-
web.groovymark@gmail.com
- December 7, 2024
Question 21
What is the main benefit of foreign direct investment (FDI) for host countries?
a) Access to international markets
b) Increased tax revenue
c) Lower regulatory barriers
d) Higher consumer spending
Answer: b) Increased tax revenue
Explanation:
Foreign direct investment (FDI) brings economic benefits to host countries, including increased tax revenue from businesses operating within their borders.
Question 22
What is the main feature of a floating exchange rate system?
a) Government sets a fixed value for the currency
b) Currency value is determined by market forces
c) Currency is pegged to another currency or basket of currencies
d) Exchange rates are regulated by international organizations
Answer: b) Currency value is determined by market forces
Explanation:
In a floating exchange rate system, the value of a currency fluctuates according to supply and demand in the foreign exchange market.
Question 23
Which global strategy focuses on developing entirely new products or services for international markets?
a) Diversification
b) Market penetration
c) Product adaptation
d) Standardization
Answer: a) Diversification
Explanation:
Diversification involves creating new products or services specifically designed for international markets, often to reduce risk and tap into new customer segments.
Question 24
Which pricing strategy involves charging a high initial price to recover investment costs and then gradually lowering the price over time?
a) Penetration pricing
b) Price skimming
c) Promotional pricing
d) Cost-plus pricing
Answer: b) Price skimming
Explanation:
Price skimming involves setting a high initial price to recover investment costs and maximize profits from early adopters, then gradually reducing the price to attract more price-sensitive customers.
Question 25
What is the purpose of anti-dumping laws in international trade?
a) To reduce trade barriers between countries
b) To prevent foreign companies from selling goods below cost
c) To protect intellectual property rights
d) To promote free trade
Answer: b) To prevent foreign companies from selling goods below cost
Explanation:
Anti-dumping laws are designed to protect domestic industries by preventing foreign companies from selling goods at unfairly low prices that could harm local businesses.
Question 26
Which organization provides low-interest loans to developing countries for projects aimed at improving infrastructure and reducing poverty?
a) International Monetary Fund
b) World Bank
c) World Trade Organization
d) United Nations
Answer: b) World Bank
Explanation:
The World Bank provides financial and technical assistance to developing countries, with a focus on reducing poverty and supporting sustainable development through infrastructure projects.
Question 27
Which type of economic integration involves the free movement of goods, services, and factors of production among member countries?
a) Free trade area
b) Common market
c) Customs union
d) Economic union
Answer: b) Common market
Explanation:
A common market allows for the free movement of goods, services, and factors of production (like labor and capital) between member countries, along with the elimination of internal tariffs.
Question 28
What is the primary benefit of economies of scope?
a) Reducing production costs by producing in large volumes
b) Lowering operational costs by expanding into new markets
c) Reducing costs by producing multiple products using the same resources
d) Increasing revenue by focusing on a single product line
Answer: c) Reducing costs by producing multiple products using the same resources
Explanation:
Economies of scope occur when a company reduces costs by using the same resources to produce a variety of goods, thereby increasing efficiency across different product lines.
Question 29
What is a key criticism of the World Trade Organization (WTO)?
a) It focuses too much on environmental issues
b) It promotes trade barriers between nations
c) It disproportionately benefits developed countries
d) It offers loans with high interest rates to developing countries
Answer: c) It disproportionately benefits developed countries
Explanation:
Critics argue that the WTO's trade policies and dispute resolution processes often favor developed countries at the expense of developing nations.
Question 30
Which pricing strategy involves setting a low price to gain market share quickly, then raising prices once a customer base is established?
a) Price skimming
b) Penetration pricing
c) Premium pricing
d) Cost-plus pricing
Answer: b) Penetration pricing
Explanation:
Penetration pricing is a strategy where a company sets a low initial price to attract customers and build market share, then gradually increases the price once they’ve gained a significant foothold.
Question 31
What is the goal of the International Telecommunication Union (ITU)?
a) To regulate international monetary systems
b) To promote free trade among member countries
c) To standardize and regulate telecommunication technologies
d) To provide financial assistance to developing countries
Answer: c) To standardize and regulate telecommunication technologies
Explanation:
The International Telecommunication Union (ITU) is a specialized agency of the United Nations that oversees global standards and regulations for telecommunication technologies.
Question 32
What is the primary purpose of corporate social responsibility (CSR) initiatives?
a) To maximize shareholder value
b) To improve a company’s financial performance
c) To enhance a company’s reputation and positively impact society
d) To reduce operational costs through efficiency
Answer: c) To enhance a company’s reputation and positively impact society
Explanation:
CSR initiatives aim to go beyond financial objectives by contributing positively to society, improving a company’s image, and ensuring sustainable and ethical business practices.
Question 33
Which factor most significantly affects a country’s comparative advantage in global trade?
a) Technological advancements
b) Population growth
c) Labor costs
d) Tariff rates
Answer: a) Technological advancements
Explanation:
Technological advancements can significantly impact a country’s comparative advantage by increasing efficiency, reducing production costs, and improving the quality of goods and services offered.
Question 34
What does the term “digital divide” refer to in the context of globalization?
a) The gap between rich and poor countries in internet access and use
b) The legal barriers to digital transactions across borders
c) The variation in digital technology costs between countries
d) The differing intellectual property regulations for digital content
Answer: a) The gap between rich and poor countries in internet access and use
Explanation:
The digital divide refers to the disparity in access to digital technologies and the internet between different socio-economic groups, especially between developed and developing countries.
Question 35
What is the purpose of antitrust laws in global business?
a) To encourage free trade between nations
b) To protect companies from foreign competition
c) To prevent monopolistic practices and promote competition
d) To regulate international financial markets
Answer: c) To prevent monopolistic practices and promote competition
Explanation:
Antitrust laws are designed to prevent monopolies and unfair business practices, ensuring that markets remain competitive and consumers benefit from fair pricing and product choices.
Question 36
Which term refers to the act of a company moving its operations to a foreign country to reduce costs?
a) Outsourcing
b) Offshoring
c) Licensing
d) Franchising
Answer: b) Offshoring
Explanation:
Offshoring occurs when a company relocates part of its operations to a foreign country, typically to reduce labor costs, take advantage of favorable regulations, or increase efficiency.
Question 37
What is a key characteristic of a transnational strategy in global business?
a) Developing entirely new products for foreign markets
b) Standardizing products across all markets with minimal customization
c) Combining global standardization with local responsiveness
d) Focusing exclusively on domestic markets
Answer: c) Combining global standardization with local responsiveness
Explanation:
A transnational strategy seeks to balance the efficiencies of standardization with the need to adapt products or services to meet the demands of local markets.
Question 38
What is the primary purpose of the United Nations Conference on Trade and Development (UNCTAD)?
a) To regulate international financial markets
b) To promote sustainable development and global trade
c) To resolve trade disputes between member nations
d) To oversee global telecommunications regulations
Answer: b) To promote sustainable development and global trade
Explanation:
UNCTAD works to promote the integration of developing countries into the world economy, focusing on trade and sustainable development.
Question 39
Which economic integration stage involves the harmonization of economic policies between member states?
a) Free trade area
b) Common market
c) Economic union
d) Customs union
Answer: c) Economic union
Explanation:
In an economic union, member countries not only allow the free movement of goods and services but also coordinate their economic policies, including monetary and fiscal policies.
Question 40
What is the primary role of the Financial Accounting Standards Board (FASB)?
a) To develop and oversee global trade regulations
b) To establish accounting standards in the United States
c) To provide loans to developing countries
d) To facilitate foreign direct investment
Answer: b) To establish accounting standards in the United States
Explanation:
The Financial Accounting Standards Board (FASB) is responsible for developing and overseeing Generally Accepted Accounting Principles (GAAP) in the U.S.
