OA Exams

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Question 21

Which term refers to a temporary restriction imposed by a government on the export or import of goods for economic or political reasons?

a) Tariff
b) Quota
c) Embargo
d) Subsidy

Answer: c) Embargo

Explanation:
An embargo is a government-imposed ban on trade with a specific country or the exchange of certain goods, often used for political or economic reasons.

Question 22

Which law prohibits U.S. companies from making corrupt payments to foreign officials to obtain or retain business?

a) Sarbanes-Oxley Act
b) Foreign Corrupt Practices Act
c) Sherman Antitrust Act
d) Dodd-Frank Act

Answer: b) Foreign Corrupt Practices Act

Explanation:
The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and individuals from offering or paying bribes to foreign officials to gain or retain business.

Question 23

Which of the following is a cooperative institution that helps member countries stabilize their economies by providing financial assistance?

a) World Bank
b) United Nations
c) International Monetary Fund
d) World Trade Organization

Answer: c) International Monetary Fund

Explanation:
The International Monetary Fund (IMF) provides financial assistance to countries facing economic instability, helping to stabilize their economies and exchange rates.

Question 24

Which term refers to a company’s ethical responsibility to minimize harm and promote good practices in society and the environment?

a) Corporate social responsibility
b) Corporate governance
c) Stakeholder management
d) Ethical capitalism

Answer: a) Corporate social responsibility

Explanation:
Corporate social responsibility (CSR) involves a company's commitment to ethical practices, including reducing environmental impact and promoting social welfare.

Question 25

Which economic concept measures the total value of goods and services produced within a country’s borders?

a) Gross domestic product
b) Gross national product
c) Purchasing power parity
d) Balance of payments

Answer: a) Gross domestic product

Explanation:
Gross domestic product (GDP) measures the total market value of all goods and services produced within a country's borders during a specific period.

Question 26

Which type of trade agreement involves the removal of tariffs and other trade barriers between member countries while maintaining independent trade policies with non-members?

a) Free trade area
b) Customs union
c) Common market
d) Economic union

Answer: a) Free trade area

Explanation:
A free trade area removes tariffs and trade barriers between member countries but allows each country to maintain its own trade policies with non-member nations.

Question 27

What is the main advantage of using a transnational strategy in international business?

a) Low costs through standardization
b) Ability to customize products for local markets
c) Greater control over global operations
d) Flexibility in adjusting to legal environments

Answer: b) Ability to customize products for local markets

Explanation:
A transnational strategy combines global standardization with local adaptation, allowing businesses to customize their products for different markets while maintaining efficiencies.

Question 28

Which process involves the redesign of a company’s business processes to achieve significant improvements in performance?

a) Reengineering
b) Outsourcing
c) Benchmarking
d) Vertical integration

Answer: a) Reengineering

Explanation:
Reengineering involves the radical redesign of core business processes to achieve significant improvements in productivity, efficiency, and quality.

Question 29

Which strategy involves a company establishing operations in a foreign market by building new facilities from the ground up?

a) Greenfield investment
b) Joint venture
c) Strategic alliance
d) Franchising

Answer: a) Greenfield investment

Explanation:
A Greenfield investment occurs when a company builds new facilities in a foreign market from scratch, allowing for full control of operations and the ability to customize the setup.

Question 30

What is the primary objective of the World Bank?

a) Promote international trade
b) Provide financial assistance to developing countries
c) Resolve trade disputes between nations
d) Stabilize global currency exchange rates

Answer: b) Provide financial assistance to developing countries

Explanation:
The World Bank provides low-interest loans, grants, and technical assistance to developing countries to support infrastructure projects and poverty reduction efforts.

Question 31

Which term refers to the manipulation of a company’s financial records to deceive stakeholders?

a) Creative accounting
b) Fraudulent reporting
c) Accounting irregularities
d) Whistleblowing

Answer: b) Fraudulent reporting

Explanation:
Fraudulent reporting involves deliberately misrepresenting a company's financial statements to deceive stakeholders, such as investors, regulators, and the public.

Question 32

What type of foreign direct investment (FDI) involves acquiring or merging with a local firm in the target country?

a) Horizontal FDI
b) Vertical FDI
c) Greenfield FDI
d) Brownfield FDI

Answer: d) Brownfield FDI

Explanation:
Brownfield FDI occurs when a company acquires or merges with an existing business in the target country rather than starting from scratch (Greenfield investment).

Question 33

What is a key feature of a customs union?

a) Free movement of labor and capital between member states
b) Common trade policies toward non-member countries
c) Uniform taxation systems across member countries
d) Elimination of all barriers to trade between members

Answer: b) Common trade policies toward non-member countries

Explanation:
A customs union allows free trade between member countries while adopting common external tariffs and trade policies toward non-member countries.

Question 34

What is the main role of the Financial Accounting Standards Board (FASB)?

a) Regulate the stock market
b) Develop and issue accounting standards in the U.S.
c) Oversee financial reporting of public companies
d) Enforce tax regulations for corporations

Answer: b) Develop and issue accounting standards in the U.S.

Explanation:
The Financial Accounting Standards Board (FASB) is responsible for setting and revising generally accepted accounting principles (GAAP) in the United States.

Question 35

Which factor of Hofstede’s cultural dimensions addresses how comfortable a society is with uncertainty and ambiguity?

a) Power distance
b) Individualism vs. collectivism
c) Masculinity vs. femininity
d) Uncertainty avoidance

Answer: d) Uncertainty avoidance

Explanation:
Uncertainty avoidance reflects the extent to which a culture feels comfortable with ambiguity and uncertainty, influencing how societies approach risk and change.

Question 36

Which economic measure captures the total value of goods and services produced by a country’s citizens, regardless of their location?

a) Gross domestic product (GDP)
b) Purchasing power parity (PPP)
c) Gross national product (GNP)
d) Balance of payments (BOP)

Answer: c) Gross national product (GNP)

Explanation:
Gross national product (GNP) measures the total value of goods and services produced by a country's citizens, whether within the country or abroad.

Question 37

Which business practice refers to an arrangement in which a company grants another business the right to use its brand and operating methods in exchange for a fee?

a) Licensing
b) Outsourcing
c) Franchising
d) Joint venture

Answer: c) Franchising

Explanation:
Franchising allows a business to expand by granting the right to use its brand, products, and operating methods to another party in exchange for fees or royalties.

Question 38

Which legal system is based on religious teachings and governs personal and public conduct?

a) Common law
b) Civil law
c) Customary law
d) Religious law

Answer: d) Religious law

Explanation:
Religious law is a system based on religious principles, governing both personal and public behavior, and is prevalent in countries that follow specific religious doctrines, such as Islamic law.

Question 39

Which factor is likely to increase a company’s exposure to political risk when entering a foreign market?

a) Stable economic environment
b) Established legal system
c) Political instability
d) High literacy rates

Answer: c) Political instability

Explanation:
Political instability, such as frequent changes in government, civil unrest, or policy uncertainty, increases a company’s exposure to political risk when operating in foreign markets.

Question 40

What is a characteristic of a decentralized organizational structure?

a) Decision-making authority is concentrated at the top
b) Employees at all levels are empowered to make decisions
c) Operations are centrally managed from headquarters
d) There is a formal chain of command with strict oversight

Answer: b) Employees at all levels are empowered to make decisions

Explanation:
In a decentralized structure, decision-making authority is distributed across various levels of the organization, allowing employees to make decisions independently.

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