BAM 401 UNIT 2 EXAMINATION

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1. Which of the following stakeholders groups wants additional sales and increased productivity,

which result in higher pro ts and larger returns going to them?

1. shareholders
2. society at large
3. customers
   d. government
4. If a British company sets up a subsidiary in France that produces products for the French market, this investment is most likely to result in what type of economic effect in the short run?
5. capital export from France
   b. import displacement in France
6. export stimulus for France
   d. capital in ow for Britain
7. In what ways can FDI bene t the host country?
8. through the transfer of technology and capital and the creation of new jobs
9. by exploiting natural resources
   c. through bidding up prices so local investors cannot compete
   d. by undermining the competitive con dence of local businesspeople
10. Why is the argument that “anything legal is ethical” insuf cient?
11. Laws can never be changed; thus, rules for all possible ethical dilemmas are found in the law.
12. Everything that is unethical is also illegal.
    c. The law is an extremely ef cient way to solve most ethical dilemmas.
13. The law is often based on imprecisely de ned moral concepts.
14. Which of the following is a reason for an MNE to base its standards for ethical behavior on a country’s laws?
15. The law provides a vaguely de ned set of rules.
    b. The law represents a consensus derived from signi cant experience and deliberation.
16. The law embodies many of a country’s moral beliefs but is an inadequate guide for

proper conduct.
d. The law contains unenforceable rules that are impossible to follow.

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BAM 401 International Business

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6. Which of the following statements describes an inconsistency of the FCPA?
7. Facilitation payments (or grease money) are excluded from the FCPA’s de nition of bribery.
8. Payments to foreign of cials who carry out the law are illegal.
   c. Payments to of cials who are not directly responsible for carrying out the law are legal.
9. Facilitation payments (also known as grease money) are classi ed as bribery.
10. At the core of the Kyoto Protocol is the theory that ____________ is a result of an increase in the emissions of carbon dioxide and other gases.
11. global warming
    b. soil contamination
    c. depletion of natural resources
12. climate control
13. Which of the following is the most persuasive reason for companies to act more ethically and responsibly?
14. The U.S. government provides tax breaks to companies that donate to international charities.
15. Companies face no outside pressures to act responsibly.
    c. Unethical or irresponsible behavior can negatively impact employee morale.
    d. Companies that have good ethical behavior are proven to have higher earnings than

unethical companies.

9. Companies need to act responsibly because unethical and irresponsible behavior ____________.
10. usually improves employee morale
    b. could result in consumer boycotts
    c. rarely results in legal sanctions
    d. almost always results in lower pro t margins
11. Which of the following is a problem that Anglo American PLC is facing as it tries to adopt an aggressive strategy against HIV/AIDS?
12. Many employees are not following through on their treatments.
    b. Its programs have been much more effective than imagined and costs to treat

employees have dropped.
c. HIV/AIDS prevention programs are more effective than treatment programs.
d. They have been incurring huge costs to help migrant workers who generally do not have

HIV/AIDS and do not take the disease back to their home villages.

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11. Which of the following undesirable results may come about for a country running a favorable balance of trade?
12. It may have to devalue its currency.
    b. Its credit to other countries may buy insuf cient goods and services when repaid.
13. Its unemployment increases.
    d. It cannot as easily repay its external debt.
14. Which of the following is most likely a basis for a Jamaican natural advantage in the export of goods and services?
15. product technology developed by a Jamaican company
    b. the use of English as the primary language
    c. low literacy rate in comparison with most other developing countries
16. clear, warm Caribbean waters
17. According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ____________.
18. the country will forego producing its less ef cient output in order to produce its more ef cient output
19. workers become more ef cient through specialization
    c. there will be more incentive to develop cost-saving technologies
20. economies of scale will reduce cost
21. Which of the following is the strongest argument for using a strategic trade policy?
22. Governments, rather than entrepreneurs, should take the risks of developing new industries.
23. Because government in uence is seldom neutral, government actions should concentrate on helping those industries that will give them the best export advantages.
24. Consumer needs would otherwise not be met.
    d. The policies have usually resulted in big payoffs.
25. A governmental strategic trade policy is one that ____________.
26. seeks reciprocal free trade agreements
    b. limits imports to encourage domestic production of what would otherwise be imported
27. develops industries to lessen dependence on foreign military goods
    d. targets the resources needed to support industries that t best with the country’s

advantages

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16. The most internationally mobile factor of production is ____________.
17. labor
    b. management
    c. short-term capital
18. long-term capital
19. Costa Rica’s recent economic transformation to dependence on high-tech manufacturing is largely due to its adoption of _____________ trade policy.
20. a comparative advantage
21. an import substitution
22. a strategic
    d. a factor proportions
23. Why have many countries come to believe that an export-led development policy is better than an import substitution policy?
24. Some countries have achieved more economic growth through export-led development policies than other countries have achieved through import substitution policies.
25. When targeting industries to develop, it is easier to identify potentially competitive ones when using export-led development policies.
26. Export-led development policies negate the need to attract foreign investment.
27. Economies diversify more when using export-led development policies.
28. All of the following are reasons a country might institute import restrictions to improve its balance of trade position with other countries EXCEPT which one?
29. to get comparable market access for its companies
30. to maintain essential industries
    c. to reduce imports
    d. to bargain away restrictions by other countries
31. All of the following are potential problems of using export controls EXCEPT which one?
32. There is more incentive for smuggling.
    b. Import prices may go down for the country imposing the controls.
    c. There will be an incentive for other countries to develop production of their own.
33. Domestic producers may have less incentive to increase output.
34. The most common type of tariff is the ____________ tariff.
35. ad valorem
36. transit
    c. import
    d. export

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22. The European Union is an example of ____________ integration.
23. bilateral
24. regional
25. global
26. relative
27. As companies expand internationally, they should change their ____________ to take advantage of regional trading groups.
28. economic integration
    b. bilateral trade agreements
29. market opportunities
    d. operating strategies
30. Trade ____________ allows consumers access to more goods at a lower price than would have been possible without integration.
31. Trade specialization
32. Trade creation
    c. Trade diversion
    d. Trade internalization
33. 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.
34. OAU b. CAFTA c. APEC d. ASEAN