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web.groovymark@gmail.com
- December 7, 2024
Question 01
What is the term for a company’s practice of moving jobs to a foreign location where labor costs are lower?
a) Outsourcing
b) Offshoring
c) Reshoring
d) Exporting
Answer: b) Offshoring
Explanation:
Offshoring involves relocating business processes or production to a foreign country where labor costs are lower to reduce overall costs.
Question 02
Which pricing strategy involves setting high prices for new products to maximize revenue from early adopters?
a) Price skimming
b) Penetration pricing
c) Competitive pricing
d) Psychological pricing
Answer: a) Price skimming
Explanation:
Price skimming sets an initially high price to maximize profit from customers willing to pay a premium, then gradually lowers the price as demand decreases.
Question 03
Which concept involves tailoring a company’s products and strategies to fit local markets while maintaining a global presence?
a) Standardization
b) Adaptation
c) Glocalization
d) Localization
Answer: c) Glocalization
Explanation:
Glocalization is a blend of global and local strategies, allowing companies to adapt their offerings to local preferences while maintaining a global identity.
Question 04
What is the term for a country limiting the amount of a particular product that can be imported from another country?
a) Tariff
b) Quota
c) Subsidy
d) Embargo
Answer: b) Quota
Explanation:
A quota is a trade restriction that limits the number or value of goods that can be imported into a country, protecting domestic industries from foreign competition.
Question 05
Which term refers to selling goods in a foreign market at a price below their cost of production?
a) Subsidizing
b) Dumping
c) Price fixing
d) Protectionism
Answer: b) Dumping
Explanation:
Dumping occurs when a company exports goods at a price lower than their cost of production or lower than in their domestic market to gain market share abroad.
Question 06
What type of market structure has many buyers and sellers, identical products, and no barriers to entry?
a) Monopoly
b) Oligopoly
c) Perfect competition
d) Monopolistic competition
Answer: c) Perfect competition
Explanation:
In a perfectly competitive market, no single buyer or seller can influence the price, and firms sell identical products with easy entry and exit.
Question 07
Which exchange rate system allows a currency to fluctuate according to supply and demand in the market?
a) Fixed exchange rate
b) Pegged exchange rate
c) Floating exchange rate
d) Currency band
Answer: c) Floating exchange rate
Explanation:
A floating exchange rate allows currency values to fluctuate based on market conditions, such as supply and demand, without direct government intervention.
Question 08
Which practice involves a company acquiring or merging with another company in a foreign country to expand its operations?
a) Licensing
b) Franchising
c) Foreign direct investment
d) Outsourcing
Answer: c) Foreign direct investment
Explanation:
Foreign direct investment (FDI) occurs when a company makes a substantial investment in a foreign country, either by acquiring assets or setting up operations.
Question 09
What type of tax is imposed on imported goods to protect domestic industries?
a) Subsidy
b) Tariff
c) Quota
d) Excise tax
Answer: b) Tariff
Explanation:
A tariff is a tax imposed on imported goods to raise their price and protect domestic industries from foreign competition.
Question 10
Which trade organization oversees international trade agreements and helps resolve disputes between member countries?
a) World Bank
b) International Monetary Fund
c) World Trade Organization
d) United Nations
Answer: c) World Trade Organization
Explanation:
The World Trade Organization (WTO) oversees global trade agreements, facilitates negotiations, and resolves trade disputes between member countries.
Question 11
Which legal system is based on written codes and laws, rather than on judicial precedents?
a) Common law
b) Civil law
c) Religious law
d) Customary law
Answer: b) Civil law
Explanation:
Civil law systems rely on comprehensive written legal codes, and judges apply these laws to individual cases rather than relying on past judicial decisions.
Question 12
Which term refers to an economy where private businesses operate for profit with limited government interference?
a) Command economy
b) Mixed economy
c) Market economy
d) Traditional economy
Answer: c) Market economy
Explanation:
A market economy allows businesses and individuals to make production and pricing decisions based on supply and demand with minimal government intervention.
Question 13
Which agreement reduced tariffs and trade barriers between the United States, Canada, and Mexico?
a) MERCOSUR
b) ASEAN
c) NAFTA
d) EU
Answer: c) NAFTA
Explanation:
The North American Free Trade Agreement (NAFTA) was established to reduce trade barriers between the United States, Canada, and Mexico, facilitating freer trade.
Question 14
What is the purpose of intellectual property rights, such as patents and copyrights?
a) To increase market competition
b) To protect creative and innovative works
c) To limit international trade
d) To promote free use of ideas
Answer: b) To protect creative and innovative works
Explanation:
Intellectual property rights, including patents and copyrights, are designed to protect the creators of original works by granting them exclusive rights to their use.
Question 15
Which economic theory suggests that countries should specialize in the production of goods they can produce most efficiently?
a) Absolute advantage
b) Comparative advantage
c) Protectionism
d) Mercantilism
Answer: b) Comparative advantage
Explanation:
Comparative advantage theory argues that countries should specialize in producing goods where they have a lower opportunity cost, leading to more efficient global trade.
Question 16
What is the term for the process by which governments provide financial assistance to domestic industries to help them compete globally?
a) Tariff
b) Subsidy
c) Quota
d) Dumping
Answer: b) Subsidy
Explanation:
A subsidy is financial assistance provided by governments to domestic industries, reducing their production costs and allowing them to compete more effectively on a global scale.
Question 17
Which financial tool allows investors to buy or sell a currency at a specific rate on a future date to hedge against currency fluctuations?
a) Currency swap
b) Currency option
c) Currency futures contract
d) Forward contract
Answer: c) Currency futures contract
Explanation:
A currency futures contract locks in an exchange rate for the purchase or sale of a currency on a future date, helping companies manage risks associated with currency fluctuations.
Question 18
What type of organizational structure involves dividing a company’s operations based on different product lines?
a) Functional structure
b) Geographic structure
c) Product structure
d) Matrix structure
Answer: c) Product structure
Explanation:
A product structure organizes a company's operations around its product lines, with each product having its own resources and team to manage production and sales.
Question 19
Which concept involves using digital technologies to automate repetitive tasks, enabling workers to focus on more complex responsibilities?
a) Artificial intelligence
b) Robotics
c) Machine learning
d) Process automation
Answer: d) Process automation
Explanation:
Process automation uses digital tools and software to automate routine, repetitive tasks, freeing up employees to focus on higher-value activities.
Question 20
Which international agreement aims to reduce greenhouse gas emissions and combat climate change?
a) Kyoto Protocol
b) Paris Agreement
c) Montreal Protocol
d) Rio Declaration
Answer: b) Paris Agreement
Explanation:
The Paris Agreement is a global climate accord aimed at limiting the increase in global temperatures by reducing greenhouse gas emissions from participating countries.
