INTERNATIONAL BUSINESS:
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD (V4.0)
COMPREHENSIVE TEST BANK
QUESTIONS AND ANSWERS. VERIFIED
2026/2027
1. According to Thomas Friedman, which of the following ‘flatteners’ was primarily
responsible for creating a global platform for multiple forms of collaboration?
A. The fall of the Berlin Wall
B. The introduction of the Netscape browser
C. The offshoring of manufacturing to China
D. The rise of workflow software
Answer: D
Conceptual Explanation: Friedman identifies workflow software as the key flattener that
allowed applications to connect with other applications, enabling people to collaborate on
data and complex projects regardless of location.
,2. In the context of the CAGE distance framework, which category does the ‘lack of a common
currency’ fall into?
A. Cultural Distance
B. Economic Distance
C. Geographic Distance
D. Administrative Distance
Answer: D
Conceptual Explanation: Administrative distance includes factors such as lack of common
currency, political hostility, and lack of colonial ties or membership in regional trading
blocks.
3. Which trade theory suggests that nations should export goods that make intensive use of
factors that are locally abundant and import goods that make intensive use of factors that are
locally scarce?
A. Mercantilism
B. Absolute Advantage
C. Heckscher-Ohlin Theory
D. Product Life Cycle Theory
Answer: C
, Conceptual Explanation: The Heckscher-Ohlin theory (Factor Proportions Theory)
focuses on factor endowments like land, labor, and capital as the basis for trade patterns.
4. Which of the following best describes the ‘Leontief Paradox’?
A. The shift from absolute advantage to comparative advantage in services
B. The tendency for innovation to occur only in developed markets
C. The finding that high tariffs lead to increased domestic efficiency
D. The observation that capital-rich countries export labor-intensive goods
Answer: D
Conceptual Explanation: Wassily Leontief found that the U.S. (a capital-abundant nation)
exported labor-intensive goods, which contradicted the Heckscher-Ohlin theory.
5. In Hofstede’s cultural dimensions, a society that exhibits ‘high uncertainty avoidance’ is
likely to:
A. Be more entrepreneurial and risk-taking
B. Have many formal rules and a low tolerance for deviant ideas
C. Value personal achievement and competition over consensus
D. Prefer decentralized decision-making in corporations
Answer: B
Conceptual Explanation: High uncertainty avoidance cultures try to minimize the
possibility of unknown situations by strict laws and rules, safety and security measures.
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD (V4.0)
COMPREHENSIVE TEST BANK
QUESTIONS AND ANSWERS. VERIFIED
2026/2027
1. According to Thomas Friedman, which of the following ‘flatteners’ was primarily
responsible for creating a global platform for multiple forms of collaboration?
A. The fall of the Berlin Wall
B. The introduction of the Netscape browser
C. The offshoring of manufacturing to China
D. The rise of workflow software
Answer: D
Conceptual Explanation: Friedman identifies workflow software as the key flattener that
allowed applications to connect with other applications, enabling people to collaborate on
data and complex projects regardless of location.
,2. In the context of the CAGE distance framework, which category does the ‘lack of a common
currency’ fall into?
A. Cultural Distance
B. Economic Distance
C. Geographic Distance
D. Administrative Distance
Answer: D
Conceptual Explanation: Administrative distance includes factors such as lack of common
currency, political hostility, and lack of colonial ties or membership in regional trading
blocks.
3. Which trade theory suggests that nations should export goods that make intensive use of
factors that are locally abundant and import goods that make intensive use of factors that are
locally scarce?
A. Mercantilism
B. Absolute Advantage
C. Heckscher-Ohlin Theory
D. Product Life Cycle Theory
Answer: C
, Conceptual Explanation: The Heckscher-Ohlin theory (Factor Proportions Theory)
focuses on factor endowments like land, labor, and capital as the basis for trade patterns.
4. Which of the following best describes the ‘Leontief Paradox’?
A. The shift from absolute advantage to comparative advantage in services
B. The tendency for innovation to occur only in developed markets
C. The finding that high tariffs lead to increased domestic efficiency
D. The observation that capital-rich countries export labor-intensive goods
Answer: D
Conceptual Explanation: Wassily Leontief found that the U.S. (a capital-abundant nation)
exported labor-intensive goods, which contradicted the Heckscher-Ohlin theory.
5. In Hofstede’s cultural dimensions, a society that exhibits ‘high uncertainty avoidance’ is
likely to:
A. Be more entrepreneurial and risk-taking
B. Have many formal rules and a low tolerance for deviant ideas
C. Value personal achievement and competition over consensus
D. Prefer decentralized decision-making in corporations
Answer: B
Conceptual Explanation: High uncertainty avoidance cultures try to minimize the
possibility of unknown situations by strict laws and rules, safety and security measures.
