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International Business
Q:
In a customs union, common external tariffs are added to an existing FTA, as found in the Southern African Customs Union and Mercosur.
Q:
Economic cooperation often begins with a common market, as in the case of the EU.
Q:
Recently, regional trade agreements have grown, a trend that may be seen to strengthen the WTO, according to the text.
Q:
The WTO has negotiated a TRIPS agreement whereby property rights do not take precedence over public health.
Q:
Although India is a member of the WTO and has benefited greatly from increased trade as a result of WTO agreements, China is not yet a member.
Q:
The Doha Development Agenda is an extended development plan for Doha, Qatar.
Q:
The WTO supports trade with discrimination as a basic right of trading nations.
Q:
The International Finance Corporation (IFC) acts as an investment banker, arranging private risk ventures in developing countries.
Q:
The World Bank is made up of one large institution, IBRD.
Q:
Some think that renewed focus on exchange rates would be a good path forward for the IMF, which is struggling with core issues related to its purpose.
Q:
The World Bank funds infrastructure projects in developed countries.
Q:
The Bretton Woods Conference established the European Union currency, the euro.
Q:
By and large, the UN record of facilitating business transactions has been minor.
Q:
The UN International Court of Justice hears cases that involve disputes between national governments.
Q:
Permanent members of the UN Security Council vote on Security Council measures, and only the secretary-general of the UN, Ban Ki-Moon, has veto power.
Q:
The UN Environment Programme laid the groundwork for the Climate Change Convention, which led to the Kyoto Protocol.
Q:
The United Nations operates with voluntary agreements, so it is essentially an informal institution.
Q:
International institutions provide nations the opportunity to build multilateral solutions, and thus make significant contributions to international stability.
Q:
Informal cognitive institutions are not important to international managers because such managers localize their hiring, and so they can draw on local talent.
Q:
One of the significant differences between formal and informal institutions is how they gain compliance.
Q:
New institutional theory suggests that institutions be understood as collections of rules and codes of conduct that limit behavior.
Q:
As discussed in the chapter, institutions are organizations constructed to create jobs for government employment initiatives.
Q:
Describe the impact of the EU on a non-EU firm.
Q:
Economic integration agreements are nice for the insiders, such as the United States, Mexico, and Canada with NAFTA, but they stand in the way of WTO progress because they violate basic guidelines of the WTO. Agree or disagree.
Q:
The five principles of the WTO (trade without discrimination, freer trade, predictability, fair competition, and encouraging development and economic reform), if followed, would provide developing nations a boost in their development. Agree or disagree.
Q:
Given what you have read about institutional theory, comment on the quote from William Inge, former dean of St. Paul's, London: "Every institution not only carries with it the seeds of its own dissolution, but prepares the way for its most hated rival."
Q:
Discuss the observation made recently by an undergraduate philosophy major that "the major international institutions are concerned with keeping the rich countries rich, at the expense of the poorer ones."
Q:
The most serious recent challenge to the EU has been:
A. the recent financial crisis.
B. the arrest of the IMF's Strauss-Kahn.
C. immigration-provoked social unrest.
D. weather changes that have resulted in rising sea levels and warmer temperatures.
Q:
Which country does not belong to the OECD?
A. Belgium
B. France
C. Japan
D. China
Q:
Two good places to begin country-level research are the websites of the:
A. CIA and UN.
B. UN and WTO.
C. BIAC and CIA.
D. specific country's government and OECD.
Q:
The OECD has encouraged members to:
A. develop trade relationships within the OECD only.
B. eliminate bribery in all commercial transactions.
C. standardize electrical wave signals.
D. extend their tax regulations beyond their borders.
Q:
The main purpose of the OECD is to:
A. provide economic research and a discussion forum.
B. function as a developed-nation cartel.
C. limit growth in developing economies.
D. support trading patterns within the group of developed nations.
Q:
The OECD is called the "rich man's club" because its members:
A. are rich and male.
B. are 34 of the world's wealthiest nations.
C. are concerned with increasing their own wealth rather than promoting development.
D. promote wealth at the cost of health and safety.
Q:
EU rulings:
A. affect all businesses headquartered within the EU.
B. affect all businesses within the EU and those that trade within the EU.
C. limit businesses outside the EU but not in the United States.
D. are of no importance outside the EU.
Q:
International institutions offer graduating international business majors:
A. interesting career development and internship opportunities.
B. funded study-abroad programs.
C. language training in major languages used in trade.
D. export-import process training.
Q:
International institutions are important to international business managers because, in general, they:
A. limit financial responsibility of business.
B. promote development.
C. limit choices, thereby providing ways to settle disagreements and resolve conflicts.
D. encourage immigration and labor mobility.
Q:
The UN is important to international business for many reasons, including that it:
A. develops standards and norms in technical areas.
B. monitors trade patterns.
C. arranges trade missions to developing nations.
D. arranges international funding for business education.
Q:
"Trade without discrimination" in the WTO means that
A. the MFN principle can be ignored.
B. all trading partners must be treated the same.
C. racially based trading patterns are tolerated.
D. developing and developed nations must be separated for trading purposes.
Q:
How many countries in the EU use the euro as their currency?
A. 17
B. 23
C. 15
D. 7
Q:
The following country is not a member of ASEAN:
A. Indonesia.
B. Vietnam.
C. Cambodia.
D. China.
Q:
The Organization for Economic Cooperation and Development provides information on:
A. military alliances.
B. economic and other activities within its member-nations.
C. trade imbalances for nonmember countries.
D. sovereign debt risk.
Q:
ASEAN began as a:
A. free trade pact.
B. cooperative marketing alliance among Southeast Asian nations.
C. security and military alliance among Southeast Asian nations.
D. response to the EU.
Q:
The main difference between a free trade area (FTA) and a customs union is that in a customs union, there is:
A. no need for passport controls.
B. a shared border patrol.
C. shared currency.
D. a common external tariff.
Q:
The results of liberalized trade so far have been:
A. beneficial for developing economies.
B. harmful for developing economies.
C. unconnected to developed economies.
D. uneven for developing and developed economies.
Q:
The Doha Development Agenda is:
A. a WTO conference on trade.
B. an agreement on climate control and greenhouse gases.
C. a decision-making approach to development.
D. a development rules list.
Q:
The idea that WTO members treat all members equally is known as:
A. the transparency principle.
B. the fairness principle.
C. the equity and equality principle
D. the MFN (most-favored-nation) principle.
Q:
The first principle of the WTO's five basic principles is trade without:
A. negotiation.
B. economic reform.
C. discrimination.
D. competition.
Q:
The WTO is the only international organization designed to establish and help implement:
A. efforts at peace between nations.
B. rules of trade among nations.
C. security measures between nations.
D. strategic planning for developing nations.
Q:
The purpose of the International Financial Corporation (IFC) is to invest in companies and financial institutions in developing countries in order to build:
A. infrastructure.
B. trade routes.
C. domestic logistics.
D. domestic capital markets.
Q:
IDA's purpose is to loan to:
A. the poorest nations.
B. middle-level-income nations needing infrastructure.
C. developed nations for use in trade stimulus efforts.
D. any nation with collateral.
Q:
The geographical area that receives the most International Development Association (IDA) credits and grants is:
A. East Asia.
B. Latin America and the Caribbean.
C. Africa.
D. Middle East.
Q:
The World Bank's two major institutions are the International Development Association and the:
A. Collateral-Based Lending Agency.
B. International Bank for Reconstruction and Development (IBRD).
C. International Microloan Bank.
D. International Bank for Development.
Q:
That the common interest of all nations in a workable international exchange rate system transcends their conflicting international interests is the premise of:
A. the International Monetary Fund (IMF).
B. the Bank for International Settlements.
C. the World Central Bank.
D. the World Bank for Reconstruction and Development.
Q:
At the end of World War II, the UN called for the conference that set up the World Bank and the IMF. This conference was:
A. convened in San Francisco.
B. held at Yalta.
C. held at Grasleben, Germany.
D. held at Bretton Woods, New Hampshire.
Q:
The UN's International Court of Justice (ICJ) is also known as:
A. the Court of Europe.
B. the Court of International Law and Regulations (CILR).
C. the International Court of Peace.
D. the World Court.
Q:
All UN member-countries belong to the UN's:
A. Peace Jurga.
B. General Assembly.
C. Internal Court of Justice.
D. Committee on Intelligence.
Q:
The United Nations is probably the best known among:
A. for-profit organizations.
B. social service organizations.
C. international organizations.
D. military organizations.
Q:
The Chinese concept of guanxi is an example of:
A. an informal, cognitive institution.
B. a regulative, formal institution.
C. a favorite cooking method of Chairman Mao.
D. taken-for-granted approaches to friendship relations.
Q:
Informal institutions are composed of sets of:
A. mandatory agreements, a bit like the mind's software.
B. orthodox accords whose goal is to establish rigor.
C. agreements that are for the most part written and taken for granted.
D. voluntary agreements.
Q:
This type of institution operates through laws and regulations, with coercion as the regulative mechanism.
A. formal
B. informal
C. normative
D. cognitive
Q:
In developing economies, informal institutions tend to play a greater role than in developed economies, possibly because
A. the developing economies have more ambiguity and lack formal institutions by definition, so informal institutions step into the breach.
B. developing economies show cultural preference for informality.
C. informal institutions emerge to give order to the unstructured, chaotic environment.
D. A and C.
Q:
Under new institutional theory, institutions can be categorized as formal and informal, and the informal institutions can be further categorized as:
A. normative and cognitive.
B. normal and abnormal.
C. informally cognitive and formally cognitive.
D. effective and ineffective.
Q:
The EU's impact on international business is:
A. negligible, since the EU members tend to trade with each other.
B. not significant, since the EU members need to trade with other developed economies.
C. substantial, since EU standards, especially in the areas of ecology and sustainability, impact any firm that wants to do business in the EU.
D. substantial, since the EU is a major exporter into developing nations.
Q:
The impact of the EU on the WTO could be said to be negative, since:
A. a country could belong to only one of these organizations.
B. the favored trade relationships among EU members are not extended to nonmember countries, so the EU undercuts the WTO.
C. the euro threatens other hard currencies supported by the WTO, such as the dollar and the yen.
D. the WTO does not collect dues from EU member-nations.
Q:
The Council of European Union, the primary policy-setting institution of the EU, is composed of:
A. the member-states' prime ministers or presidents.
B. the member-states' ministers who represent the specific area being discussed.
C. elected members from across Europe, elected by country.
D. appointed representatives from each member-state.
Q:
The EMU (European Monetary Union or Economic and Monetary Union) has established the euro, a currency that is used in:
A. all of the EU.
B. all of the EU and much of the rest of Europe.
C. 16 of the EU member-countries.
D. the Bank for International Settlements and the IMF.
Q:
The Treaty of Rome, signed in 1957, established a common market for coal and steel for:
A. West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy.
B. England, Ireland, Northern Ireland, Scotland, Wales, and France.
C. Finland, Sweden, Norway, West Germany, Denmark, and Switzerland.
D. Austria, Hungary, Slovakia, Poland, Romania, and Bulgaria.
Q:
The EU began as a common market for:
A. all imported goods from beyond Europe.
B. the textile and dairy industries.
C. the transportation industries.
D. the coal and steel industries.
Q:
NAFTA maintains restrictions on the movement of labor, a limitation that suggests it is:
A. a free trade area.
B. a common market.
C. not in compliance with WTO regulations.
D. B and C.
Q:
ASEAN began as a defensive alliance of 10 Asian nations concerned about:
A. trade barriers in the West.
B. translation issues for their export products.
C. the spread of communism in their region.
D. Japan's influence in the region.
Q:
Most African nations have their main trade relationships:
A. within local FTAs.
B. with other African nations due to transport costs.
C. with developed nations, often built on former colonial ties.
D. with China.
Q:
Economic integration often progresses:
A. in stages, from free trade area to customs union to common market.
B. in stages, totally dependent on the members' national economic strength.
C. as a result of cultural beliefs and economic strength.
D. in unpredictable ways due to unintended consequences.
Q:
In a free trade area, members drop internal tariffs. External tariffs:
A. are dropped also.
B. are coordinated so that there is one agreed-upon set of external tariffs.
C. are maintained independently by each member.
D. do not apply to an FTA.
Q:
Discuss Dunning's eclectic theory of international production as a theory to explain flows of international trade and foreign direct investment.
Q:
Discuss the keystone of international trade, the theory of comparative advantage.
Q:
Discuss the theory of absolute advantage and how it explains the basis for trade between nations.
Q:
Explain the logic of mercantilism and why it is generally viewed as a deficient theory.
Q:
Discuss the advantages in focusing attention on a nation that is already a sizable purchaser of goods coming from the exporter's home country.
Q:
Dunning's eclectic theory of international production states that if a firm is going to invest in production facilities abroad, it must have the following kinds of advantages:
A. ownership specific, location specific, and internationalization.
B. strategic, organizational, and technological.
C. political, technological, and human resource.
D. technological, financial, and human resource.
E. none of the above.
Q:
The monopolistic advantage theory states that:
A. a firm that has a monopoly has a major advantage in overseas investment.
B. FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.
C. a firm that has a monopoly domestically will have no competition making overseas investments.
D. the firm making the overseas investment first has a monopolistic advantage.
E. none of the above.