Business Management - Basic Knowledge Test

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

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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