International Trade Theories Quiz
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Questions and Answers

Which of the following is a consequence of consumers boycotting a multinational corporation (MNC)?

  • The government may impose barriers on the MNC's subsidiary.
  • Consumers' income levels will increase, thus increasing consumption.
  • The MNC's subsidiary will experience increased sales.
  • Consumers' income levels will decrease, thus decreasing consumption. (correct)
  • A microeconomic perspective focuses on ____ forces such as economic conditions that can affect the value of an MNC.

  • external (correct)
  • internal
  • neither internal nor external
  • both internal and external
  • If an MNC has a subsidiary in Italy that exports its products to various European countries that use the Euro as their currency, the MNC is not subject to exchange rate risk.

  • True
  • False (correct)
  • Compared to other methods of international business, international trade generally results in ____ exposure to international political risk and ____ exposure to international economic conditions.

    <p>lower; lower</p> Signup and view all the answers

    Which method of international business is most appropriate for Boca Co. to expand its business to Japan and maintain complete control over the operations?

    <p>Licensing</p> Signup and view all the answers

    A decentralized management style of an MNC results in relatively ____ agency costs.

    <p>high</p> Signup and view all the answers

    Which of the following is a method of international business that allows an MNC to have complete control over its operations in a foreign country?

    <p>Establishment of a subsidiary</p> Signup and view all the answers

    Compared to other methods of international business, international trade generally results in ____ exposure to international political risk.

    <p>lower</p> Signup and view all the answers

    Which of the following is a consequence of consumers boycotting an MNC's products?

    <p>The MNC will face decreased demand for its products.</p> Signup and view all the answers

    Which of the following is a characteristic of a decentralized management style in an MNC?

    <p>High agency costs</p> Signup and view all the answers

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