The following multiple choice questions (approximately one per chapter or major topic area) are examples of some of the questions you might be asked. Most often, but not always, you'll be asked to synthesize, compare/contrast and apply information. So just being able to define terms won't be enough.

You also will be asked questions that are based on supply and demand analysis and using graphs to answer questions. These types of questions we will work with in class so they are not represented here.

1. Which of the following statements about the Putin re-election WSJ article is false?

a.  Putin is violating the "freedom of the press" building block of democracy.
b.  Most people believe that Putin's economic liberalization policies are compatible with "managed democracy".
c.  Russia's political system under Putin has been labeled "soft-authoritarianism".
d.  Putin's economic policies will be focused on opening the economy to market forces.
            Ans. A

2.  Which of the following statements about he WSJ articles is true?

a.  Kodak is asking the W.T.O. to stop Sony, a Japanese firm, from violating its digital imaging intellectual property rights.
b.  The disagreement between the E.U., and the U.S. over global accounting rules centers around how to account for before tax profit.
c.  Both Thailand and South Korea are attempting to adopt "transparency" as one of the building blocks of democracy.
d.  Toyota's ads for a Prado land Cruiser focused on patriotism not brand loyalty.
            Ans. C

3.  Which of the following is an attribute that distinguishes the high-need achiever?

a.  Wanting supervisors to be responsible for finding solutions to problems.
b.  Wanting concrete feedback on performance.
c.  Wanting to maintain an amiable and continuing relationship with other people.
d.  Setting moderate goals for taking calculated risks.
            Ans. B

4. The risks associated with doing business in a country are typically lower when countries

a. Are politically stable developing nations with mixed economies
b. Are economically advanced and politically stable democratic nations.
c. Are underdeveloped, politically unstable democratic nations.
d. Have a high capacity for growth
            Ans.  B

5.  Economies of scale arise when

a. average fixed costs are falling
b. fixed costs are large relative to variable costs
c. when workers are able to specialize in a particular tasks.
d. an economy is self-sufficient in production
           Ans. C

6. Which of the following statements about Canada and free trade is false?

a.  The most important reason for Canada to seek a free trade agreement with the U.S. was to harmonize its environmental laws with the U.S.
b.  Canada chose not to open its cultural industries to free trade agreements.
c.  Canada felt strong competitive pressure coming from Asian firms so sought a free trade agreement with the U.S.
d.  Canada chose a free trade pact with the U.S. since the U.S. was more willing to protect its domestic firms from foreign competition.
            Ans. A

7. Which of the following is NOT an objective of the Single European Act?

a. Removal of border controls
b. Increase competition
c. Create a single currency
d. Increase competition in the financial services industry
            Ans.  C

8.  The main redistribution effect of a tariff is the transfer of income from

a.  domestic producers to domestic buyers
b.  domestic buyers to domestic producers
c.  domestic producers to domestic government
d.  domestic government to domestic consumers
            Ans. B

9. A limitation of the Porter diamond is that:

a.  companies have fewer opportunities to import factors from abroad than they did historically.
b.  it assumes companies will seek global market niches rather than responding to domestic needs.
c.  it assumes there will be little response by competitors.
d.  it emphasizes domestic conditions even though economics are becoming more open.
            Ans. D

10. When a Swiss MNE purchases an Austrian company, it is recorded as a

a. credit on the Swiss current account
b. debit on the Swiss capital account
c. debt on the Swiss current account
d. credit on the Austrian current account
            Ans. B

11.  What effect will variations among countries in factor proportions have on the overall volume of FDI?

a.  FDI will be stimulated due to pressures for the more abundant factors to move to countries with greater scarcity of those factors.
b.  FDI will be stimulated through regional economic agreements.
c.  FDI will be inhibited because of the high cost of transporting factors of production among countries.
d.  FDI will be inhibited due to high unemployment rates in LDCs.
            Ans. A

12. Which of the following statements is about the euro is false.

a. The euro will cause a decrease in industry mergers.
b. Price transparency will increase with the euro
c. Euro countries will lose the ability to devalue their currencies between 1999-2001
d. The euro will decrease currency risk and conversion costs.
e. All of the above are false
            Ans. A

13.  With respect to the movement of labor between countries, labor in the host country:

a.  benefits as labor migrates from their country
b.  is harmed as labor migrates from their country.
c.  benefits as labor migrates into their country.
d.  is harmed as labor migrates into their country.
            Ans. D

14.  Which of the following statements is true?

a.  A fixed exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods.
b.  A flexible exchange rate does not automatically cushion the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods.
c.  A flexible exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the relative price of domestic and foreign goods.
d.  A flexible exchange rate automatically cushions the economy's output and employment by allowing an immediate change in the absolute price of domestic and foreign goods.
            Ans. C

15.  Under the gold standard,

a.  Exchange rates did not change for long periods of time.
b.  Businesses could trade and invest with little fear of exchange rates changes.
c.  The price of each currency in terms of gold was fixed.
d.  Inflation was a serious economic problem.
            Ans. D

16. If someone believes that the US dollar is overvalued relative to the Mexican peso, they

a. Should buy dollars and sell pesos in advance
b. Are expecting the peso to depreciate relative to the dollar
c. May have found that the money supply is growing faster in Mexico than the US
d. Are expecting the peso to appreciate relative to the dollar.
            Ans. D

17. The risk of exchange rate fluctuations

a. Negates the reduction in systematic risk implied by holding an internationally diverse portfolio
b. Contributes to the low correlation between stock prices movements in different countries
c. Can only drive down the higher returns that might be available abroad for investors
d. Has essentially been eliminated as a factor when considering pan-European investments
        Ans. B

18. Which of the following statements is true about the global capital markets?

a. An increased use of the global capital market leads to a higher cost of capital
b. Eurobonds are dominated in the currency of the country where the bonds are sold.
c. Ceilings placed on interest rates under Regulation Q fueled the growth of the eurocurrency markets.
d. Global capital markets are more highly regulated than domestic capital markets.
            Ans. C

19. Which of the following statements is true about the aftermath of the Asian financial crisis?

a. The large savings accumulated in the SE Asian nations was invested in projects with potentially high returns
b. The banking industry in SE Asia was over-regulated.
c. Pegging Asian currency to the dollar increased its vulnerability to attacks.
d. The IMF's role helped to reduce moral hazard in the financial sector.
e. All of the above are true.
            Ans. C

20.  Backlashers who are against free trade and globalization generally argue that globalization

a.  helps spread the best of each country's culture, so as too uplift global cultural standards.
b.  improves the environment by correcting for distortions caused by import competing policies.
c.  causes a degradation in the world's environment.
d.  helps each country safeguard the best of its own culture.
            Ans. C