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Q:
A zero-sum game is a situation in which:
A.the market mechanism determines what a country imports and what it exports.
B.a country engages in international trade even for products it is able to produce for itself.
C.an economic gain by one country results in an economic loss by another.
D.limits on imports are often in the interests of domestic producers, but not domestic consumers.
E.one country has an absolute advantage in the production of all goods.
Q:
An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:
A.the volume of a country's imports increases as an indirect consequence of mercantilism.
B.the exclusion of government influence in matters pertaining to trade is not ideal.
C.in the long run, no country could sustain a surplus on the balance of trade.
D.it was not backed by either sound political principles or social ideologies.
E.trade is a zero-sum game rather than a positive-sum game as postulated by the theory.
Q:
The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from exports. Which of the following theories prohibits such international trade?
A.New trade theory
B.Product life-cycle theory
C.Mercantilism
D.Heckscher-Ohlin theory
E.Theory of national competitive advantage
Q:
Which of the following is consistent with the central beliefs of mercantilism?
A.A country's government should intervene to achieve a surplus in the balance of trade.
B.A large volume of trade is essential regardless of whether it comes from imports or exports.
C.Trade is a positive-sum game in which all countries benefit from trading with each other.
D.A country that has an absolute advantage in the production of all goods derives no benefits from international trade.
E.Potential world production is greater with unrestricted free trade than it is with restricted trade.
Q:
Considered to be the first theory of international trade, the principal assertion of mercantilism is that:
A.countries differ in their ability to produce goods efficiently.
B.gold and silver are the mainstays of a country's wealth and essential to vigorous commerce.
C.countries should specialize in the production of goods for which they have an absolute advantage.
D.differences in labor productivity between nations underlie the notion of comparative advantage.
E.resources can move freely from the production of one good to another within a nation.
Q:
Which of the following is in a country's best interests, according to the main tenet of mercantilism?
A.Importing products from developing rather than developed countries
B.Importing products even if they are efficiently produced at home
C.Importing less specialized goods rather than attempting to make them at home
D.Minimizing exports and maximizing imports
E.Maintaining a trade surplus
Q:
Which of the following asserts that countries should simultaneously encourage exports and discourage imports?
A.Ethnocentrism
B.Capitalism
C.Collectivism
D.Mercantilism
E.Socialism
Q:
The argument for unrestricted free trade is that both import controls and export incentives:
A.help firms build a competitive advantage that is subsequently difficult to challenge.
B.help firms to capture first-mover advantages.
C.imply that a laissez-faire stance toward trade is in the best interests of a country.
D.are self-defeating and result in wasted resources.
E.are not in line with principles of mercantilism.
Q:
Salcia is a country that depends heavily on domestic products. The Salcian government decides on the products that can be imported and ensures that any product that can be produced at home is not imported. A major part of Salcia's trade is concentrated on exporting agricultural produce and textiles. Which of the following influences Salcia's approach to international trade?
A.Mercantilism
B.Leontief's paradox
C.Product life-cycle theory
D.New trade theory
E.Neo-Ricardian trade theory
Q:
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.The proportions in which the factors of production are available
C.International differences in labor productivity
D.The ability of firms to cope with late-mover disadvantages
E.The ability of firms to capture first-mover advantages
Q:
Sentoria is an island nation in the Pacific Ocean. Its geographical location is advantageous since it has access to a variety of aquatic life forms and also a number of freshwater sources that provide for fisheries. The lack of arable land drives local demand for seafood. The competition in the domestic fishing industry is fierce and enables Sentoria to be one of the major exporters of seafood. Which of the following theories of international trade best explains Sentoria's dominance as an exporter of seafood?
A.New trade theory
B.Product life-cycle theory
C.Mercantilism
D.Heckscher-Ohlin theory
E.Theory of national competitive advantage
Q:
Which of the following terms best represents a situation in which a government does not attempt to influence through quotas or duties what its citizens can buy from another country, or what they can produce and sell to another country?
A.Free trade
B.Positive-sum game
C.Socialism
D.Absolute advantage
E.Zero-sum game
Q:
Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.
Q:
Individual firms should invest substantial financial resources in trying to build a first-mover advantage, even if that means several years of losses before a new venture becomes profitable.
Q:
Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.
Q:
According to Michael Porter, government can influence each of the four components of Porter's diamondeither positively or negatively.
Q:
Michael Porter argues that advanced factors are the most significant for competitive advantage.
Q:
Porter argues that an absence of domestic rivalry is vital to the creation and persistence of international competitive advantage in an industry.
Q:
The new trade theory suggests that a country may predominate in the export of a good simply because it was lucky enough to have one or more pioneering firms to produce that good.
Q:
Factor endowments are unit cost reductions associated with a large scale of output.
Q:
The new trade theory emerged from the thought that the ability of firms to attain economies of scale might have important implications for international trade.
Q:
While Vernon's theory is useful for explaining the pattern of international trade in the modern world, its relevance during the period of American global dominance seemed more limited.
Q:
Viewed from an Asian or European perspective, Vernon's argument that most new products are developed and introduced in the United States seems ethnocentric and increasingly dated.
Q:
According to the product life-cycle theory, the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.
Q:
According to the product life cycle theory, as demand for a product starts to grow in other advanced countries, potential for exports from the United States will gradually increase.
Q:
Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by the firms situated in Germany and sold first in the German market.
Q:
When the impact of differences of technology on productivity is controlled for, Heckscher-Ohlin theory gains predictive power.
Q:
The Heckscher-Ohlin theory is the best predictor of real-world international trade patterns.
Q:
Most economists prefer Ricardo's theory to the Heckscher-Ohlin theory because it makes fewer simplifying assumptions.
Q:
Factor endowments refer to the extent to which free trade impacts the wealth of a country.
Q:
Despite the short-term adjustment costs associated with adopting a free trade regime, trade would seem to produce greater economic growth and higher living standards in the long run.
Q:
Free trade is likely to increase a country's stock of resources and the efficiency with which it utilizes those resources.
Q:
A certain amount of friction is involved when resources are required to move from one economic activity to another.
Q:
The Nobel Prize-winning economist Paul Samuelson argued that contrary to the standard interpretation, in certain circumstances the theory of comparative advantage predicts that a rich country might actually be worse off by switching to a free trade regime with a poor nation.
Q:
Ricardo's theory of comparative advantage is a major intellectual weapon for advocates of free trade because it provides a strong rationale for encouraging free trade.
Q:
According to the theory of comparative advantage, potential world production is greater with unrestricted free trade than it is with restricted trade.
Q:
According to Ricardo's theory of comparative advantage, it makes sense for a country to specialize in the production of those goods that it produces most efficiently and to import goods that it produces less efficiently.
Q:
According to Adam Smith, countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries.
Q:
In his book The Wealth of Nations, Adam Smith supported the mercantilist assumption that trade is a zero-sum game.
Q:
A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.
Q:
The major advantage of mercantilism was that it viewed trade as a zero-sum game.
Q:
The main tenet of mercantilism was that it was in a country's best interests to maintain a trade surplus.
Q:
The first theory of international trade that emerged in England asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.
Q:
New trade theory stresses that in some cases countries specialize in the production of particular products because of underlying differences in factor endowments.
Q:
Limits on imports are often in the interests of domestic consumers, but not domestic producers.
Q:
Smith, Ricardo, and Heckscher-Ohlin suggested that a country's economy would gain only if its citizens buy products that are made in that country.
Q:
The theories of Smith, Ricardo, and Heckscher-Ohlin failed to identify the specific benefits of international trade.
Q:
According to Adam Smith, market mechanism, rather than government policy, should determine a country's imports and exports.
Q:
David Ricardo's theory of comparative advantage was the first to explain why unrestricted free trade is beneficial to a country.
Q:
Free trade refers to a situation in which a government, through quotas or duties, attempts to influence what its citizens can buy from another country, or what they can produce and sell to another country.
Q:
Although mercantilism is an old and largely discredited doctrine, its echoes remain in modern political debate and in the trade policies of many countries.
Q:
Mercantilism, propagated in the sixteenth and seventeenth centuries, advocated that countries should simultaneously encourage both imports and exports.
Q:
Which of the following statements is true about the Sullivan principles?
A.They were widely opposed by U.S. firms, such as General Motors, operating in South Africa.
B.They promoted the abolition of apartheid laws.
C.It has been argued that they led to the violation of human rights in South Africa.
D.They were against the introduction of democratic elections in South Africa.
E.Western businesses that followed them were considered unethical.
Q:
The Sullivan principles attempted to fight against:
A.globalization.
B.apartheid laws.
C.legalization of facilitating payments.
D.democratic structures.
E.anti-dumping laws.
Q:
Which of the following refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization.
A.strategy
B.goodwill
C.ethics
D.mission
E.vision
Q:
Ethics officers act as an internal ombudsperson with responsibility for handling confidential inquiries from employees.
Q:
To strengthen the moral courage of employees, companies should not retaliate against those employees who complain about unethical actions.
Q:
The first step in an ethical algorithm is to identify those common resources that are not owned by anyone in particular but are used by everybody.
Q:
The internal stakeholders of a company do not have an exchange relationship with the company.
Q:
Business leaders should use every relevant opportunity to stress the importance of business ethics and make sure that key business decisions not only make good economic sense but also are ethical.
Q:
John Rawls's veil of ignorance is a conceptual tool that contributes to the moral compass that managers can use to help them navigate through difficult ethical dilemmas.
Q:
According to John Rawls's difference principle, wide variations in income and wealth can be considered just if the market-based system that produces this unequal distribution also benefits the least-advantaged members of society.
Q:
John Rawls argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage.
Q:
Multinational corporations do not qualify to act as moral agents within the framework of rights theories.
Q:
The action that produces the greatest good for the greatest number of people can result in the unjustified treatment of a minority.
Q:
Kantian ethics asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.
Q:
The righteous moralist's approach to ethics is typically associated with managers from developed nations.
Q:
A righteous moralist claims that while operating in a foreign country, a multinational company should follow the ethical standards of the host country.
Q:
According to the concept of cultural relativism, a firm, while operating in any host country, should adopt the ethics of the culture that is predominant in its home country.
Q:
According to Milton Friedman, businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.
Q:
According to Friedman's doctrine, the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.
Q:
Enterprises headquartered in a country which scores high on masculinity and power distance measures are more likely to behave ethically than enterprises headquartered in a culture where individualism and uncertainty avoidance are strong.
Q:
An organizational culture that requires all decisions to be purely economic allows unethical behavior to flourish and persist.
Q:
Societal business ethics are not divorced from personal ethics.
Q:
Ethical dilemmas are situations in which only one of the available alternatives seems ethically acceptable.
Q:
Noblesse oblige is a French term referring to those multinationals that have unethically used their power for private gain.
Q:
The power of a multinational corporation is constrained not only by laws and regulations, but also by the discipline of the market and the competitive process.
Q:
The concept of corporate social responsibility (CSR) refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions.
Q:
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member-states and other signatories to make the bribery of foreign public officials a criminal offense.
Q:
The Foreign Corrupt Practices Act does not allow for "facilitating payments."