C211
- Which political view of foreign direct investment (FDI) is most widely used by governments in the current
international business environment?
Radicalism
Protectionism
Communism
nationalism - Which factors predict the degree of rivalry between a pair of competitors? 2 choices
Market commonality
Cost structure
Resource similarity
Organizational structure - Which factors predicts how local firms in emerging economics will respond to multinational competitors?
Competitive assets and industry pressures to globalize
Formal and informal institutions
Market dominance and market fragmentation
Cooperation and signaling - During which stage of the product life cycle do sales and profits gradually increase before seeing more
dramatic increases?
Introduction
Maturity
Growth
Decline - Which factor determines the foreign exchange rate any currency?
Universal trade of the currency
Supply and demand for the currency
The age of the currency
Business economics of the currency - Which risk must a corporation minimize if it is to effectively manage short-term currency fluctuations?
Beta risk
Hedging
Alpha risk
Transaction risk - Which policy does a country use to determine the exchange rate of their currency in relationship to
another country’s currency if they do not rely on market forces?
Clean float rate policy
Fixed rate policy
Flexible rate policy
Floating rate policy - Which term refers to trading currencies and currency derivatives in order to earn profits and help make
prices efficient?
Investing
Brokering
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C211 OA Global Economics Exam 2022/2023
Day trading
Speculation
- Which type of advantage is gained by a company based on where it operates?
Lifecycle-specific
Innovation-specific
Institution-specific
Location-specific - Who gains from erecting significant entry barriers for other entrants?
Late mover
Early movers
Laggard
First movers - Which strategy for entering into a foreign market has the lowest degree of risk?
Wholly-owned subsidiary
Joint venture
Foreign acquisition
Licensing - What is a non-equity mode involving some type of contractual agreement?
Minority joint venturing
Direct exporting
Licensing
Acquisition - After the Lehman Brothers collapse, the federal Reserve stood ready to lend financial institutions
funds. When the Federal reserve did this, it was acting in its role as a lender of last resort. Which type of
group has this role?
Informal institution
Nongovernmental organization
Formal institution
Government agency - What is the comprehensive free-trade settlement among Canada, US, and Mexico, that addresses
issues of protecting workers rights, the environment and reducing tariffs and non-tariff trade barriers?
NAFTA
ASEAN
AMEA
Mercosur - What is one of the core propositions underpinning an institution-based view of global business?
A political system should establish controls of the financial sector
Countries should provide tariff protection
If formal constraints are not in place, the informal constraints will guide decision making
Investment in infrastructure provides a multiplier effect in a developing economy - What is one of the core propositions underpinning an institution-based view of global business?
Investment in infrastructure provides a multiplier effect in a developing economy
Government should provide tariff protection
Managers and corporations make rational decisions within their formal and informal framework
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C2114. Which political view of foreign direct investment (FDI) is most widely used by governments in the currentinternational business environment?RadicalismProtectionismCommunismnationalism5. Which factors predict the degree of rivalry between a pair of competitors? 2 choicesMarket commonalityCost structureResource similarityOrganizational structure 6. Which factors predicts how local firms in emerging economics will respond to multinational competitors?Competitive assets and industry pressures to globalizeFormal and informal institutionsMarket dominance and market fragmentationCooperation and signaling7. During which stage of the product life cycle do sales and profits gradually increase before seeing more dramatic increases?IntroductionMaturityGrowthDecline8. Which factor determines the foreign exchange rate any currency?Universal trade of the currencySupply and demand for the currencyThe age of the currencyBusiness economics of the currency9. Which risk must a corporation minimize if it is to effectively manage short-term currency fluctuations?Beta riskHedgingAlpha riskTransaction risk10. Which policy does a country use to determine the exchange rate of their currency in relationship to another country’s currency if they do not rely on market forces?Clean float rate policyFixed rate policyFlexible rate policyFloating rate policy11. Which term refers to trading currencies and currency derivatives in order to earn profits and help makeprices efficient?Investing Brokering
Day tradingSpeculation 12. Which type of advantage is gained by a company based on where it operates?Lifecycle-specificInnovation-specificInstitution-specificLocation-specific 13. Who gains from erecting significant entry barriers for other entrants?Late moverEarly moversLaggardFirst movers14. Which strategy for entering into a foreign market has the lowest degree of risk?Wholly-owned subsidiaryJoint ventureForeign acquisitionLicensing15. What is a non-equity mode involving some type of contractual agreement?Minority joint venturingDirect exportingLicensingAcquisition16. After the Lehman Brothers collapse, the federal Reserve stood ready to lend financial institutions funds. When the Federal reserve did this, it was acting in its role as a lender of last resort. Which type of group has this role?Informal institutionNongovernmental organizationFormal institutionGovernment agency17. What is the comprehensive free-trade settlement among Canada, US, and Mexico, that addresses issues of protecting workers rights, the environment and reducing tariffs and non-tariff trade barriers?NAFTAASEANAMEAMercosur18. What is one of the core propositions underpinning an institution-based view of global business?A political system should establish controls of the financial sectorCountries should provide tariff protectionIf formal constraints are not in place, the informal constraints will guide decision makingInvestment in infrastructure provides a multiplier effect in a developing economy19. What is one of the core propositions underpinning an institution-based view of global business?Investment in infrastructure provides a multiplier effect in a developing economyGovernment should provide tariff protectionManagers and corporations make rational decisions within their formal and informal framework
A political system should establish controls of the financial sector20. Which type of system allows businesses to be privately owned with a strong individualistic profit orientation?Market economyDemocracyCommand economyTotalitarianism21. Which legal system is based on a religious document and religious teachings?Property lawTheocratic lawCivil lawCommon law 22. Which type of good has well-established property rights?Public goodsPrivate goodsClub goodsCommon goods23. Which activity disregards basic property rights?A person reads a newspaper on the backyard patioSomeone chooses to ride a bike to work rather than drive a carStudents play loud music in the open area between dormsExecutives discuss strategy in the company boardroom24. What is one type of economy that uses the market system?Political economyMixed economyUniversal economyDual economy25. Which kind of outcome was Adam Smith referring to when describing the invisible hand?Open outcomesPlanned outcomesMixed outcomesMarket outcomes26. What does the value of the marginal product of labor for a perfectly competitive, profit-maximizing firm equal?LossRateCostwage27. What is the change in total cost equal to?Marginal cost multiplied by quantityMarginal cost multiplied by change in quantityMarginal cost multiplied by total costMarginal cost divided by total cost
- Which condition must be satisfied for a competitive firm to shut down in a short runTotal variable costs are greater than total revenueTotal revenue covers total variable costsTotal fixed costs are greater than total revenueTotal revenue is equal to price 29. What will a competitive firm do in the short run if its average variable cost exceeds price?It will expand productionIt will shut downIt will produce to make economic profitIt will prevent other firms from entering the industry 30. What is a characteristic of a monopoly’s demand curve?It is the same as the marginal revenue curveIt is the same as the market demand curveIt is the same as the supply curveIt is more elastic than the demand curve of a competitive firm31. Which statement describes a monopoly demand curve?It is perfectly inelasticIt is perfectly elasticIt is less elastic than a perfectly competitive firms demand curveIt is the same as its marginal revenue curve32. What is the profit maximization condition for a monopoly?Where marginal cost is minimizedWhere total revenues are maximizedWhere price equals marginal costWhere marginal revenue equals marginal cost33. What is a characteristic of monopolistic competition?Firms have equal market powerMany firms sell identical productsFirms avoid advertisingMany firms sell differentiated products34. How does self-interest influence each prisoner’s decision in the prisoner’s dilemma?Neither prisoner will likely confessOne prisoner will confess while the other will notBoth prisoners will likely confessAuthorities will withhold a deal from both prisoners35. Why is studying the prisoner’s dilemma applicable to business?It provides insights into why cooperation is individually rationalIt is a game in which only two players have a dominant strategyIt challenges the ideas of a single dominant strategyIt demonstrates the value of mapping out a potential strategy given actions of rivals36. What does an indifference curve illustrate?The preferences of a consumerA consumer’s budgetThe prices of two goods
A firm’s profits37. What happens to an individual’s budget constraint if the budget decreases and prices remain the same?The budget constraints line shifts parallel inwardThe budget constraints line shifts parallel outwardThe budget constraints line rotates outward along the horizontal axisThe budget constraints line remains the same 38. What happens to the nominal interest rate and the quantity of money if the Federal Reserve increasesthe reserve requirement? Choose 2 answersThe quantity of money increasesThe interest rate increasesThe interest rate decreasesThe quantity of money decreases39. What will happen to the equilibrium in the market for a good if demand and supply increase simultaneously? Equilibrium quantity will always increaseEquilibrium price will always decreaseEquilibrium quantity will always decreaseEquilibrium price will always increase40. What concept measures how much the quantity supplied responds to change in price?Cross-price elasticity of demandValue elasticity of supplyPrice elasticity of supplyIncome elasticity of demand 41. Which elasticity of demand measures how the quality demanded of one good responds to a change in price of another good? Income elasticity of demandCompared elasticity of demandRevenue elasticity of demandCross-price elasticity of demand42. What is the interest rate on a loan borrowed by banks from the federal reserves?Prime rateBank rateDiscount rateFederal rate43. Which target rate would the federal reserve lower in order to stimulate the economy and avoid a recessionThe exchange rateThe foreign exchange rateThe monetary growth rateThe federal funds rate44. Which action would the federal reserve rate take to expand the money supply and lower the equilibrium interest rate?Conduct open market sales of government bonds
Increase government spendingPurchase government bonds on the open marketLower income tax rate46. What happens when the price of a good increases holding everything else constant?Producer surplus decreasesConsumer surplus decreasesProducer and consumer surplus are unchangedConsumer surplus increases47. Which activity will result in an increase in gross domestic product (GDP) other things being equal?A law passes making the sale of recreational marijuana legalA law passes making the sale of medical marijuana illegalConsumption of illegal drugs increasesConsumption of prescription drugs decreases48. Which two types of investment are included in gross domestic product (GDP) 2 answersSpending on stocks and bondsSpending on educationSpending on new residential constructionSpending to build new factoriesSpending on consumer durable goods49. A nation begins applying a tariff on bananas which is imported productPrice will increasePrice will remain the sameThe price will decreaseThe price will begin to match the global market price50. A nation has implemented a tariff on rare minerals. How will this affect the price domestic consumers pay?It will prevent the price consumers pay from fluctuatingIt will cause the price consumers pay to go downIt will cause the price consumers pay to go upIt will cause the price consumers pay to equal the world price
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- Which factor influences price elasticity demand? a. annual interest rate b. availability of close substitutes c. money supply d. world prices41. What concept measures how many quantity supplied responds to change in price? a. value elasticity of supply b. cross price elasticity of demand c. income elasticity of demand d. price elasticity of supply42. Which type of market operation does the federal reserve use to increase the money supply when it buys bonds from the public in the nation’s bond market? a. Closed Market operations b. Money Market operations c. Value Market operations d. Open Market operations43. If the government increases its purchases by $10 billion the aggregate demand for goods and servicescould rise by more than $10 billion what does this illustrate? a. exchange rate effect b. multiplier effect c. automatic stabilizer effect d. crowding out effect44. Which fiscal policy will result in rightward shift of the aggregate demand curve? a. raising corporate taxes b. lowering discount rate c. expanding government purchases d lowering reserve requirement46. Which two statements describe gross domestic product (GDP). Choose 2a. GDP is no longer used to monitor performance of the overall economyb. GDP measures expenditures but not incomec. GDP is the most used measure of a country economic well beingd. GDP measures the market value of all final goods and services47. A man is willing to pay $300 for a pair of boots and purchases it for $200 what does this indicate?a. price of the boots will fall due to market forcesb. the producer surplus will be $100
c. the producer surplus will equal the consumer surplusd. the consumer surplus will be $10048. A us citizen has been living and working in Canada for the last 10 years. Where is the values of the individual’s production counted?a. US GNP and Canada GNPb. US GNP and Canada GDPc. US GDP onlyd. US GDP and Canada GDPWhich strategy for entering a foreign market has the highest degree of risk? a. joint ventureb. licensingc. foreign acquisitiond. wholly owned industry Which code of entry provides advantages to a multinational firm that can be transferred within the firm at very low cost?a. indirect exportsb. licensingc. ownershipd. externalizationWhich term describes currency derivatives to reduce potential transaction, translation and economic risks of currency movement that could lead to loses for a firm or investment?a. an exchange positionb. hedgingc. speculatingd. a shot positionWhat advantages do corporations receive when operating in favorable areas within a given country?b. labor specificc. capital specificd. Location specificWhich body guides economic activity in a command economy?a. board of directorsb. united nationc. a public private partnershipd. the governmentWhich price will a monopoly set?a. above marginal costb. equal to marginal costc. equal to fractional cost of marginal costd. below marginal costWhich condition determines the profit maximizing output for a monopolist?a. price equals average total costb. marginal revenue equals marginal cost
c. price equals average fixed costd. marginal revenue equals average fixed costHow does oligopoly represent a prisoner’s dilemma?a. every game presents zero-sum alternativesb. beneficial for both to avoid cooperationc. it depends the difficulty in maintaining cooperation’s agreementd. strategic decisions faced by decision mirror those firms face in competitive agreementWhat is used to measure the opportunity cost on one good when it is being compared to another good?a. slope of demand curveb. the competition effectc. the scope of the budget constraintd. marginal rate of distributionWhat will an increase in income cause to a consumer’s budget constraints?a. a shift outward, parallel to its initial positionb. a shift inward, parallel to its initial positionc. pivot along the vertical axisd. pivot along the horizontal axisWhat happens to market equilibrium quantity and price if supply increases and demand remains the same? (Pick 2)a Quantity Increasesb price Increasesc Quantity decreasesd Price decreases