Multiple Choice Quiz for International Business Class (Multiple Choice Questions Sample)

International Business(Answers)
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Answers to the Multi Choice Questions
1 All of the following factors of production are internationally mobile EXCEPT land. (D)
2 A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called rationalized production. (A)
3 A market that is said to operate at peak efficiency and where goods are readily and easily available is said to be a perfect market. (True)
4 The merchandise account includes exports and imports of tangible goods. (True)
5 If the cost of land and the tax rate on profits are lower in the local market, one can assume they will remain constant. (False)
6 The current account records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country. (D)
7 . The requirement that a sufficient portion of a product's content originate within a certain market to escape tariff charges is an example of a market imperfection. (B)
8 Exports and imports of computer software, electronic components, and apparel would be reflected in the merchandise account within the current account. (C)
9 Any nation's balance of payments consists of two major components: the current account and the past-due account. (False)
10 . The automobile industry uses a rationalized method of production. (B)
Industrialized countries are the source for about 35 percent of worldwide foreign direct investment. (True)
Home governments may use differential tax rates to limit the effects of outbound foreign direct investment. (B)
Values, attitudes, and beliefs form the basis for much of a government's position regarding foreign direct investment. (True)
. An economic union requires member nations to harmonize their tax, monetary, and fiscal policies and create a common currency. (B)
The primary purpose of the Gulf Cooperation Council (GCC) at its formation was to create a political union between Iraq and Iran. (False).
The Southern Common Market is also referred to as MERCOSUR. (True)
All of the following are true of trade diversion EXCEPT that it guarantees consumers a wider selection of goods.(D)
The greatest benefit of regional integration is trade diversion. (False).
Economic integration can unintentionally reward a less efficient producer within a trading bloc. (True)
The benefits to individual nations in a common market are typically distributed fairly evenly. (False)
A benefit of regional economic integration is that it always expands employment opportunities in all nations. (True)
. The common currency of the European Union is known as the euro. ( CITATION Int \l 1033 (International Business))
Economic integration whereby countries remove all barriers to trade among themselves, but erect a common trade policy against nonmembers is called an economic union. (A)
Canada and the United States are examples of early formations of political unions. (False)
In regional economic integration, industries requiring mostly unskilled labor will tend to shift production to low-wage nations within a trading bloc. (True)
Because the formation of trading blocs significantly reduces or eliminates barriers to trade among members, the producer of a particular good or service is likely to be the least productive producer. (False)
The international financial market is composed of two interrelated systems called the international capital market and the foreign exchange market (B)
The international capital market is a network of individuals, companies, financial institutions, and governments that invest and borrow across national boundaries. (True)
Foreign bonds issued in the U.K. are called bulldog bonds. (A)
Deregulation of capital markets resulted in all of the following EXCEPT reduced the use of microcredit. (D)
Offshore financial centers tend to be characterized by economic and political instability and poor telecommunications infrastructures. (False)
Increased regulation of national capital markets has been instrumental in the expansion of the international capital market. (False)
An excess money supply creates a borrower's market, forcing down interest rates and the cost of borrowing. (True)
The profit-motivated purchase and sale of interest-paying securities denominated in different currencies is called interest arbitrage. (C)
If a currency's forward rate is higher than its spot rate, the currency is trading at a discount. (False)
The international capital market's rapid growth rate is traced to all these EXCEPT foreign exchange rates. (C).
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