities
24. Horizontal integration occurs when
A. firm creates singular country production facilities, each of which produces different good or goods
B. firm creates multiple production facilities, each of which produces the same good or goods.
C. firm creates multiple production facilities, each of which produces different good or goods
D. firm creates singular country facilities, each of which produces the same good or goods
Answer
B. firm creates multiple production facilities, each of which produces the same good or goods.
25. Which of the following would be an example of foreign direct investment from the United States toTaiwan?
A. a u.s. bank buys bonds issued by a taiwan computer manufacturer.
B. a u.s. car manufacturer enters into a contract with a taiwan firm to make and sell it spark plugs.
C. microsoft hires a taiwanese computer programmer to debug some software for it.
D. the state of california rents space in taipei for one of its employees to use promoting tourism in
Answer
B. a u.s. car manufacturer enters into a contract with a taiwan firm to make and sell it spark plugs.
26. If a German manufacturer of household appliances wants to take advantage of the cheaper labor availablein the Czech Republic, which of the following actions will not serve that purpose?
A. build a manufacturing subsidiary there and employ czech workers.
B. build a plant in the czech republic and send all german workers to operate it.
C. license a czech firm to produce its products under its own label.
D. contract for a czech firm to do some of the processing for it.
Answer
B. build a plant in the czech republic and send all german workers to operate it.
27. Which of the following was created in an effort to promote free trade?
A. world trade organization
B. the sarbanes-oxley act
C. multilateral development banks
D. the organization for economic cooperation and development
Answer
A. world trade organization
28. . Removing barriers or restrictions set by the government is called:
A. liberalisation
B. investment
C. favorable trade
D. free trade
Answer
A. liberalisation
29. Which is the right sequence of stages of Internationalization
A. domestic, transnational, global, international, multinational
B. domestic, international, multinational, global, transnational
C. domestic, multinational, international, transnational, global
D. domestic, international, transnational, multinational, global
Answer
B. domestic, international, multinational, global, transnational
30. Subsidiaries consider the regional environment for policy / Strategy formulation is known as
A. polycentric approach
B. regionocentric approach
C. ethnocentric approach
D. geocentric approach
Answer
B. regionocentric approach
31. . Which is not an Indian Multinational Company?
A. unilever
B. asian paints
C. piramal
D. wipro
Answer
A. unilever
32. 18. Select example of Indian Multinational Company
A. hindustan unilever
B. videocon
C. cargill
D. tesco
Answer
B. videocon
33. ___ corporation produces in the home country or in a single country and focuses on marketingthese products globally or vice a versa.
A. global
B. international
C. transnational
D. none of the above
Answer
A. global
34. The —————-company produces, markets, invests and operates across the world
A. global
B. international
C. transnational
D. multinational
Answer
C. transnational
35. Business across several countries with some decentralization of management decision making tosubsidiaries is
A. global business.
B. multinational business.
C. transnational business.
D. multi-regional business.
Answer
B. multinational business.
36. Immobility of labor among nations is
A. absolute.
B. relatively of a higher degree than among regions in the same country.
C. relatively easier than movement within the country.
D. of the same degree as within the country.
Answer
B. relatively of a higher degree than among regions in the same country.
37. The following factor does not differentiate international business from domestic business
A. different currencies
B. product quality
C. product mobility
D. trade policies
Answer
B. product quality
38. By entering into international business, a firm expects improvement in
A. marketing.
B. all spheres of marketing, operation and finance simultaneously.
C. any or all spheres of marketing, operation and finance.
D. finance only
Answer
C. any or all spheres of marketing, operation and finance.
more mcqs
39. Theory of Mercantilism propagates
A. encourage exports and imports
B. encourage exports and discourage imports
C. discourage exports and imports
D. discourage exports and encourage imports
Answer
B. encourage exports and discourage imports
40. Free international trade maximizes world output through
A. countries specializing in production of goods they are best suited for.
B. reduction in taxes.
C. increased factor income.
D. encouraging competition.
Answer
A. countries specializing in production of goods they are best suited for.
