Question 1

The comparative advantage argument in free trade

Accepted Answer

A) ignores the cost of readjustment. 
B) is a short-run argument. 
C) only works for two goods at a time. 
D) none of the above 
A) ignores the cost of readjustment. 
B) is a short-run argument. 
C) only works for two goods at a time. 
D) none of the above A

Question 2

The euro

Accepted Answer

A) is the common currency of Europe. 
B) is divisible into 100 cents, just like the U.S. dollar. 
C) may eventually have a transaction domain larger than the U.S. dollar. 
D) all of the above. 
A) is the common currency of Europe. 
B) is divisible into 100 cents, just like the U.S. dollar. 
C) may eventually have a transaction domain larger than the U.S. dollar. 
D) all of the above. D

Question 3

A MNC may gain from its global presence by

Accepted Answer

A) spreading R&D expenditures and advertising costs over their global sales. 
B) pooling global purchasing power over suppliers. 
C) utilizing their technological and managerial know-how globally with minimum additional costs. 
D) all of the above are potential gains 
A) spreading R&D expenditures and advertising costs over their global sales. 
B) pooling global purchasing power over suppliers. 
C) utilizing their technological and managerial know-how globally with minimum additional costs. 
D) all of the above are potential gains D

Question 4

Suppose you start with $100 and buy stock for £50 when the exchange rate is £1 = $2. One year later, the stock rises to £60. You are happy with your 20 percent return on the stock, but when you sell the stock and exchange your £60 for dollars, you only get $45 since the pound has fallen to £1 = $0.75. This loss of value is an example of

Accepted Answer

A) exchange rate risk. 
B) political risk. 
C) market imperfections. 
D) weakness in the dollar. 
A) exchange rate risk. 
B) political risk. 
C) market imperfections. 
D) weakness in the dollar.

Question 5

In modern times, it is not a country per se but rather a controller of capital and know-how that gives the country in which it is domiciled a comparative advantage over another country. These controllers of capital and technology are

Accepted Answer

A) the state. 
B) the multinational corporations (MNCs). 
C) portfolio managers of international mutual funds. 
D) none of the above 
A) the state. 
B) the multinational corporations (MNCs). 
C) portfolio managers of international mutual funds. 
D) none of the above

Question 6

Deregulated financial markets and heightened competition in financial services provided an environment for financial innovations that resulted in the introduction of various instruments. Examples of these innovative instruments include

Accepted Answer

A) currency futures and options, foreign stock index futures and options. 
B) multicurrency bonds. 
C) international mutual funds, country funds, exchange traded funds. 
D) all of the above 
A) currency futures and options, foreign stock index futures and options. 
B) multicurrency bonds. 
C) international mutual funds, country funds, exchange traded funds. 
D) all of the above

Question 7

In which product does Northern Ireland have a comparative advantage?

Accepted Answer

A) Beer 
B) Whiskey 
C) Neither 
A) Beer 
B) Whiskey 
C) Neither

Question 8

The massive privatization that is currently taking place in formerly socialist countries, will likely

Accepted Answer

A) eventually enhance the standard of living to these countries' citizens. 
B) depend on private investment. 
C) increase the opportunity set facing these countries' citizens. 
D) all of the above 
A) eventually enhance the standard of living to these countries' citizens. 
B) depend on private investment. 
C) increase the opportunity set facing these countries' citizens. 
D) all of the above

Question 9

Which state has a comparative advantage in producing wine in Case II?

Accepted Answer

A) South Dakota 
B) North Dakota 
C) Neither state 
A) South Dakota 
B) North Dakota 
C) Neither state

Question 10

Restrictions or impediments to free trade include such things as

Accepted Answer

A) import quotas. 
B) import tariffs. 
C) costly transportation. 
D) all of the above 
A) import quotas. 
B) import tariffs. 
C) costly transportation. 
D) all of the above

Question 11

Deregulation of world financial markets

Accepted Answer

A) provided a natural environment for financial innovations, like currency futures and options. 
B) has promoted competition among market participants. 
C) has encouraged developing countries such as Chile, Mexico, and Korea to liberalize by allowing foreigners to directly invest in their financial markets. 
D) all of the above 
A) provided a natural environment for financial innovations, like currency futures and options. 
B) has promoted competition among market participants. 
C) has encouraged developing countries such as Chile, Mexico, and Korea to liberalize by allowing foreigners to directly invest in their financial markets. 
D) all of the above

Question 12

Underlying the theory of comparative advantage are assumptions regarding

Accepted Answer

A) free trade between nations. 
B) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively immobile. 
C) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively mobile. 
D) a and b 
A) free trade between nations. 
B) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively immobile. 
C) that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively mobile. 
D) a and b

Question 13

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

Accepted Answer

A) 5 percent. 
B) 10 percent. 
C) 15 percent. 
D) 20 percent. 
A) 5 percent. 
B) 10 percent. 
C) 15 percent. 
D) 20 percent.

Question 14

The World Trade Organization, WTO,

Accepted Answer

A) has the power to enforce the rules of international trade. 
B) covers agriculture and physical goods, but not services or intellectual property rights. 
C) recently expelled China for human rights violations. 
D) ruled that NAFTA is to be the model for world trade integration. 
A) has the power to enforce the rules of international trade. 
B) covers agriculture and physical goods, but not services or intellectual property rights. 
C) recently expelled China for human rights violations. 
D) ruled that NAFTA is to be the model for world trade integration.

Question 15

In David Ricardo's theory of comparative advantage,

Accepted Answer

A) international trade is a zero-sum game in which one trading partner's gain comes at the expense of another's loss. 
B) liberalization of international trade will enhance the welfare of the world's citizens. 
C) is a short-run argument, not a long-run argument. 
D) has been superseded by the now-orthodox view of mercantilism. 
A) international trade is a zero-sum game in which one trading partner's gain comes at the expense of another's loss. 
B) liberalization of international trade will enhance the welfare of the world's citizens. 
C) is a short-run argument, not a long-run argument. 
D) has been superseded by the now-orthodox view of mercantilism.

Question 16

When individual investors become aware of overseas investment opportunities and are willing to diversify their portfolios internationally,

Accepted Answer

A) they trade one market imperfection, information asymmetry, for another, exchange rate risk. 
B) they benefit from an expanded opportunity set. 
C) they should not bother to read or to understand the prospectus, since its probably written in a foreign language. 
D) they should invest only in dollars or euros. 
A) they trade one market imperfection, information asymmetry, for another, exchange rate risk. 
B) they benefit from an expanded opportunity set. 
C) they should not bother to read or to understand the prospectus, since its probably written in a foreign language. 
D) they should invest only in dollars or euros.

Question 17

Which is growing at a faster rate, foreign direct investment by MNCs or international trade?

Accepted Answer

A) FDI by MNCs 
B) International trade 
C) Since they are linked, they grow at the same rate. 
D) None of the above 
A) FDI by MNCs 
B) International trade 
C) Since they are linked, they grow at the same rate. 
D) None of the above

Question 18

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Country B can produce 8 yards of textiles or 5 pounds of food per unit of input.

Accepted Answer

A) Country A is relatively more efficient than Country B in the production of food. 
B) Country B is relatively more efficient than Country A in the production of textiles. 
C) Country A has an absolute advantage over Country B in the production of food and textiles. 
D) Country B has an absolute advantage over Country A in the production of food and textiles. 
A) Country A is relatively more efficient than Country B in the production of food. 
B) Country B is relatively more efficient than Country A in the production of textiles. 
C) Country A has an absolute advantage over Country B in the production of food and textiles. 
D) Country B has an absolute advantage over Country A in the production of food and textiles.

Question 19

Foreign-owned manufacturing companies in the world's most highly developed countries

Accepted Answer

A) generally are more productive and pay their workers more than do comparable locally-owned businesses. 
B) generally are less productive and therefore pay their workers less than do comparable locally-owned businesses. 
C) tend to specialize in different articles of manufacture than they produce in their home countries. 
D) usually do not build their own production facilities but simply buy existing domestic manufacturing firms. 
A) generally are more productive and pay their workers more than do comparable locally-owned businesses. 
B) generally are less productive and therefore pay their workers less than do comparable locally-owned businesses. 
C) tend to specialize in different articles of manufacture than they produce in their home countries. 
D) usually do not build their own production facilities but simply buy existing domestic manufacturing firms.

Question 20

Is Northern Ireland better off when it trades with Southern Ireland?

Accepted Answer

A) Yes 
B) No 
A) Yes 
B) No

The comparative advantage argument in free trade

The euro

A MNC may gain from its global presence by

In modern times, it is not a country per se but rather a controller of capital and know-how that gives the country in which it is domiciled a comparative advantage over another country. These controllers of capital and technology are

Deregulated financial markets and heightened competition in financial services provided an environment for financial innovations that resulted in the introduction of various instruments. Examples of these innovative instruments include

In which product does Northern Ireland have a comparative advantage?

The massive privatization that is currently taking place in formerly socialist countries, will likely

Which state has a comparative advantage in producing wine in Case II?

Restrictions or impediments to free trade include such things as

Deregulation of world financial markets

Underlying the theory of comparative advantage are assumptions regarding

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

The World Trade Organization, WTO,

In David Ricardo's theory of comparative advantage,

When individual investors become aware of overseas investment opportunities and are willing to diversify their portfolios internationally,

Which is growing at a faster rate, foreign direct investment by MNCs or international trade?

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Country B can produce 8 yards of textiles or 5 pounds of food per unit of input.

Foreign-owned manufacturing companies in the world's most highly developed countries

Is Northern Ireland better off when it trades with Southern Ireland?

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 1: Globalization and the Multinational Firm

The comparative advantage argument in free trade

The euro

A MNC may gain from its global presence by

In modern times, it is not a country per se but rather a controller of capital and know-how that gives the country in which it is domiciled a comparative advantage over another country. These controllers of capital and technology are

Deregulated financial markets and heightened competition in financial services provided an environment for financial innovations that resulted in the introduction of various instruments. Examples of these innovative instruments include

In which product does Northern Ireland have a comparative advantage?

The massive privatization that is currently taking place in formerly socialist countries, will likely

Which state has a comparative advantage in producing wine in Case II?

Restrictions or impediments to free trade include such things as

Deregulation of world financial markets

Underlying the theory of comparative advantage are assumptions regarding

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

The World Trade Organization, WTO,

In David Ricardo's theory of comparative advantage,

When individual investors become aware of overseas investment opportunities and are willing to diversify their portfolios internationally,

Which is growing at a faster rate, foreign direct investment by MNCs or international trade?

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Country B can produce 8 yards of textiles or 5 pounds of food per unit of input.

Foreign-owned manufacturing companies in the world's most highly developed countries

Is Northern Ireland better off when it trades with Southern Ireland?

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters