Quiz
Economics Pretest
Questions in this quiz (50)
1Which view claims that the phenomenon of globalization was initially driven by the desire of Western economies to exploit their power through multinational enterprises?
- AThe new-force view
- BThe long-run historical view
- CThe balanced surplus-deficit view
- DThe pendulum view
2Economic gains come from international trade because one country's exported goods, services, or other items are unique, valuable, and difficult to duplicate to the importing country. Which view does this statement portray?
- AInstitution-based view
- BCountry-based view
- C City-based view
- DResource-based view
3What is the aggregation of importing and exporting that leads to the country-level trade surplus or deficit?
- AProfit
- BRevenue
- CBalance of Trade
- D Loss
4What is a cost of foreign direct investment?
- ADeveloping countries may be exploited by multinational enterprises (MNE)
- BHuman rights firms may help labor force in host countries with multinational enterprise (MNE) influence
- CHost countries welcome political interference by multinational enterprises (MNE) when things are not in favor of the foreign company
- DLocal government in host countries may promote corporate social responsibilities on behalf of multinational enterprises (MNEs)
5Which type of managerial capability is both challenging and difficult to imitate?
- ADuplicative capability
- BIntangible capability
- CFactual capability
- DDualistic Capability
6What may precious, rare, and hard-to-duplicate resources and capabilities lead to for a firm?
- ASustained competitive disadvantage
- BSustained comparative advantage
- CSustained influence
- D Sustained leverage
7Which theory of international trade states that poor countries often experience faster rates of economic growth compared to wealthy countries?
- AThe catch-up effect
- BThe sustainability effect
- CThe income effect
- DThe ratchet effect
8What is the financial environment in which exchange rates and payments for goods and services are conducted.
- AStock exchange
- BIntercontinental exchange
- CInternational monetary system
- DCommodity exchange
9What happens to a country's real exchange rate and nominal interest rate as the price level increases, assuming all other factors are unchanged?
- AExchange rate appreciate, interest rates decrease
- BExchange rates depreciate, interest rates increase
- CExchange rates appreciate, interest rates increase
- DExchange rates depreciate, interest rates decrease
10What is the easiest method non-financial companies use to handle currency fluctuations?
- AForeign direct investment
- BCommodity trading
- CExport sales
- DCurrency diversification
- AForeign direct investment
11Which strategy minimizes the risk of unanticipated changes in future exchange rates?
- ASensitivity analysis
- BCurrency swap
- CSpeculation
- DSpot transaction
- ASensitivity analysis
12A company is looking for a location with an abundance of ground-breaking individuals, firms, and universities. Which type of strategic goal is this company demonstrating?
- AEfficiency-seeking
- BNatural-resource seeking
- CInnovation-seeking
- DMarket-seeking
13What advantage comes with not sharing benefits with late entrants?
- AEarly-mover advantage
- BLaggard advantage
- CFirst-mover advantage
- DLate-mover advantage
14Which entry mode is a non-equity arrangement for a company contemplating entry into a foreign market?
- AGreen-fields
- BAcquisitions
- CLicensing
- DJoint-venture
- AGreen-fields
15What size commitment is required for a non-equity mode of entry into a foreign market?
- AStandard commitment
- BLarger commitment
- CNo commitment
- DSmall commitment
16What are two supportive pillars for an informal institution?
- ANormative
- BProtection
- CRegulatory
- DCognitive
- ECoercive
17What is the key role of an institution, according to the institution-based view?
- ATo develop a new business culture
- BTo reduce uncertainty
- CTo identify problems
- DTo challenge laws
18What are the rules, enforcement mechanisms, and organizations that support market transactions?
- ABusinesses
- BCompanies
- CIndustries
- DInstitutions
19What is a core proposition underpinning an institutional-based view of global business?
- ASubstantive rationality
- BBounded rationality
- CFormal rationality
- DTheoretical rationality
20In which type of political system do citizens elect representatives to govern the country on their behalf?
- A Democracy
- BCommunism
- CMonarchy
- DTotalitarianism
21Which legal system uses comprehensive lists of rules and written codes?
- AProperty law
- BTort law
- CCommon law
- DCivil law
22What are the legal privileges associated with the use of economic property to obtain income and other benefits from its use?
- AProperty propaganda
- BProperty rights
- CUniversal property
- DProperty gains
23What is the purpose of having property rights and intellectual property rights?
- ATo legally protect past owners of the property from its future owners after the sale of it
- B To legally protect the use to tangible and intangible property and allow its lawful owner to derive income and other benefits from it
- CTo legally protect the future and past users of the property and allow its future owners all future benefits
- DTo legally protect the future of property so that one county can derive income from it and the past users cannot
24What are the two popular types of economies?
- AMixed economies
- BMarket economies
- CCentrally planned economies
- DOpen economies
25In addition to encouraging efficiency, why might a government intervene in a market?
- ATo promote equality
- BTo prop up self-interest
- CTo increase profits
- D To ensure changes
26What is the relationship between total and marginal cost?
- AMarginal cost is the change in total cost divided by the change in quantity
- BMarginal cost is total cost divided by quantity
- CMarginal cost is price multiplied by total cost
- DMarginal cost is quantity multiplied by total cost
27A farmer sells wheat in a perfectly competitive market. Which action should the farmer take to maximize profits?
- AProduce the quantity that minimizes average variable cost
- BProduce at a price were marginal cost equals the average total cost
- CProduce the quantity at the average fixed cost
- DProduce the quantity where the price equals the farmer's marginal cost
28What is the economic profit of a competitive firm?
- AThe difference between average fixed cost and price
- BThe different between marginal revenue and marginal cost
- CThe difference between total revenue and price
- DThe difference between total revenue and total cost
- AThe difference between average fixed cost and price
29Which condition applies when a competitive firm decides to temporarily shut down?
- AAverage variable costs are above the price
- BMarginal costs are above average total costs
- CMarginal costs are above average variable costs
- DFixed costs are above variable costs
30What is the producer's demand curve if the producer sells a differentiated product?
- AHorizontal
- BVertical
- CDownward sloping
- DUpward sloping
31Which statement describes a competitive firm's demand curve?
- AIt is identical to a monopoly's demand curve
- BIt is perfectly inelastic
- CIt lies above the marginal cost curve
- DIt is more elastic than a monopoly's demand curve
- AIt is identical to a monopoly's demand curve
32What is the point at which a monopoly maximizes profit?
- AWhere demand equals marginal cost
- BWhere marginal cost equals price
- C Where marginal cost equals marginal revenue
- DWhere price equals total cost
- AWhere demand equals marginal cost
33What is a characteristic of monopolistic competition?
- AA few firms and identical products
- BA few firms and differentiated products
- C Many firms and differentiated products
- DMany firms and identical products
34What is a likely outcome of the standard prisoner's dilemma game?
- ANeither prisoner confesses
- BBoth prisoners benefit
- COnly one prisoner confesses
- DBoth prisoners confess
35How does the prisoner's dilemma help in understanding company behavior in an oligopoly?
- ACompanies lack strategic thinking
- BCompanies always reach cooperative solutions
- CCompany strategies must consider actions by rival firms
- DCompany success is hampered by too many decision makers
36What do economists use to represent a consumer's preferences?
- ARelative prices
- BBudget constraints
- CIndifferent curves
- DSupply curves
37What can be assumed that the consumer will buy if it is observes that the consumer's budget constraint has shifted inward?
- AFewer normal goods and more inferior goods
- BFewer normal goods and fewer inferior goods
- CMore normal goods and more inferior goods
- DMore normal goods and fewer inferior goods
38What will happen to the market price and quantity in the short run if there is an increase in market demand in a perfectly competitive market?
- AThe equilibrium price will decrease, and the equilibrium quantity will decrease
- B The equilibrium price will remain unchanged, and the equilibrium quantity will increase
- CThe equilibrium price will increase, and the equilibrium quantity will remain unchanged
- DThe equilibrium price will increase, and the equilibrium quantity will increase
39What will happen to the output of a particular factory when there are negative externalities?
- AThe quantity produced by that factor will be less than the optimal quantity
- BThe quantity produced by that factory will be equal to its average total cost
- CThe quantity produced by that factory will be greater than the optimal quantity
- DThe quantity produced by that factory will be at the optimal quantity
40What happens to demand quantity for normal goods as percentage change in income increases?
- ADemand stays the same
- BDemand increases
- CDemand decreases
- DDemand increases and then decreases
41What do the positive or negative numbers of cross-price elasticity of demand represent?
- ANormal or inferior
- BSubstitutes or complements
- CNecessities or luxuries
- DExpensive or inexpensive
- ANormal or inferior
42What is one way the Federal Reserve influences the reserve ratio?
- ABy altering deposit requirements
- BBy altering reserve requirements
- CBy altering capital requirements
- DBy altering interest requirements
43Which fiscal policy would be most effective at raising consumer spending and expanding aggregate demand?
- AReducing government spending
- BEnacting a permanent income tax cut
- CLowering target interest rates
- DRepeating the tax cut for capital investment
- AReducing government spending
44What is the effect of an increase in the money supply in the short run?
- A Interest rates increase and stock prices increase
- BInterest rates decrease and aggregate demand for goods and services increase
- CInterest rates decrease and stock prices decrease
- DInterest rates increase and aggregate demand for goods and services decrease
45How is consumer surplus represented on a graph?
- AThe area between the supply and demand curves
- B The area below the demand curve and above price
- CThe area below the demand curve and to the right of the equilibrium point
- DThe area below the price and above the supply curve
46Which two statements define producer surplus?
- AThe value to buyers minus the cost to sellers
- BThe area between the demand and supply curve on a graph
- CThe area below the price and above the supply curve on a graph
- DThe amount the seller is paid minus the cost of production
- EThe value to the sellers multiplied by the cost to sellers
- AThe value to buyers minus the cost to sellers
47A painter spends $200 on paint. He then bills the homeowner $1,000 to cover his time and his expenses. What is the amount of these transactions that is added to gross domestic product (GDP)?
- A$1,200
- B$1,000
- C$800
- D$200
- A$1,200
48A U.S. state purchases a fleet of new highway patrol vehicles manufactured in Japan. Which two statements correctly describe how the components of U.S. gross domestic product (GDP) are affected?
- ANet exports decrease
- BNet investment decreases
- CImports decrease
- DConsumption increases
- EGovernment expenditures increase
49A nation ends a tariff on bananas, which is an imported product. What will be the effect on banana prices within that nation?
- AThe price will remain the same
- B The price will be set at a fair standard by importers
- CThe price will match the global market price
- DThe price will increase
50What effect does implementing a new tariff have on the government that implements it?
- ATax revenue increases
- BTax revenue variance is unpredictable
- CTax revenue remains the same
- DTax revenue decreases
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- Quiz on Economics Pretest, created by Chelsea Lee on 18/02/2015.
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- Chelsea Lee
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