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International Business: The New Realities, 5e (Cavusgil)

Chapter 1 Introduction: What Is International Business?

1) International business is defined as the performance of ________ activities by firms across national borders.

• marketing and fiduciary
• trade and investment
• finance and operational
• accounting and auditing

Answer: B

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

2) International business is also known as which of the following?

• born global business
• laissez-faire business
• cross-border business
• multi-hub business

Answer: C

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

3) Which of the following best characterizes the development of international business?

• It has existed in some form for centuries.
• It first started in Europe.
• It developed after the year 2000.
• Its development has slowed in recent years.

Answer: A

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

4) A few decades ago, international business was largely the domain of ________.

• service firms
• multinational firms
• smaller firms
• all of the these

Answer: B

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

(International Business The New Realities, 5e Cavusgil, Knight, Riesenberger) (Test Bank all Chapters) 1 / 4

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5) Which of the following is another term for importing?

• capital investment
• supply side development
• global sourcing
• unilateral procurement

Answer: C

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

6) Which of the following is subject to importing and exporting?

• both finished products and intermediate goods
• finished products but not intermediate goods
• intermediate goods but not raw materials
• raw materials and components, but not finished products

Answer: A

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

7) ________ refers to the transfer of assets to another country or the acquisition of assets in that country.

• International investment
• International trade
• Importing
• Exporting

Answer: A

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

8) Each of the following represents a factor of production EXCEPT ________.

• manufacturing infrastructure
• technology
• government regulations
• managerial talent

Answer: C

Diff: 2: Moderate

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

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3 Copyright © 2020 Pearson Education, Inc.9) Which of the following would NOT be considered an example of foreign direct investment

(FDI)?

• cross-border purchase of a textile plant
• cross-border purchase of stocks
• purchase of capital assets of a foreign company
• purchase of foreign land for business operations

Answer: B

Diff: 2: Moderate

Skill: Application

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

10) ________ is the total value of products and services produced in a country over the course of a year.

A) GDP

B) CAD

C) FDI

D) PPP

Answer: A

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

11) Which of the following best explains why export growth has outpaced the growth of domestic production during the last few decades?

• Both world exports and domestic production have grown significantly over the past 30 years.
• The cost to import products is generally higher than the cost to produce domestic products.
• Growth in gross domestic product in most countries has steadily increased since 1970.
• Advanced economies now source many of their consumable products from low-cost

manufacturing nations.

Answer: D

Diff: 3: Hard

Skill: Critical Thinking

Objective: 1-1: Describe the key concepts in international business

AACSB: Analytical Thinking

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4 Copyright © 2020 Pearson Education, Inc.12) Each of the following has contributed to the rapid growth of trade among nations EXCEPT

________.

• the growth of emerging market countries
• the increase in trade barriers
• advances in information technology
• the liberalization of markets

Answer: B

Diff: 2: Moderate

Skill: Application

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

Freehold Investment Corp. (Scenario) Dan Freehold and his business partner, Bethany Quinn, are successful investors engaged in a variety of enterprises. Recently Dan and Bethany have decided to expand their foreign investing operations. They hold a meeting for individuals interested in participating in certain overseas ventures.

13) At the meeting, Dan explains to the attendees that Freehold direct investment projects differ from international trade in that ________.

• the firm itself is crossing international borders to purchase foreign assets
• the firm is restricting its investments to stocks and does not purchase mutual funds
• the firm has chosen to focus strictly on the technology sector
• the firm is engaging in the transfer of products across national borders

Answer: A

Diff: 1: Easy

Skill: Concept

Objective: 1-1: Describe the key concepts in international business

AACSB: Application of Knowledge

14) Dan discusses an investment opportunity that involves the purchase of selected securities from the Chinese stock market. This opportunity represents which type of international investment?

• indirect production
• international portfolio
• foreign direct
• domestic securities

Answer: B

Diff: 2: Moderate

Skill: Application

Objective: 1-1: Describe the key concepts in international business

AACSB: Analytical Thinking

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