BUS 312: INTERNATIONAL BUSINESS
1.
The following are types of international business activities or transactions EXCEPT:
A.
B.
C.
D.
E.
2.
Which of the following is NOT an advantage of Foreign Direct Investment?
A.
B.
C.
D.
E.
3.
Licensing
Foreign Direct Investment
Joint Venture
Strategic Alliance
Franchising
The main difference between licensing and franchising is:
A.
B.
C.
D.
E.
6.
Licensing
Foreign Direct Investment
Joint Venture
Strategic Alliance
None of the above
Which of the following is the best internationalisation strategy in terms of potential higher
returns?
A.
B.
C.
D.
E.
5.
Economic Efficiency worldwide
Tax Revenues for the host country
New technology brought to the country
Changes in culture observed
None of the above
Which of the following is the best internationalisation strategy in terms of low risk?
A.
B.
C.
D.
E.
4.
Exports
Foreign Direct Investments
Imports
International Investments
None of the above
Licensing does not require signing a contract
Franchising is a Foreign Direct Investment activity whereas licensing is not
Franchising requires more control from the franchiser
Licensing is usually more long-term than franchising
None of the above
What is NOT an obvious reason for studying international business?
A.
B.
C.
D.
E.
7.
What is NOT an obvious reason for a firm to internationalise?
A.
B.
C.
D.
E.
8.
Public policies are often related to international business
Learn about different cultures
Update ourselves with techniques from abroad
Obtain global skills for a successful career
None of the above.
Market Expansion
Acquisition of resources
Keep up with global competitive forces
Resist to the international trading barriers
None of the above.
Which of the following countries had the greater growth in internationalisation activities in
the last 40 years as a source but not as a destination?
A.
B.
C.
D.
E.
Cyprus
United Kingdom
Japan
Poland
None of the above.
Assume that we have two countries, Sri Lanka and China. As the Table shows, both countries can
produce Tea and Rice and their respective productivity is measured in unit labour requirements
i.e. number of hours of labour required to produce a kilo of rice or a pack of tea leaves. Use the
table below to answer questions 9-12.
9.
TEA
LABOUR HOURS
SRI LANKA
2
4
200
CHINA
10
5
200
According to the absolute advantage theory of Adam Smith what should China produce?
A.
B.
C.
D.
E.
10.
RICE
Rice
Tea
Both rice and tea
Nothing
None of the above.
According to the comparative advantage theory what should China produce?
A.
B.
C.
D.
E.
11.
What is the opportunity cost of producing rice for China ?
A.
B.
C.
D.
E.
12.
0,5
2
1,25
0,8
None of the above.
Leontief’s paradox implies that:
A.
B.
C.
D.
E.
14.
0,5
2
5
0,2
None of the above.
What is the opportunity cost of producing tea for Sri Lanka?
A.
B.
C.
D.
E.
13.
Rice
Tea
Both rice and tea
Nothing
None of the above.
Hecksher-Ohlin theory of factors endowments is invalid
Absolute advantage theory is wrong
Comparative advantage theory does not comply with existing data
USA is just the exception to all the other countries
None of the above
The country-similarity theory of Steffan Linder says that:
A.
B.
C.
D.
E.
International trade theories explain well all aspects of industrial trade
Absolute advantage theory is better than the comparative advantage theory
International trade theories explain only intra-industry trade
International trade theories explain only inter-industry trade
None of the above
15.
Which of the following is NOT a stage in the international product life cycle theory?
A. Recession
B. Growth
C. Maturity
D. Introduction
E. None of the above
16.
Which of the following does NOT fall within the criticism exercised on international
product life cycle theory?
A. Obsolescence of products
B. Trivial concern of cost for luxury products
C. Labour intensive products do not fall under the theory
D. Production and innovation sometimes happen at the same time
E. None of the above
17.
What does Porter’s Diamond theory suggest as the determinants of whether a firm will
be successful in international trade?
A. The interaction of absolute and comparative advantage of a firm
B. The interaction of the country and firm factor conditions, rivalry, demand and related
industries
C. Only the adequacy of capital and labour in the country and the firm
D. The adjustment to the cultural differences
E. None of the above
The following figure illustrates the relationship between the price of the American
Dollar against the British Pound and the Quantity of Dollars demanded. Use it to
answer questions 18-21.
18.
What will happen when the prices of goods in Britain increase?
A.
B.
C.
D.
E.
19.
What will happen when the prices of goods in USA increase?
A.
B.
C.
D.
E.
20.
The demand curve will shift to the left
The supply curve will move to the right
The demand curve will move to the right and the supply curve to the left
The demand curve will move to the left and the supply curve to the right
None of the above
The demand curve will shift to the left
The supply curve will move to the right
The demand curve will move to the right and the supply curve to the left
The demand curve will move to the left and the supply curve to the right
None of the above
When the dollar is devalued against the British Pound this means that:
A. Demand for American goods will increase causing an increase in demand for American
dollars
B. Demand for American goods will decrease causing an increase in demand for American
dollars
C. Demand for American goods will decrease causing a decrease in demand for American
dollars
D. Demand for American goods will increase causing a decrease in demand for American
dollars
E. None of the above
21.
When facing a trade deficit, what could the USA Central Bank do to keep the exchange
rate between dollar and British pound fixed?
A.
B.
C.
D.
E.
22.
Buy British pounds
Sell British pounds
Sell dollars
Buy dollars
None of the above
What does the Balance of Payments measure?
A. Business transactions within a country for a certain period of time
B. The flow of economic transactions between the residents of a country and the residents of
the rest of the world for a certain period of time
C. Only goods and services imports and exports of a country within a year
D. Investments and transfer payments between the business firms of a country and the
business firms of the rest of the world for a certain period of time
E. None of the above
23.
When dealing with foreign exchange transactions what is the potential usefulness of a
“Forward” for a multinational manager?
A.
B.
C.
D.
E.
24.
Minimises profit prospects and helps in planning
Minimises risk and facilitates planning
Helps making a foreign exchange profit from international transactions in the future
Appears as the best solution when the manager has to re-convert currency in the future
None of the above
What is a “Swap”?
A. exchange of currencies in the spot market accompanied by an agreement to reverse the
transaction in the future
B. exchange of currencies in the spot market with no right to reverse the transaction anytime
in the future
C. exchange of currencies in the spot market at a fixed exchange rate
D. exchange of currencies in the forward market at a privileged exchange rate
E. None of the above
25.
What is the most widely used method of buying foreign exchange in the world?
A.
B.
C.
D.
E.
Spot
Swap
Forward
International markets
None of the above