INTERNATIONAL BUSINESS:
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD (8.0)
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 release of Netscape
C. The rise of offshoring
D. The development of workflow software
Answer: D
Conceptual Explanation: While the fall of the Wall and Netscape provided the
environment and the interface, workflow software allowed individuals and businesses to
actually collaborate and communicate globally across different applications.
2. In the CAGE framework developed by Pankaj Ghemawat, which dimension accounts for
differences in consumer incomes and the quality of infrastructure?
A. Cultural Distance
,B. Administrative Distance
C. Economic Distance
D. Geographic Distance
Answer: C
Conceptual Explanation: Economic distance focuses on differences in consumer wealth,
infrastructure, and costs of resources between countries.
3. The ‘Leontief Paradox’ challenged which of the following classical trade theories?
A. Heckscher-Ohlin Theory
B. Absolute Advantage
C. Mercantilism
D. Comparative Advantage
Answer: A
Conceptual Explanation: Leontief found that the U.S. (a capital-abundant nation) exported
labor-intensive goods, contradicting the Heckscher-Ohlin theory that countries export
goods that use their abundant factors.
4. Which component of Michael Porter’s Diamond Model refers to the presence or absence of
supplier industries that are internationally competitive?
A. Factor conditions
B. Demand conditions
, C. Firm strategy, structure, and rivalry
D. Related and supporting industries
Answer: D
Conceptual Explanation: Related and supporting industries describe the presence of
world-class suppliers and industries that provide inputs or services crucial to the focal
industry.
5. Under the Bretton Woods Agreement, the value of the U.S. dollar was fixed to gold at what
rate?
A. $25 per ounce
B. $35 per ounce
C. $42 per ounce
D. $50 per ounce
Answer: B
Conceptual Explanation: The Bretton Woods system established the dollar as the global
reserve currency, pegged to gold at $35 per ounce.
6. What is the primary difference between a ‘Free Trade Area’ and a ‘Customs Union’ in
regional economic integration?
A. The removal of internal tariffs
B. The adoption of a single currency
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD (8.0)
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 release of Netscape
C. The rise of offshoring
D. The development of workflow software
Answer: D
Conceptual Explanation: While the fall of the Wall and Netscape provided the
environment and the interface, workflow software allowed individuals and businesses to
actually collaborate and communicate globally across different applications.
2. In the CAGE framework developed by Pankaj Ghemawat, which dimension accounts for
differences in consumer incomes and the quality of infrastructure?
A. Cultural Distance
,B. Administrative Distance
C. Economic Distance
D. Geographic Distance
Answer: C
Conceptual Explanation: Economic distance focuses on differences in consumer wealth,
infrastructure, and costs of resources between countries.
3. The ‘Leontief Paradox’ challenged which of the following classical trade theories?
A. Heckscher-Ohlin Theory
B. Absolute Advantage
C. Mercantilism
D. Comparative Advantage
Answer: A
Conceptual Explanation: Leontief found that the U.S. (a capital-abundant nation) exported
labor-intensive goods, contradicting the Heckscher-Ohlin theory that countries export
goods that use their abundant factors.
4. Which component of Michael Porter’s Diamond Model refers to the presence or absence of
supplier industries that are internationally competitive?
A. Factor conditions
B. Demand conditions
, C. Firm strategy, structure, and rivalry
D. Related and supporting industries
Answer: D
Conceptual Explanation: Related and supporting industries describe the presence of
world-class suppliers and industries that provide inputs or services crucial to the focal
industry.
5. Under the Bretton Woods Agreement, the value of the U.S. dollar was fixed to gold at what
rate?
A. $25 per ounce
B. $35 per ounce
C. $42 per ounce
D. $50 per ounce
Answer: B
Conceptual Explanation: The Bretton Woods system established the dollar as the global
reserve currency, pegged to gold at $35 per ounce.
6. What is the primary difference between a ‘Free Trade Area’ and a ‘Customs Union’ in
regional economic integration?
A. The removal of internal tariffs
B. The adoption of a single currency
