Question 1

The ascendance of the dollar the dominant global currency reflects several key factors such as

Accepted Answer

A)  the size of the U.S.population.
B)  the mature and open capital markets of the U.S.economy.
C)  exchange rate stability.
D)  all of the above.E) None of the above
F) All of the above

Question 2

What is the increased amount of goods available in Northern Ireland after trade?

Accepted Answer

A)  400 more bottles of whiskey and 200 more kegs of beer
B)  1,000 more bottles of whiskey and 500 more kegs of beer
C)  200 more bottles of whiskey and 400 more kegs of beerD) A) and B)
E) None of the above

Question 3

A true MNC,with operations in dozens of different countries

Accepted Answer

A)  must effectively manage foreign exchange risk.
B)  can ignore foreign exchange risk since it is diversified.
C)  will pay taxes in only its home county.
D)  none of the aboveE) A) and C)
F) B) and D)

Question 4

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.E) A) and B)
F) A) and C)

Question 5

If you can make a good at a low opportunity cost,

Accepted Answer

A)  you would be well served to produce that good and trade for other goods.
B)  you should make something else that has a higher value.
C)  you should make something else that has a higher opportunity cost.
D)  none of the aboveE) All of the above
F) B) and C)

Question 6

A purely domestic firm sources its products,sells its products,and raises its funds domestically

Accepted Answer

A)  can face stiff competition from a multinational corporation that can source its products in one country, sell them in several countries, and raise its funds in a third country.
B)  can be more competitive than an MNC on its home turf due to superior knowledge of the local market.
C)  can still face exchange rate risk, just like an MNC.
D)  all of the above are trueE) B) and D)
F) None of the above

Question 7

Countries A and B currently consume 400 units of food and 400 units of textiles each and currently do not trade with one another.The citizens of country A have to give up one unit of food to gain two units of textiles,while the citizens of country B have to give up one unit of textiles to gain two units of food.Their production possibilities curves are shown.  Under the theory of comparative advantage

Accepted Answer

A)  The citizens of country A should make food and trade with the citizens of country B for textiles.
B)  The citizens of country A should make textiles and trade with the citizens of country B for food.
C)  There are no gains from trade in this example.
D)  A is twice as good as B at making food and B is twice as good as A at making textiles.E) All of the above
F) A) and D)

Question 8

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input.Compute the opportunity cost of producing one additional unit of food instead of textiles.

Accepted Answer

A)  1 yard of textiles per 1.67 pounds of food
B)  1 pound of food per 1.67 yards of textiles
C)  1 yard of textiles per .6 pounds of food
D)  1 pound of food per .6 yards of textilesE) C) and D)
F) A) and C)

Question 9

Which state has a comparative advantage in wheat production in Case I?

Accepted Answer

A)  South Dakota
B)  North Dakota
C)  Neither stateD) A) and B)
E) A) and C)

Question 10

Recently,financial markets have become highly integrated.This development

Accepted Answer

A)  allows investors to diversify their portfolios internationally.
B)  allows minority investors to buy and sell stocks.
C)  has increased the cost of capital for firms.
D)  answers a and c are both correct.E) All of the above
F) C) and D)

Question 11

Under the theory of comparative advantage,liberalization of international trade will

Accepted Answer

A)  enhance the welfare of the world's citizens.
B)  create unemployment and displacement of workers permanently.
C)  result in higher prices in the long run as monopolists are able to charge higher prices after eliminating their competitors.
D)  all of the aboveE) None of the above
F) A) and B)

Question 12

A firm with concentrated ownership

Accepted Answer

A)  may give rise to conflicts of interest between dominant shareholders and small outside shareholders.
B)  may enjoy more accounting transparency than firms with diffuse ownership structures.
C)  is a partnership, never a corporation.
D)  tends to exist overseas but not in the U.S.E) None of the above
F) C) and D)

Question 13

A country like North Korea

Accepted Answer

A)  probably rejects the notion of increased opportunity presented by free trade.
B)  engages in free trade.
C)  lies on a production possibilities curve superior to South Korea, since North Korea protects its domestic producers.
D)  none of the aboveE) A) and B)
F) B) and D)

Question 14

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.E) None of the above
F) C) and D)

Question 15

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.E) B) and C)
F) A) and D)

Question 16

Counties A and B currently consume 400 units of food and 400 units of textiles each and currently do not trade with one another.The citizens of country A have to give up one unit of food to gain two units of textiles,while the citizens of country B have to give up one unit of textiles to gain two units of food.Their production possibilities curves are shown.  Under the theory of comparative advantage,if free trade is allowed,the market clearing price (or exchange rate if you will) between food and textiles will be

Accepted Answer

A)  one unit of food for one unit of textiles.
B)  somewhere between one unit of food for two units of textiles and two units of food for one unit of textiles.
C)  one unit of food for two units of textiles.
D)  two units of food for one unit of textiles.E) B) and C)
F) C) and D)

Question 17

Which state has a comparative advantage in wheat production in Case II?

Accepted Answer

A)  South Dakota
B)  North Dakota
C)  Neither stateD) B) and C)
E) None of the above

Question 18

The common monetary policy for the euro zone is now formulated by

Accepted Answer

A)  the Bundesbank in Germany.
B)  the Federal Reserve Bank.
C)  the World Bank.
D)  the European Central Bank.E) A) and D)
F) B) and C)

Question 19

Which state is better at making guns?

Accepted Answer

A)  South Carolina
B)  North Carolina
C)  neitherD) All of the above
E) B) and C)

Question 20

Which state has an absolute advantage in producing wheat in Case I?

Accepted Answer

A)  South Dakota
B)  North Dakota
C)  Neither stateD) B) and C)
E) All of the above

Exam 1: Globalization and the Multinational Firm

Correct Answer
verified

The euro

Correct Answer
verified

The common monetary policy for the euro zone is now formulated by

Correct Answer
verified

Which state is better at making guns?

Correct Answer
verified

A purely domestic firm sources its products,sells its products,and raises its funds domestically

Correct Answer
verified

If you can make a good at a low opportunity cost,

Correct Answer
verified

Which state has a comparative advantage in wheat production in Case II?

Correct Answer
verified

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input.Compute the opportunity cost of producing one additional unit of food instead of textiles.

Correct Answer
verified

A country like North Korea

Correct Answer
verified

Recently,financial markets have become highly integrated.This development

Correct Answer
verified

Which state has an absolute advantage in producing wheat in Case I?

Correct Answer
verified

What is the increased amount of goods available in Northern Ireland after trade?

Correct Answer
verified

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

Correct Answer
verified

A true MNC,with operations in dozens of different countries

Correct Answer
verified

Under the theory of comparative advantage,liberalization of international trade will

Correct Answer
verified

The ascendance of the dollar the dominant global currency reflects several key factors such as

Correct Answer
verified

Correct Answer
verified

The World Trade Organization,WTO,

Correct Answer
verified

Which state has a comparative advantage in wheat production in Case I?

Correct Answer
verified

A firm with concentrated ownership

Correct Answer
verified

Exam 1: Globalization and the Multinational Firm

Correct AnswerverifiedShow Answer

The euro

Correct AnswerverifiedShow Answer

The common monetary policy for the euro zone is now formulated by

Correct AnswerverifiedShow Answer

Which state is better at making guns?

Correct AnswerverifiedShow Answer

A purely domestic firm sources its products,sells its products,and raises its funds domestically

Correct AnswerverifiedShow Answer

If you can make a good at a low opportunity cost,

Correct AnswerverifiedShow Answer

Which state has a comparative advantage in wheat production in Case II?

Correct AnswerverifiedShow Answer

Country A can produce 10 yards of textiles or 6 pounds of food per unit of input.Compute the opportunity cost of producing one additional unit of food instead of textiles.

Correct AnswerverifiedShow Answer

A country like North Korea

Correct AnswerverifiedShow Answer

Recently,financial markets have become highly integrated.This development

Correct AnswerverifiedShow Answer

Which state has an absolute advantage in producing wheat in Case I?

Correct AnswerverifiedShow Answer

What is the increased amount of goods available in Northern Ireland after trade?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A true MNC,with operations in dozens of different countries

Correct AnswerverifiedShow Answer

Under the theory of comparative advantage,liberalization of international trade will

Correct AnswerverifiedShow Answer

The ascendance of the dollar the dominant global currency reflects several key factors such as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The World Trade Organization,WTO,

Correct AnswerverifiedShow Answer

Which state has a comparative advantage in wheat production in Case I?

Correct AnswerverifiedShow Answer

A firm with concentrated ownership

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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