Chapter 3: Differences in Culture

1. Abstract ideas about what a group believes to be good, right, and desirable are called
A) norms B) values C) folkways D) mores
2. The basic social organization of a society is its
A) culture B) social strata C) social structure D) caste system
3. The group is the primary unit of social organization in
A) Japan B) the United States C) Switzerland D) Mexico
4. Which of the following is not characteristic of individualism?
A) individual achievement C) low company loyalty
B) low managerial mobility D) entrepreneurial behavior
5. Which religion promotes the notion that a moral force in society requires the acceptance of
certain responsibilities called dharma?
A) Islam B) Buddhism C) Hinduism D) Confucianism
6. ………..is the mother tongue of the largest number of people in the world.
A) English B) Chinese C) Japanese D) Spanish
7. ………..focuses on how society deals with the fact that people are unequal in physical and
intellectual capabilities
A) power distance B) individualism versus collectivism
C) uncertainty avoidance D) masculinity versus femininity
8. Which of the following is not regarding culture?
A) Culture is static
B) Culture is evolving
C) It is a system of values and norms that are shared among a group of people
D) It involves the knowledge and beliefs of people
9. An act, as simple as shaking hands when meeting new people is an example of
A) Values B) symbolic behavior C) Mores D) Social stratification
10. The emphasis on individualism in the U.S. results in all of the following disadvantages except
A) Managers tend to develop good general skills but lack the company-specific experience
B) Difficulty in building teams within an organization to perform collective tasks
C) Executives are not exposed to difference way to do business
D) Difficulty to achieve cooperation both within a company and between companies
11. It has been argued that the success of Japanese enterprises in the global economy has been
based partly all of the following except
A) The diffusion of self-managing work teams
B) The close cooperation among different functions within Japanese companies
C) The high degree of managerial mobility between companies
D) The cooperation between a company and its suppliers on issues such as design, quality control
and inventory reduction
12. The individualism vs. collectivism dimension of Hofstede's study explored
A) The extent to which different cultures socialized their members into accepting ambiguous
situations and tolerating uncertainty
B) The relationship between gender and work roles
C) How a society deals with the fact that people are unequal in physical and intellectual
capabilities
D) The relationship between the individual and his or her allows
13. Hofstede's uncertainty avoidance dimension considered
A) The extent to which different cultures socialized their members into accepting ambiguous
situations and tolerating uncertainty
B) The relationship between gender and work roles
C) How a society deals with the fact that people are unequal in physical and intellectual
capabilities
D) The relationship between the individual and his or her fellows
14. Gabrielle Green, a manager at Cryptic Corporation, believes in empowerment, upward
mobility, and motivating her employees. This describes her:
A) criterion.
B) values.
C) Norms
D) folkways
15. What is the difference between folkways and mores?
A) Folkways are norms that are seen as central to the functioning of a society.
B) Violating mores can bring serious retribution.
C) Mores include rituals and symbolic behavior.
D) Folkways have much greater significance than mores
16. Which of the following is NOT considered a prevailing factor in the formation of values and
norms of a culture?
A. Political philosophies B. Dominant religion
C. Homogeneity D. Dominant language
17. Factors such as…….and…….clearly influence the values and norms of a society.
A. routines; folkways. B. conduct; culture.
C. rites; rituals. D. social structure; religion
18. What type of consciousness refers to a condition where people perceive themselves in terms of
their background, and this shapes their relationships with members of other classes?
A. Social B. Rank C. Class D. Norm
19. Which of the following countries scores high on individualism and low on power distance?
A. Argentina B. Panama C. United States D. Indonesia

Chapter 5: International trade theory

20. All of the following theories show why it is beneficial for a country to engage in international
trade even for products it is able to produce for itself, except
A. Mercantilism. B. Heckscher- Ohlin
C. Comparative advantage D. Absolute advantage
21. Which theory suggested that comparative advantage arises from differences in national factor
endowments?
A) Mercantilism B) Absolute advantage
C) Heckscher- ohlin D) Comparative advantage
22. Which theory suggests that as products mature the optimal production location will change?
A) Mercantilism B) Comparative Advantage
C) Absolute Advantage D) Product life-cycle
23. Economies of scale and first mover advantages are important to which trade theory?
A) Mercantilism B) Product life cycle
C) New trade theory D) Comparative advantage
24. Porter's diamond of competitive advantage includes all of the following except
A) Factor endowments
B) Demand conditions
C) First-mover advantages
D) Firm strategy, structure, and rivalry
25. …… refer to the nature of home demand for the industry's product or service.
A) Demand conditions
B) Factor endowments
C) Firm strategy, structure, and rivalry
D) Related and supporting industries
26. Free trade ?
A) Formed the basis for the mercantilist philosophy
B) Is in direct contrast to the notion of the invisible hand as advocated by Smith
C) Refers to a situation where a government does not attempt to influence through quotas or duties
what its citizens can buy from another country
D) Rejects the laissez-faire stance toward trade and maintains that it is not in the best interests of a
country
27. This theory, proposed in 1776, was the first to explain why unrestricted free trade is beneficial
to a country.
A. Mercantilism B. Heckscher- Ohlin
C. Comparative advantage D. Absolute advantage
28. ……. suggests that international differences in labor productivity are key to understanding
patterns of international trade.
A. Mercantilism B. Vernon C. Michael Porter D. David Ricardo
29. This theory explains the observed patterns of international trade by emphasizing the interplay
between the proportions in which the factors of production are available in different countries
and the proportions in which they are needed for producing particular goods.
A. Mercantilism B. Absolute advantage
C. Heckscher- Ohlin D. Comparative advantage
30. Identify the incorrect statement pertaining to Raymond Vernon's product life-cycle theory.
A) Early in their life cycle, most new products are produced in and exported from the country in
which they were developed
B) As a new product becomes widely accepted Internationally production starts in other countries
C) A product in the early stage of the product life cycle is imported by the country where it was
innovated
D) A product may ultimately be exported back to the country of its original innovation
31. Which theory stresses that in some cases countries. specialize in the production and export of
particular products not because of underlying differences in factor endowments but because in
certain industries the world market can support only a limited number of firms?
A. Balanced trade B. Heckscher- Olin
C. New trade D. Product life cycle
32. The theory of……… developed by Michael Porter, focuses on the importance of country
factors, in addition to factor endowments, such as domestic demand and domestic rivalry in
explaining a nation's dominance in the production and export of particular products.
A. New trade B. Absolute advantage
C. Comparative advantage D. National competitive advantage
33. The theory of ……… makes a crude case for government involvement in promoting exports
and limiting imports.
A. Mercantilism B. Free trade
C. Absolute advantage D. Comparative advantage
34. According to the …….. US is a major player in the commercial jet aircraft industry because US
firms were first movers in the world market.
A. Product life cycle theory B. Theory of mercantilism
C. New trade theory D. Theory of absolute advantage
35. The main tenet of mercantilism was that it was in a country's best interest to maintain a trade
A. Balance B. Embargo C. Surplus D. Deficit
36. When a government limits imports via tariffs and quotas and subsidizes exports in order to
maximize exports and minimize imports, the country is following
A. A mercantilist philosophy B. The theory of absolute advantage
C. The theory of comparative advantage D. The Heckscher- Ohlin theory
37. According to Smith, countries should specialize in the production of goods for which they have
an absolute advantage and then
A) Retain these goods for strictly domestic sales
B) Trade these goods for the goods produced by other countries
C) Sell these goods to the highest domestic or international bidder
D) Prohibit the import of these goods from other countries
38. According to the theory of …….,it make sense for a country to specialize in producing the
goods it produces most efficiently and buy the products it produces less efficiently from other
countries, even if it could produce the good more efficiently itself.
A) Strategic trade
B) Pertinent advantage
C) Comparative advantage
D) Absolute advantage
39. During the stage of Vernon's product life cycle, as the market in the United States and other
advanced nations matures, the product moves toward standardization and price becomes
important.
A Initial B. Early middle C. Late middle D. Late
40. According to the product life cycle theory, the focus of global production initially switches
from the U.S. to other advanced nations and then from those nations to developing countries.
The consequence of this trend for the pattern of world trade is that over time the U.S.
A) Becomes the sole producer of a product
B) Switches from being an exporter of the product to being an importer of the product
C) Switches from being an importer of the product to being an exporter of the product
D) Becomes the sole consumer of the product

Chapter 8: Regional economic integration

41. All barriers to the free flow of goods and services between member countries are removed, and
a common policy toward nonmembers is established in a
A) Free trade area B) Customs union
C) Common market D) Economic union
42. NAFTA is an example of a(n)
A) Free trade area B) Customs union
C) Common market D) Economic union
43. When higher cost suppliers within the free trade area replace lower cost external suppliers
A) The bloc as a whole benefits B) There is trade creation
C) There is trade diversion D) External suppliers benefit
44. For international businesses, regional economic integration such as the EU
A) Raises the costs of doing business in the region
B) Eliminates differences in culture allowing companies to standardize marketing activities
C) Opens markets that had formerly been protected
D) Standardizes competitive practices enabling companies to realize substantial cost economies
45. Which of the following is not a threat that emerges for international businesses as a result of
regional economic integration?
A) The business environment within each grouping becomes more competitive
B) There is a risk of being shut out of the single market by the creation of a "trade fortress"
C) It limits the ability of firms to pursue the corporate strategy of their choice
D) The costs of doing business in a single market may fall
46. Which of the following selections accurately depicts the levels of economic integration from
least integrated to most integrated?
A) Common market, economic union, full political union, free trade area and customs union
B) Common market, economic union, full political union, free trade area and customs union
C) Free trade area, customs union, common market, economic union and full political union
D) Full political union, free trade area, common market, customs union and economic union
47. In a….. subsidies or administrative impediments are allowed to distort trade between member
nations. Each country, however is allowed to determine its own trade policies with regard to
nonmembers.
A. Common market B. Economic union
C. Political union D. Free trade area
48. Which of the following is of a common market?
A) All barriers to the trade of goods and services among member countries are removed and each
country maintains its own policy towards nonmember countries
B) Involves the free flow of products and factors of production between member countries and the
adoption of individual external trade policies
C) Has no barriers to trade between member countries, includes a common external trade policy
and allows factors of production to move freely between members
D) Eliminates trade barriers between member countries and adopts a common external trade policy
and a common currency
49. Which of the following statement best defines a custom union?
A) All barriers to the trade of goods and services among member countries are removed and each
country maintains its own policy towards nonmember countries
B) Eliminates trade barriers between member countries and adopts a common external trade policy
and a common currency
C) Has no barriers to trade between member countries, includes a common external trade policy
and allows factors of production to move freely between members
D) Eliminates trade barriers between member countries and adopts a common external trade policy
50. The Andean Pact is an example of a(n)
A. Economic union B. Customs union
C. Common market D. Political union
51. Identify the incorrect statement about a common market.
A) It has no barriers to trade between member countries
B) It includes a common external trade policy
C) It establishes a central political apparatus coordinating the economic, social and foreign policy
of
D) It allows factors of production to move freely between the member states members
52. A(n) .….. involves the free flow of products and factors of production between member
countries and the adoption of a common external trade policy, along with a common' currency,
harmonization of members' tax rates and a common monetary and fiscal policy.
A. Free trade area B. Economic union
C. Common market D. Customs union
53. Economic theories suggest that free trade and investment
A. Is a zero-sum game
B. Has a drag effect on economic growth
C. Is a positive sum game
D. Is not achievable for developed countries
54. A political benefit of economic integration is that
A) It enables participants to achieve gains from the free flow of trade
B) It enables participants to achieve gains from the free flow of investment
C) It allow countries to specialize in the production of goods and services that they can produce
most efficiently
D) Linking neighboring economies creates incentives for cooperation between the neighboring
states and reduces the potential for violent conflict
55. All of the following are reasons why economic integration has never been easy to achieve or
sustain, except
A) Even though it aids the majority, it has its costs
B) A nation as a whole may benefit significantly, but certain groups may lose
C) There are concerns over loss of national sovereignty
D) Linking neighboring economies makes them increasingly dependent on each other
56. Which of the following is seen as a disadvantage of the euro?
A) Higher foreign exchange and hedging costs
B) National authorities losing control over monetary policy
C) It becomes difficult to compare prices across Europe
D) Undermines the development of a pan-European capital market