Chapter 1

1.
The "Triad" of free-trade blocs includes all of the following except: Your Answer: Russian Federation

2.
The World Economic Forum held in Davos Switzerland in 2009 had as its theme: Your Answer: "Shaping the Post-Crisis World"

3.
Which country experienced the greatest growth rate in gross domestic product between 2000 and 2006? Your Answer: China

4.
Which country listed below is *not* a member of CAFTA? Your Answer: Venezuela

5.
Which development has had the greatest impact on international managers? Your Answer: Information technology

6.
When examining trends in the globalization of human capital, Forrester Research, and several other researchers have predicted which effect on the U.S. labor market? Your Answer: The labor market in the U.S. will decrease because more jobs will be shifted offshore

7.
The major concern for multi-national corporations is which of the following?

Correct Answer: Appropriability of technology

8.
If a government were to seize the assets of a MNC and not provide adequate compensation to the owners, the government would be following which practice? Your Answer: Expropriation

9.
If an event occurred that only impacted one industry or only a few companies in a country, the event would most likely be classified as: Your Answer: A micropolitical risk event

10.
Which event would not be considered a political risk event? Your Answer: Consumer preference toward a national company

11.
An event which affects all foreign firms doing business in a country is called _______________________. Your Answer: A macropolitical risk event

12.
For an MNC, what is the most important resource for current information on the political environment in the host country? Correct Answer: Host-country national managers

13.
What method would most likely be successful in keeping a subsidiary and the host nation dependent on the parent corporation? Your Answer: Input control

14.

Which method of analyzing economic risk relies on a few easily measurable and timely criteria believed to reflect or indicate changes in the creditworthiness of the country? Correct Answer: The checklist approach

15.
Which method of risk reduction would most likely be classified as a hedging technique? Your Answer: Local debt financing

16.
Which type of law would most likely be defined as a comprehensive set of laws organized into a code? Your Answer: Civil law

17.
China has become the world's largest exporter, surpassing Germany in 2009. Your Answer: True

18.
Emerging-market companies have yet to buy stakes in any of the large scale corporations of the developed countries. Your Answer: False

19.
Japan, with a growth rate in GDP of over 9% in 2003, has experienced the fastest growth rate in the world. Correct Answer: False

20.
The globalization of human capital is predicted to decrease the number of service-sector jobs available in the U.S. Your Answer: True

21.
Nationalization occurs when a government takes possession of the foreign owned assets of a MNC. Correct Answer: False

22.
Contract law plays a major role in international business transactions because of the complexities arising from differences in legal systems. Your Answer: True

23.
An advantage of quantitative systems of political risk assessment is the use and primary reliance on past events. Your Answer: False

24.
Market control, as a method of keeping the subsidiary and the host nation dependent on the parent corporation, involves keeping certain key subsidiary management positions in the hands of expatriate or home-office managers. Correct Answer: False

25.
Political risk often has a direct effect on the ownership and control of the foreign firm. Your Answer: True

26.
The qualitative approach to evaluating economic risk assesses the competence of that country's leaders and analyzing the types of policies they are likely to implement. Your Answer: True

27.
Under civil law, past court decisions act as precedents to the interpretation of the law and common customs.

Correct Answer: False

28.
Use of patents, trademarks, trade names, copyrights, and trade secrets are the most common methods of protecting proprietary technology. Your Answer: True

29.
Business-to-business transactions provide the greatest opportunities for the use of e-business. Your Answer: True

30.
Equity sharing is a method of managing political risk that includes the initiation of joint ventures with nationals to reduce political risk. Your Answer: True

31.
A country's tax system influences the attractiveness of investing in that country and affects the relative level of profitability for an MNC. Your Answer: True