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ADMS 3960 (12)
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Department
Administrative Studies
Course
ADMS 3960
Professor
Brian Zeiler- Kligman
Semester
Fall

Description
International Business: Environments and Operations, 14e (Daniels et al.) Chapter 8 Cross-National Cooperation and Agreements 1) ________ integration is the political and economic agreements among countries that give preference to member countries to the agreement. A) Global B) Economic C) Bilateral D) Regional Answer: B Diff: 1 Learning Outcome: Define the fundamental concepts of international business Skill: Concept Objective: 1 2) Country A and Country B make an agreement to cooperate more closely and implement tariff reductions. Which of the following best describes this agreement? A) double commodity integration B) multilateral integration C) regional integration D) bilateral integration Answer: D Diff: 1 Learning Outcome: Define the fundamental concepts of international business Skill: Application Objective: 1 3) The European Union is an example of ________ integration. A) regional B) relative C) global D) bilateral Answer: A Diff: 2 Skill: Concept Objective: 1 AACSB: Multicultural and diversity understanding 1 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 4) Global integration occurs as countries from all over the world decide to cooperate through the ________. A) EU B) NAFTA agreement C) WTO D) CARICOM Answer: C Diff: 1 Skill: Concept Objective: 1 AACSB: Multicultural and diversity understanding 5) Which of the following statements most accurately describes the relationship between trading groups and MNEs? A) Trading groups have no influence on the size of the regional market. B) Regional trading groups can define the rules under which companies must operate within that region. C) Companies never need to change their organizational structure to take advantage of regional trading groups. D) Regional trading groups have no influence on an MNE's strategy since they operate worldwide. Answer: B Diff: 2 Skill: Concept Objective: 1 6) Anderson Enterprises is a U.S. firm that manufactures light fixtures for commercial and residential consumers. Anderson is looking to expand internationally, so the firm should most likely ________. A) focus on developing new recruitment strategies and selection tests B) change their organizational structure to fit the norms of the foreign country C) disregard changes in trading groups because they have little effect on a company D) look to expand beyond the triad regions currently controlled by the top 500 MNEs Answer: B Diff: 2 Learning Outcome: Discuss factors affecting the organizational structures of international businesses Skill: Application Objective: 1 2 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 7) Baldani Manufacturing, an Italian firm, plans to expand into Asia. In order to take advantage of regional trading groups, Baldani will most likely need to change its ________. A) operating strategies B) selection test methods C) bilateral trade agreements D) economic integration methods Answer: A Diff: 2 Skill: Application Objective: 1 8) Which of the following is NOT one of the regions included in the triad regions of the world? A) South America B) Europe C) North America D) Asia Answer: A Diff: 2 Learning Outcome: Define the fundamental concepts of international business Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 9) The ________ clause embodied the fundamental principle of GATT—trade without discrimination. A) most-favored-nation B) nontariff barriers C) free rider D) normal trade relations Answer: A Diff: 1 Skill: Concept Objective: 1 10) Which of the following accurately identifies a difference between GATT and the WTO? A) GATT could enforce member compliance with agreements, but the WTO cannot. B) At its inception, GATT had more member nations than the WTO currently has. C) GATT withdrew the most-favored-nation clause, but the WTO reinstated it. D) GATT rules did not cover trade in services, but the rules of the WTO do. Answer: D Diff: 2 Skill: Concept Objective: 1 3 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 11) Under the WTO agreement, ________. A) a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures B) there is no dispute resolution mechanism except for trade involving environmental products C) countries are allowed to place trade barriers on member countries with no particular justification, because like GATT the WTO has no enforcement mechanism D) tariffs are permitted to be levied by developed countries against developing countries but not against each other Answer: A Diff: 2 Skill: Concept Objective: 1 AACSB: Ethical understanding and reasoning abilities 12) A major problem with the Doha Round is that ________. A) developing countries want developed countries to better protect their intellectual property B) developing countries want a reduction in agricultural subsidies maintained by the developed countries C) the WTO does not want the developing countries to liberalize their investment rules D) because of security issues, not all countries were able to attend the meetings, so it was impossible to get a consensus vote Answer: B Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 1 13) Most trade groups contain countries in the same area of the world. Why is this so? A) The distances that goods need to travel between such countries are short. B) Distribution channels are not easily established in adjacent countries. C) Adjacent countries are reluctant to coordinate policies. D) Neighboring countries usually lack a common history and interests. Answer: A Diff: 3 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 4 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 14) Which of the following groups of countries is most likely to form a regional trading group? A) India, Argentina, France B) Canada, United States, Mexico C) Brazil, Ukraine, Japan D) Spain, South Africa, Mongolia Answer: B Diff: 2 Skill: Application Objective: 4 AACSB: Dynamics of the global economy 15) The EU and Brazil have negotiated a strategic trade alliance. This is an example of a ________. A) customs union B) free trade agreement C) bilateral agreement D) multilateral agreement Answer: C Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 2 AACSB: Dynamics of the global economy 16) The goal of a ________ is to abolish all tariffs among member countries. A) customs union B) common market C) free trade agreement D) common internal tariff Answer: C Diff: 1 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 4 17) The European Union is best described as a ________. A) customs union B) domestic organization C) global bargaining unit D) common language agreement Answer: A Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 4 AACSB: Multicultural and diversity understanding 5 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 18) A ________ results when free mobility of factors of production is added to a customs union. A) customs union B) common market C) free trade agreement D) regional trade agreement Answer: B Diff: 1 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 4 19) Members of the Andean Community(CAN) have a common external tariff. CAN is most likely a ________. A) free trade agreement B) customs union C) domestic trade zone D) free trade sovereignty Answer: B Diff: 1 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 4 20) ________ effects of trade agreements are the shifting of resources from inefficient to efficient companies as trade barriers fall. A) Dynamic B) Static C) Economic D) Barrier Answer: B Diff: 1 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 3 21) ________ effects of economic integration are the overall growth in the market and the impact on a company caused by expanding production and by the company's ability to achieve greater economies of scale. A) Dynamic B) Static C) Economic D) Barrier Answer: A Diff: 1 Skill: Concept Objective: 3 6 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 22) Trade shifting to countries within a regional trade agreement at the expense of trade with countries not in the agreement is called ________. A) a dynamic effect B) trade creation C) trade diversion D) economy of scale Answer: C Diff: 2 Skill: Concept Objective: 3 23) When the European Union was formed, the size of the market increased for European companies. This is most likely an example of a ________. A) dynamic effect B) static effect C) trade diversion D) trade reflection Answer: A Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 3 AACSB: Dynamics of the global economy 24) Since production has shifted to more efficient producers due to comparative advantage, consumers in Country X have had access to more goods at lower prices. Which of the following most likely exists? A) trade specialization B) trade diversion C) trade creation D) trade internalization Answer: C Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 3 25) A free trade agreement is likely to increase efficiency because of ________. A) decreased competition B) increased competition C) decreased trade diversion D) decreased trade creation Answer: B Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 3 7 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 26) Assume that U.S. companies are importing the same product from Mexico and Taiwan. The United States enters into an FTA with Mexico but not with Taiwan. Consequently, the United States begins to import more goods from Mexico (due to lower tariffs) than from Taiwan, even though the Mexican products are not any better or cheaper. This is most likely an example of ________. A) trade specialization B) trade internalization C) trade creation D) trade diversion Answer: D Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 3 AACSB: Dynamics of the global economy 27) Because the size of the market increases when trade barriers fall, companies can increase their production, which will result in lower costs per unit. This phenomenon is known as ________. A) trade creation B) economies of scale C) diseconomies of scale D) increased competition Answer: B Diff: 1 Skill: Concept Objective: 3 28) The ________ is the European Union's ultimate decision-making body and is composed of the different ministers of the member countries. A) European Commission B) Council of the European Union C) European Parliament D) European Court of Justice Answer: B Diff: 2 Skill: Concept Objective: 5 8 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 29) The three major responsibilities of the ________ are legislative power, control over the budget, and supervision of executive decisions. A) European Commission B) European Council C) European Parliament D) European Court of Justice Answer: C Diff: 2 Skill: Concept Objective: 5 30) The EU organization that provides political leadership, drafts laws, and runs the daily programs of the EU is the ________. A) European Commission B) Council of Ministers C) European Parliament D) European Central Bureaucracy Answer: A Diff: 2 Skill: Concept Objective: 5 31) The EU organization that ensures consistent interpretation and application of EU treaties is the ________. A) European Commission B) Council of Ministers C) Court of Justice D) Council of Treaties and Laws Answer: C Diff: 2 Skill: Concept Objective: 5 AACSB: Ethical understanding and reasoning abilities 32) Which of the following was primarily responsible for establishing the euro? A) Lisbon Treaty B) Treaty of Maastricht C) European Finance Act D) Single European Act Answer: B Diff: 2 Skill: Concept Objective: 5 9 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 33) Critics of the Lisbon Treaty primarily argue that the legislation will ________. A) reduce national sovereignty B) implement trade restrictions C) develop a monetary union D) weaken decision making Answer: A Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 4 34) The ________ is the common currency of the European Union. A) franc B) pound C) euro D) mark Answer: C Diff: 1 Skill: Concept Objective: 5 35) Which of the following statements about the euro is true? A) It was adopted by all existing EU members when it was first initiated. B) It must be adopted by countries as a precondition to joining the EU. C) It cannot be used by countries that are not members of the EU. D) It was designed to eliminate currency as a barrier to trade in the EU. Answer: D Diff: 3 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 5 36) Which of the following members of the European Union has NOT adopted the euro? A) United Kingdom B) Estonia C) Germany D) Greece Answer: A Diff: 2 Skill: Concept Objective: 5 10 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 37) Hudson Manufacturing is an MNE based in the U.S. with operations in Asia. The firm is considering expansion into the European Union. Which of the following questions is most relevant to the decision? A) What is the primary language of most workers? B) Which country has the best production location? C) Which currency has the most favorable value of the euro? D) Which country has the lowest tariffs for manufactured products? Answer: B Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Critical Thinking Objective: 5 AACSB: Reflective thinking skills 38) Hudson Manufacturing is an MNE based in the U.S. with operations in Asia. The firm is considering expansion into the European Union. Executives at the firm are debating whether central Europe or Eastern Europe would be best for the firm. Which of the following best supports a decision to establish operations in Eastern Europe? A) Hudson wants to implement a high-performance work system. B) Hudson plans to staff the foreign facility with local managers. C) Hudson wants to minimize costs by keeping wages low. D) Hudson recently lost money in a joint venture. Answer: C Diff: 3 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Critical Thinking Objective: 5 39) Korman Industries is a foreign multinational that recently established operations in the European Union. What is the most likely advantage for Korman as a result? A) Governance processes are streamlined because local governments have been eliminated. B) Market size is larger because of the elimination of internal tariff barriers. C) Differential external tariff barriers exist for product shipments. D) The EU uses English as its official language. Answer: B Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Application Objective: 5 11 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 40) Which of the following recently threatened the future of the EU's common currency? A) refusal of the UK to use the euro B) failed mergers and acquisitions C) debt crisis in Greece D) human rights issues Answer: C Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 41) Which of the following are members of NAFTA? A) the United States, Canada, and Mexico B) North America and Latin America C) the United Kingdom, the United States, and Canada D) the United States, Canada, and Brazil Answer: A Diff: 1 Skill: Concept Objective: 5 AACSB: Multicultural and diversity understanding 42) NAFTA was primarily formed because the member nations have ________. A) static and dynamic liberalization policies B) similarly sized economies and resources C) geographic proximity to each other D) competing interests with the EU Answer: C Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 5 43) NAFTA is a good example of ________. A) trade divestment B) trade diversion C) the theory of trade disruption D) the theory of trade implementation Answer: B Diff: 2 Skill: Concept Objective: 5 12 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 44) Compared to the European Union, the North American Free Trade Agreement ________. A) has a stronger currency linkage due to the U.S. dollar B) has more trade problems since it is a customs union C) is significantly larger in population and total GNI D) is slightly smaller in population and GDP Answer: D Diff: 2 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 45) Under NAFTA, rules of origin ensure that ________. A) only goods produced mostly within the region are eligible for liberal tariff conditions B) only American products are shipped to Canada and Mexico duty-free C) all members import products only from member nations D) all members have the same external and internal tariffs Answer: A Diff: 2 Skill: Concept Objective: 5 46) According to regional content rules, at least ________ of the net cost of most products must come from the NAFTA region in order to get access to the tariff reductions of NAFTA. A) 62.5% B) 50% C) 45% D) 40.5% Answer: B Diff: 2 Skill: Concept Objective: 5 47) Which of the following is a unique provision of NAFTA? A) tariff elimination B) common currency C) environmental standards D) immigration oversights and policies Answer: C Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 5 13 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 48) The major trade group in South America involving Brazil, Paraguay, Uruguay, and Argentina is ________. A) MERCOSUR B) UNASUR C) APEC D) CACM Answer: A Diff: 1 Skill: Concept Objective: 5 49) The ________ is a preferential trade agreement that was organized in 1967 and comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. A) APEC B) OAU C) ASEAN D) CAFTA Answer: C Diff: 1 Skill: Concept Objective: 5 50) Which of the following is the primary focus of the African Union (AU)? A) FDI influx B) democracy C) economic integration D) intrazonal trade relations Answer: B Diff: 2 Learning Outcome: Discuss arguments for and against regional economic integration Skill: Concept Objective: 5 51) An NGO is ________. A) an agency of the United Nations B) a private institution independent of a government C) any organization working on environmental issues D) an organization that is concerned only with workers' rights Answer: B Diff: 1 Skill: Concept Objective: 6 14 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 52) Which of the following is most likely a true statement about the relationship between the United Nations and NGOs? A) The UN must license an NGO for it to be involved in any international relief efforts. B) A UN committee discusses issues of importance to NGOs but does not regulate their activities. C) The UN determines which NGOs can work on international humanitarian issues and relief efforts. D) NGOs typically operate in only one country, whereas UN agencies can operate anywhere in the world. Answer: B Diff: 3 Skill: Concept Objective: 6 53) Many NGOs, including Africa Now, Quaker Peace and Social Witness, and Save the Children, are members of the ________. A) Ethical Trading Initiative
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