International Business Exam 1-Multiple
Choice Questions and Answers
An office uses printer paper made primarily of recycled paper. This is an example of
a ______ policy. - ANSWER-Sustainable development
During the mid-18 th century, British economist ________, who came to be known
as the father of free market and open trade systems, recognized the absurdity of
Mercantilism. - ANSWER-Adam Smith
A group of states with convergent social, economic, and monetary policies is called
a(n) _____. - ANSWER-economic union
According to the text, which of the following is the second stage of regional
integration? - ANSWER-Customs Union
All 28 EU countries are permitted to use the euro as their currency. - ANSWER-
False
All of the following statements about regional integration are true EXCEPT: -
ANSWER-regional integration should initially address a broad, ill-defined area of
cooperation.
Both common markets and economic unions abolish restrictions on factor
movements. - ANSWER-True
Generally, countries within trading blocs that have significantly lowered trade barriers
have done better economically than others. - ANSWER-True
In which country is the EU headquartered? - ANSWER-Belgium
NAFTA is in which stage of the economic integration process? - ANSWER-First
Stage (free trade area)
Of the following statements regarding the euro, which is NOT true? - ANSWER-The
U.K., Denmark, and Sweden use the euro as their currency.
Of the following, which is NOT a cost of regional integration? - ANSWER-Enhancing
the flow of capital, labor, and technology
_____ refers to the process of allowing efficient geographic distribution of business
activities within and among countries. - ANSWER-Spatial transformations
Which of the following is NOT an objective of NAFTA? - ANSWER-The creation of a
uniform currency in North America
, The union created when member countries of an economic and monetary union work
closely with one another to arrive at common defense and foreign policies and
behave as a single country is known as a(n) _____. - ANSWER-Political Union
The appropriate approach for countries interested in regional integration could
include the following three fundamentals: start small, think global, and compensate
the least fortunate. - ANSWER-True
A British firm may need dollars to pay for U.S. imports. It can work with banks in
London to exchange pounds for dollars to make this payment via electronic transfer.
This is an example of a(n) _____ market. - ANSWER-Spot
According to the text, _____ countries' exports are growing the fastest. - ANSWER-
Asian
Acquisitions of a foreign company, creation of new manufacturing or research
facilities abroad, and expansion of an existing plant in a foreign country are all
examples of _____. - ANSWER-foreign direct investment
In this system, a currency's value depends partly upon active government
intervention in the foreign exchange market. - ANSWER-managed floating exchange
rate system
Of the following, which is NOT listed in the text as a reason why currency values can
change? - ANSWER-WTO Mandates
The _____ market is an informal OTC market run by banks. - ANSWER-forward
The difference between bid and ask prices of a currency, or the fee earned by the
bank is called the _____. - ANSWER-bid-ask spread
The forex market consists of spot, forward, and _____ markets. - ANSWER-futures
The net of services exports and imports is called the ______. - ANSWER-services
balance
The system in which the country pegs its currency at a fixed rate to a major currency
or basket of currencies, while the exchange rate fluctuates within a narrow margin
around a central rate is called a(n) _____. - ANSWER-fixed exchange rate system
What is dollarization? - ANSWER-Using the dollar or some other foreign currency
together with or instead of a domestic currency.
_____ refers to the added return required by investors for risk associated with a
security or asset. - ANSWER-A risk premium
______ communication refers to tone of voice, gestures, eye contact, body positions,
facial grimaces, and other body language that accompanies verbal communication. -
ANSWER-Nonverbal
Choice Questions and Answers
An office uses printer paper made primarily of recycled paper. This is an example of
a ______ policy. - ANSWER-Sustainable development
During the mid-18 th century, British economist ________, who came to be known
as the father of free market and open trade systems, recognized the absurdity of
Mercantilism. - ANSWER-Adam Smith
A group of states with convergent social, economic, and monetary policies is called
a(n) _____. - ANSWER-economic union
According to the text, which of the following is the second stage of regional
integration? - ANSWER-Customs Union
All 28 EU countries are permitted to use the euro as their currency. - ANSWER-
False
All of the following statements about regional integration are true EXCEPT: -
ANSWER-regional integration should initially address a broad, ill-defined area of
cooperation.
Both common markets and economic unions abolish restrictions on factor
movements. - ANSWER-True
Generally, countries within trading blocs that have significantly lowered trade barriers
have done better economically than others. - ANSWER-True
In which country is the EU headquartered? - ANSWER-Belgium
NAFTA is in which stage of the economic integration process? - ANSWER-First
Stage (free trade area)
Of the following statements regarding the euro, which is NOT true? - ANSWER-The
U.K., Denmark, and Sweden use the euro as their currency.
Of the following, which is NOT a cost of regional integration? - ANSWER-Enhancing
the flow of capital, labor, and technology
_____ refers to the process of allowing efficient geographic distribution of business
activities within and among countries. - ANSWER-Spatial transformations
Which of the following is NOT an objective of NAFTA? - ANSWER-The creation of a
uniform currency in North America
, The union created when member countries of an economic and monetary union work
closely with one another to arrive at common defense and foreign policies and
behave as a single country is known as a(n) _____. - ANSWER-Political Union
The appropriate approach for countries interested in regional integration could
include the following three fundamentals: start small, think global, and compensate
the least fortunate. - ANSWER-True
A British firm may need dollars to pay for U.S. imports. It can work with banks in
London to exchange pounds for dollars to make this payment via electronic transfer.
This is an example of a(n) _____ market. - ANSWER-Spot
According to the text, _____ countries' exports are growing the fastest. - ANSWER-
Asian
Acquisitions of a foreign company, creation of new manufacturing or research
facilities abroad, and expansion of an existing plant in a foreign country are all
examples of _____. - ANSWER-foreign direct investment
In this system, a currency's value depends partly upon active government
intervention in the foreign exchange market. - ANSWER-managed floating exchange
rate system
Of the following, which is NOT listed in the text as a reason why currency values can
change? - ANSWER-WTO Mandates
The _____ market is an informal OTC market run by banks. - ANSWER-forward
The difference between bid and ask prices of a currency, or the fee earned by the
bank is called the _____. - ANSWER-bid-ask spread
The forex market consists of spot, forward, and _____ markets. - ANSWER-futures
The net of services exports and imports is called the ______. - ANSWER-services
balance
The system in which the country pegs its currency at a fixed rate to a major currency
or basket of currencies, while the exchange rate fluctuates within a narrow margin
around a central rate is called a(n) _____. - ANSWER-fixed exchange rate system
What is dollarization? - ANSWER-Using the dollar or some other foreign currency
together with or instead of a domestic currency.
_____ refers to the added return required by investors for risk associated with a
security or asset. - ANSWER-A risk premium
______ communication refers to tone of voice, gestures, eye contact, body positions,
facial grimaces, and other body language that accompanies verbal communication. -
ANSWER-Nonverbal
