TEST BANK FOR GLOBAL BUSINESS
5TH EDITION BY PENG MIKE :
ISBN-10; 035771640X / ISBN-13; 978-
0357716403 ALL CHAPTERS
COVERED
TEST BANK FOR GLOBAL BUSINESS 5TH EDITION BY PENG MIKE
CHAPTER 1: GLOBAL BUSINESS AND GLOBALIZATION
1. A multinational enterprise is a firm that engages in foreign direct investment by directly investing
in, controlling, and managing value-added activities in other countries.
a. True
b. False
ANSWER: a (True)
RATIONALE: A multinational enterprise (MNE) is defined as a firm that engages in foreign direct
investment (FDI) by directly investing in, controlling, and managing value-added activities in other
countries. This is the fundamental definition of an MNE as presented in the textbook.
2. The term "emerging markets" refers to the fastest-growing developing economies.
a. True
b. False
ANSWER: a (True)
RATIONALE: Emerging markets (or emerging economies) refer to the fastest-growing developing
economies. These markets are characterized by rapid economic growth and industrialization, and they
have become increasingly important players in the global economy.
3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and
governments operating in an economy.
,a. True
b. False
ANSWER: a (True)
RATIONALE: GDP is defined as the sum of value added by resident firms, households, and governments
operating in an economy. It measures the total economic output produced within a country's borders,
regardless of the nationality of the producers.
4. The majority of the global GDP is contributed by the emerging markets.
a. True
b. False
ANSWER: b (False)
RATIONALE: The majority of global GDP is contributed by developed economies, not emerging markets.
While emerging markets are growing rapidly and contribute an increasing share, developed economies
(particularly the Triad of North America, Europe, and Japan) still account for the majority of global GDP.
5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods and
services different currencies can purchase.
a. True
b. False
ANSWER: a (True)
RATIONALE: Purchasing power parity (PPP) is a conversion that determines the equivalent amount of
goods and services that different currencies can purchase. It is used to compare economic productivity
and standards of living between countries by adjusting for price level differences.
6. Purchasing power parity (PPP) is calculated as the sum of value added by resident firms,
households, and governments operating in an economy.
a. True
b. False
ANSWER: b (False)
,RATIONALE: This statement is false because it describes Gross Domestic Product (GDP), not Purchasing
Power Parity (PPP). PPP is a currency conversion method that equalizes the purchasing power of
different currencies, while GDP measures the total economic output of a country.
7. Global business includes both international and domestic business activities.
a. True
b. False
ANSWER: a (True)
RATIONALE: Global business includes both international (cross-border) and domestic business activities.
It encompasses all business activities that involve the exchange of goods, services, or resources between
two or more nations, as well as domestic activities that are influenced by global factors.
8. International business can be defined as the investment in, controlling, and managing value-added
activities in other countries.
a. True
b. False
ANSWER: b (False)
RATIONALE: This statement actually defines foreign direct investment (FDI) or a multinational enterprise
(MNE), not international business broadly. International business is a broader term that includes
international trade (exports and imports), licensing, franchising, and foreign direct investment.
9. On the global economic pyramid, the Triad refers to developed economies consisting of North
America, Europe, and Japan.
a. True
b. False
ANSWER: a (True)
RATIONALE: The Triad refers to the three major developed economic regions: North America, Western
Europe, and Japan. These regions represent the top tier of the global economic pyramid and account for
the majority of global economic activity and purchasing power.
10. All the countries of the BRIC belong to the top tier of the global economic pyramid.
, a. True
b. False
ANSWER: b (False)
RATIONALE: BRIC countries (Brazil, Russia, India, and China) do not all belong to the top tier of the
global economic pyramid. While they are major emerging economies, they are typically classified in the
second tier (with per capita incomes between $2,000 and $20,000), not the top tier with per capita
incomes above $20,000.
11. The second tier of the global economic pyramid is made up of countries with a per capita annual
income of more than $20,000.
a. True
b. False
ANSWER: b (False)
RATIONALE: The second tier of the global economic pyramid is made up of countries with a per capita
annual income between $2,000 and $20,000, not more than $20,000. The top tier consists of countries
with per capita annual income above $20,000.
12. The emerging markets of the world are placed at the top of the global economic pyramid.
a. True
b. False
ANSWER: b (False)
RATIONALE: Emerging markets are not placed at the top of the global economic pyramid. The top tier
consists of developed economies (the Triad: North America, Europe, and Japan) with per capita annual
incomes above $20,000. Emerging markets are typically in the second tier.
13. The global economic pyramid does not represent countries that have a per capita annual income
of less than $2,000.
a. True
b. False
ANSWER: b (False)
5TH EDITION BY PENG MIKE :
ISBN-10; 035771640X / ISBN-13; 978-
0357716403 ALL CHAPTERS
COVERED
TEST BANK FOR GLOBAL BUSINESS 5TH EDITION BY PENG MIKE
CHAPTER 1: GLOBAL BUSINESS AND GLOBALIZATION
1. A multinational enterprise is a firm that engages in foreign direct investment by directly investing
in, controlling, and managing value-added activities in other countries.
a. True
b. False
ANSWER: a (True)
RATIONALE: A multinational enterprise (MNE) is defined as a firm that engages in foreign direct
investment (FDI) by directly investing in, controlling, and managing value-added activities in other
countries. This is the fundamental definition of an MNE as presented in the textbook.
2. The term "emerging markets" refers to the fastest-growing developing economies.
a. True
b. False
ANSWER: a (True)
RATIONALE: Emerging markets (or emerging economies) refer to the fastest-growing developing
economies. These markets are characterized by rapid economic growth and industrialization, and they
have become increasingly important players in the global economy.
3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and
governments operating in an economy.
,a. True
b. False
ANSWER: a (True)
RATIONALE: GDP is defined as the sum of value added by resident firms, households, and governments
operating in an economy. It measures the total economic output produced within a country's borders,
regardless of the nationality of the producers.
4. The majority of the global GDP is contributed by the emerging markets.
a. True
b. False
ANSWER: b (False)
RATIONALE: The majority of global GDP is contributed by developed economies, not emerging markets.
While emerging markets are growing rapidly and contribute an increasing share, developed economies
(particularly the Triad of North America, Europe, and Japan) still account for the majority of global GDP.
5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods and
services different currencies can purchase.
a. True
b. False
ANSWER: a (True)
RATIONALE: Purchasing power parity (PPP) is a conversion that determines the equivalent amount of
goods and services that different currencies can purchase. It is used to compare economic productivity
and standards of living between countries by adjusting for price level differences.
6. Purchasing power parity (PPP) is calculated as the sum of value added by resident firms,
households, and governments operating in an economy.
a. True
b. False
ANSWER: b (False)
,RATIONALE: This statement is false because it describes Gross Domestic Product (GDP), not Purchasing
Power Parity (PPP). PPP is a currency conversion method that equalizes the purchasing power of
different currencies, while GDP measures the total economic output of a country.
7. Global business includes both international and domestic business activities.
a. True
b. False
ANSWER: a (True)
RATIONALE: Global business includes both international (cross-border) and domestic business activities.
It encompasses all business activities that involve the exchange of goods, services, or resources between
two or more nations, as well as domestic activities that are influenced by global factors.
8. International business can be defined as the investment in, controlling, and managing value-added
activities in other countries.
a. True
b. False
ANSWER: b (False)
RATIONALE: This statement actually defines foreign direct investment (FDI) or a multinational enterprise
(MNE), not international business broadly. International business is a broader term that includes
international trade (exports and imports), licensing, franchising, and foreign direct investment.
9. On the global economic pyramid, the Triad refers to developed economies consisting of North
America, Europe, and Japan.
a. True
b. False
ANSWER: a (True)
RATIONALE: The Triad refers to the three major developed economic regions: North America, Western
Europe, and Japan. These regions represent the top tier of the global economic pyramid and account for
the majority of global economic activity and purchasing power.
10. All the countries of the BRIC belong to the top tier of the global economic pyramid.
, a. True
b. False
ANSWER: b (False)
RATIONALE: BRIC countries (Brazil, Russia, India, and China) do not all belong to the top tier of the
global economic pyramid. While they are major emerging economies, they are typically classified in the
second tier (with per capita incomes between $2,000 and $20,000), not the top tier with per capita
incomes above $20,000.
11. The second tier of the global economic pyramid is made up of countries with a per capita annual
income of more than $20,000.
a. True
b. False
ANSWER: b (False)
RATIONALE: The second tier of the global economic pyramid is made up of countries with a per capita
annual income between $2,000 and $20,000, not more than $20,000. The top tier consists of countries
with per capita annual income above $20,000.
12. The emerging markets of the world are placed at the top of the global economic pyramid.
a. True
b. False
ANSWER: b (False)
RATIONALE: Emerging markets are not placed at the top of the global economic pyramid. The top tier
consists of developed economies (the Triad: North America, Europe, and Japan) with per capita annual
incomes above $20,000. Emerging markets are typically in the second tier.
13. The global economic pyramid does not represent countries that have a per capita annual income
of less than $2,000.
a. True
b. False
ANSWER: b (False)
