Business Management - Basic Knowledge Test

Should international transportation costs decrease, the effect on international trade would include a (an):
Decrease in the level of specialization in production
Decline in the income of home producers
Smaller gain from trade
Increase in the volume of trade
For the United States, empirical studies indicate that over the past two decades the cost of international transportation relative to the value of U.S. imports has:
Any of the above
Not changed
According to the factor endowment model, countries heavily endowed with land will:
Import products that are land-intensive
Export products that are land-intensive
Devote insufficient amounts of resources to agricultural production
Devote excessive amounts of resources to agricultural production
The trade model of the Swedish economists Heckscher and Ohlin maintains:
A country exports goods for which its resource endowments are most suited
The division of labor is limited by the size of the world market
Comparative advantage determines the distribution of the gains from trade
Absolute advantage determines the distribution of the gains from trade
The theory of overlapping demands predicts that trade in manufactured goods is unimportant for countries with very different:
Labor productivities
Per-capita income levels
Expectations of future interest rate levels
Tastes and preferences
Which trade theory contends that a country which initially develops and exports a new product may eventually become an importer of it, and may no longer manufacture the product:
Product life cycle theory
Economies of scale theory
Theory of overlapping demands
Theory of factor endowments
Boeing aircraft company was able to cover its production costs of the first “jumbo jet” in the seventies because Boeing could market it to several foreign airlines in addition to domestic airlines. This illustrates:
How a natural monopoly is forced to behave less competitively with international trade
How a natural monopoly is forced to behave more competitively with international trade
A transfer of wealth from domestic consumers to domestic producers as the result of trade
How economies of scale make possible a larger variety of products in international trade
The Hechscher-Ohlin theory explains comparative advantage as the result of differences in countries’:
Research and development
Relative costs of labor
Relative abundance of various resources
Economies of large-scale production
Comparative advantage is determined by:
Neither (1) nor (2)
Both (1) and (2)
Relative differences in labor productivity between countries
Actual difference in labor productivity between countries
Absolute advantage is determined by:
Neither (1) nor (2)
Both (1) and (2)
Relative differences in labor productivity between countries
Actual differences is labor productivity between countries
In the classical model, the direction of trade is determined by:
Which way the wind blows
Physical advantage
Comparative advantage
Absolute advantage
According to the classical theory of international trade:
All of the above are false
Countries with high wages will have higher prices
Only countries with high wages will import
Only countries with low wages will export
The gains from international trade are closely related to:
All of the above
The fact that on country must lose from trade
How much the autarky price differs from terms of trade change
The labor theory of value
The classical trade theories of Smith and Ricardo predict that
All of the above
Small countries could obtain all of the gains from trade when trading with large countries
Considerable trade will occur between countries with different levels of technology
Countries will completely specialize in the production of export goods
Both (1) and (3)
Was praised by Adam Smith in The Wealth of Nations
Was a system of export promotion and barriers to imports practiced by governments
Is the philosophy of free international trade
International trade is based on the notion that:
A country’s exports should always exceeds its imports
Resources are more mobile internationally that are goods
Goods are more mobile internationally than are resources
Different currencies are an obstacle to international trade
In some high technology industries, the expense of _______ and _________ must be allocated over many outlets to make their affairs _____ possible
Both 1 and 3 are correct
Research, development, economically
Tariffs, research, economically
Tariffs, trade, economically
What others perspective is necessary for international businesses?
Political motives and GATT
Political motives and MNC
Cultural and political motives
Cultural and environment
What is GDP abbreviated from?
Gross Domestic Product
Gross Development Product
Good Domestic Product
Good Development Product
What is MNC abbreviated from?
Management Negotiation Corporation
Management National Center
Movement of National Corporation
Multinational Corporation
What does the strong dollar to US export products?
None of the above
Economic effectiveness
Higher tariffs
Higher price
A primary reason why nations conduct international trade is because:
Interest rates are not identical in all trading nations
Trade enhances opportunities to accumulate profits
Resources are not equally distributed to all trading nations
Some nations prefer to produce one thing while others produce another
A main advantage of specialization results from:
High wages paid to foreign workers
Smaller production runs resulting in lower unit costs
The specializing country behaving as a monopoly
Economics of large scale production
International trade in goods and services is sometimes used as a substitute for all of the following except:
Domestic production of the different goods and services
Domestic production of the same goods and services
International movements of labor
International movements of capital
If a nation has an open economy it means that the nation:
Conducts trade with other countries
Has fixed exchange rates
Has flexible exchange rates
Allows private ownership of capital
International trade forces domestic firms to become more competitive in terms of:
All of the above
Product price
Product design and quality
The introduction of new products
The movement to free international trade is most likely to generate short-term unemployment in which industries:
Industries that sell to only foreign buyers
Industries that sell to domestic and foreign buyers
Import-competing industries
Industries in which there are neither imports nor exports
International trade is based on the idea that:
Resources are less mobile internationally than are goods
Resources are more mobile internationally than are goods
Imports should exceed exports
Exports should exceed imports
Arguments for free trade are sometimes disregarded by politicians because:
Economists tend to favor highly protected domestic markets
There exist sound economic reasons for keeping one’s economy isolated from other
Maximizing consumer welfare may not be a chief priority
Maximizing domestic efficiency is not considered important
Which American industry has been affected by import competition in recent years
Microsoft software
Radios and TVs
The largest amount of trade with the United States in recent years has been conducted by:
United Kingdom
West Germany
Increased foreign competition tend to
Increase profits of domestic import-competing industries
Place constraints on the wages of domestic workers
Induce falling output per worker-hour for domestic workers
Intensify inflationary pressure at home
The United States currently exports what percent of its gross national product:
25 percent
12 percent
8 percent
3 percent
The Netherlands currently exports what percent of its gross national product:
55 percent
30 percent
15 percent
5 percent
Free traders maintain that an open economy is advantageous in that it provides all of the following except:
Relatively high wages levels for all domestic workers
The utilization of the most efficient production methods
A wider selection of products for consumers
Increased competition for world producers
Recent pressures for protectionism in the United States have been motivated by all of the following except:
High unemployment rates among American workers
Sluggish rates of productivity growth in the United States
High profit levels for American corporations
U.S. firms shipping component production overseas
International trade tends to cause welfare losses to at least some groups in a country the:
Higher the country’s initial living standard
Lower the country’s initial living standard
More mobile the country’s resources
Less mobile the country’s resources
For the United States, automobiles are:
Neither imported not exported
Exported and imported
Exported, but not imported
Imported, but not exported
A feasible effect of international trade is that a (an):
Purely competitive firm becomes an monopolist
Purely competitive firm becomes an oligopolist
Oligopoly in the home market becomes an monopoly in the world market
Monopoly in the home market becomes an oligopoly in the world market
International trade in goods and services tends to:
Increase the amount of competition facing home manufacturers
Lessen the amount of competition facing home manufacturers
Keep all domestic costs and prices at the same level
Increase all domestic costs and prices
The real income of domestic producers and consumers can be increased by:
Neither technological progress nor international trade
Technological progress and international trade
International trade, but not technological progress
Technological progress, but not international trade
For the United States, commercial jetliners are
Neither exported nor imported
Imported and exported
Exported, but not imported
Imported, but not exported
Technological improvements are similar to international trade since they both:
Ensure that industries can operate at less than full capacity
Reduce unemployment for all domestic workers
Increase the nation’s aggregate income
Provide benefits for all producers and consumers
A sudden shift from import tariffs to free trade may induce short-term unemployment
Industries that neither import nor export
Industries that sell domestically as well as export
Industries that are only exporters
Import-competing industries
A reduced share of the world export market for the United States would be attributed to:
High levels of investment by American corporations
Relatively low interest rates in the United States
High incomes of American households
Decreased productivity in U.S. manufacturing
The earliest statement of the principle of comparative advantage is associated with:
Bertil Ohlin
Eli Heckscher
David Ricardo
Adam Smith
If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production:
There would be no basis for gainful trade
Trade would depend on the use of different currencies
Trade would depend on economies of large-scale production
Trade would depend on differences in demand conditions
If the international terms of trade settle at a level that is between each country’s opportunity cost
One country gains and the other country loses from trade
Only one country gains from trade
Both countries gain from trade
There is no basis for gainful trade for either country
What is the result from the restructuring for business?
International markets
Global competitions
Foreign source
More money for U.S. firms
What brought foreign investors to the US in 1980?
Strong dollar
Wall Street
Gross National Product
Real Estate

This test tests basic knowledge in the field of Business Management. The questions related to Ethics, Entrepreneurship and Economics. Also, check out the best finance training for non-finance executives (C-cadre and business owners!) from Dr. Anil Lamba as well.

Vikrama Dhiman
Product Manager + Business Development & Setup + Agile Process Coach
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