Chelsea Lee
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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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Economics Pretest

Economics Pretest

Question 1 of 50

1

Which view claims that the phenomenon of globalization was initially driven by the desire of Western economies to exploit their power through multinational enterprises?

Select one of the following:

  • The new-force view

  • The long-run historical view

  • The balanced surplus-deficit view

  • The pendulum view

Explanation

Question 2 of 50

1

Economic 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?

Select one of the following:

  • Institution-based view

  • Country-based view

  • City-based view

  • Resource-based view

Explanation

Question 3 of 50

1

What is the aggregation of importing and exporting that leads to the country-level trade surplus or deficit?

Select one of the following:

  • Profit

  • Revenue

  • Balance of Trade

  • Loss

Explanation

Question 4 of 50

1

What is a cost of foreign direct investment?

Select one of the following:

  • Developing countries may be exploited by multinational enterprises (MNE)

  • Human rights firms may help labor force in host countries with multinational enterprise (MNE) influence

  • Host countries welcome political interference by multinational enterprises (MNE) when things are not in favor of the foreign company

  • Local government in host countries may promote corporate social responsibilities on behalf of multinational enterprises (MNEs)

Explanation

Question 5 of 50

1

Which type of managerial capability is both challenging and difficult to imitate?

Select one of the following:

  • Duplicative capability

  • Intangible capability

  • Factual capability

  • Dualistic Capability

Explanation

Question 6 of 50

1

What may precious, rare, and hard-to-duplicate resources and capabilities lead to for a firm?

Select one of the following:

  • Sustained competitive disadvantage

  • Sustained comparative advantage

  • Sustained influence

  • Sustained leverage

Explanation

Question 7 of 50

1

Which theory of international trade states that poor countries often experience faster rates of economic growth compared to wealthy countries?

Select one of the following:

  • The catch-up effect

  • The sustainability effect

  • The income effect

  • The ratchet effect

Explanation

Question 8 of 50

1

What is the financial environment in which exchange rates and payments for goods and services are conducted.

Select one of the following:

  • Stock exchange

  • Intercontinental exchange

  • International monetary system

  • Commodity exchange

Explanation

Question 9 of 50

1

What happens to a country's real exchange rate and nominal interest rate as the price level increases, assuming all other factors are unchanged?

Select one of the following:

  • Exchange rate appreciate, interest rates decrease

  • Exchange rates depreciate, interest rates increase

  • Exchange rates appreciate, interest rates increase

  • Exchange rates depreciate, interest rates decrease

Explanation

Question 10 of 50

1

What is the easiest method non-financial companies use to handle currency fluctuations?

Select one of the following:

  • Foreign direct investment

  • Commodity trading

  • Export sales

  • Currency diversification

Explanation

Question 11 of 50

1

Which strategy minimizes the risk of unanticipated changes in future exchange rates?

Select one of the following:

  • Sensitivity analysis

  • Currency swap

  • Speculation

  • Spot transaction

Explanation

Question 12 of 50

1

A 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?

Select one of the following:

  • Efficiency-seeking

  • Natural-resource seeking

  • Innovation-seeking

  • Market-seeking

Explanation

Question 13 of 50

1

What advantage comes with not sharing benefits with late entrants?

Select one of the following:

  • Early-mover advantage

  • Laggard advantage

  • First-mover advantage

  • Late-mover advantage

Explanation

Question 14 of 50

1

Which entry mode is a non-equity arrangement for a company contemplating entry into a foreign market?

Select one of the following:

  • Green-fields

  • Acquisitions

  • Licensing

  • Joint-venture

Explanation

Question 15 of 50

1

What size commitment is required for a non-equity mode of entry into a foreign market?

Select one of the following:

  • Standard commitment

  • Larger commitment

  • No commitment

  • Small commitment

Explanation

Question 16 of 50

1

What are two supportive pillars for an informal institution?

Select one or more of the following:

  • Normative

  • Protection

  • Regulatory

  • Cognitive

  • Coercive

Explanation

Question 17 of 50

1

What is the key role of an institution, according to the institution-based view?

Select one of the following:

  • To develop a new business culture

  • To reduce uncertainty

  • To identify problems

  • To challenge laws

Explanation

Question 18 of 50

1

What are the rules, enforcement mechanisms, and organizations that support market transactions?

Select one of the following:

  • Businesses

  • Companies

  • Industries

  • Institutions

Explanation

Question 19 of 50

1

What is a core proposition underpinning an institutional-based view of global business?

Select one of the following:

  • Substantive rationality

  • Bounded rationality

  • Formal rationality

  • Theoretical rationality

Explanation

Question 20 of 50

1

In which type of political system do citizens elect representatives to govern the country on their behalf?

Select one of the following:

  • Democracy

  • Communism

  • Monarchy

  • Totalitarianism

Explanation

Question 21 of 50

1

Which legal system uses comprehensive lists of rules and written codes?

Select one of the following:

  • Property law

  • Tort law

  • Common law

  • Civil law

Explanation

Question 22 of 50

1

What are the legal privileges associated with the use of economic property to obtain income and other benefits from its use?

Select one of the following:

  • Property propaganda

  • Property rights

  • Universal property

  • Property gains

Explanation

Question 23 of 50

1

What is the purpose of having property rights and intellectual property rights?

Select one of the following:

  • To legally protect past owners of the property from its future owners after the sale of it

  • To legally protect the use to tangible and intangible property and allow its lawful owner to derive income and other benefits from it

  • To legally protect the future and past users of the property and allow its future owners all future benefits

  • To legally protect the future of property so that one county can derive income from it and the past users cannot

Explanation

Question 24 of 50

1

What are the two popular types of economies?

Select one or more of the following:

  • Mixed economies

  • Market economies

  • Centrally planned economies

  • Open economies

Explanation

Question 25 of 50

1

In addition to encouraging efficiency, why might a government intervene in a market?

Select one or more of the following:

  • To promote equality

  • To prop up self-interest

  • To increase profits

  • To ensure changes

Explanation

Question 26 of 50

1

What is the relationship between total and marginal cost?

Select one of the following:

  • Marginal cost is the change in total cost divided by the change in quantity

  • Marginal cost is total cost divided by quantity

  • Marginal cost is price multiplied by total cost

  • Marginal cost is quantity multiplied by total cost

Explanation

Question 27 of 50

1

A farmer sells wheat in a perfectly competitive market. Which action should the farmer take to maximize profits?

Select one of the following:

  • Produce the quantity that minimizes average variable cost

  • Produce at a price were marginal cost equals the average total cost

  • Produce the quantity at the average fixed cost

  • Produce the quantity where the price equals the farmer's marginal cost

Explanation

Question 28 of 50

1

What is the economic profit of a competitive firm?

Select one of the following:

  • The difference between average fixed cost and price

  • The different between marginal revenue and marginal cost

  • The difference between total revenue and price

  • The difference between total revenue and total cost

Explanation

Question 29 of 50

1

Which condition applies when a competitive firm decides to temporarily shut down?

Select one of the following:

  • Average variable costs are above the price

  • Marginal costs are above average total costs

  • Marginal costs are above average variable costs

  • Fixed costs are above variable costs

Explanation

Question 30 of 50

1

What is the producer's demand curve if the producer sells a differentiated product?

Select one of the following:

  • Horizontal

  • Vertical

  • Downward sloping

  • Upward sloping

Explanation

Question 31 of 50

1

Which statement describes a competitive firm's demand curve?

Select one of the following:

  • It is identical to a monopoly's demand curve

  • It is perfectly inelastic

  • It lies above the marginal cost curve

  • It is more elastic than a monopoly's demand curve

Explanation

Question 32 of 50

1

What is the point at which a monopoly maximizes profit?

Select one of the following:

  • Where demand equals marginal cost

  • Where marginal cost equals price

  • Where marginal cost equals marginal revenue

  • Where price equals total cost

Explanation

Question 33 of 50

1

What is a characteristic of monopolistic competition?

Select one of the following:

  • A few firms and identical products

  • A few firms and differentiated products

  • Many firms and differentiated products

  • Many firms and identical products

Explanation

Question 34 of 50

1

What is a likely outcome of the standard prisoner's dilemma game?

Select one of the following:

  • Neither prisoner confesses

  • Both prisoners benefit

  • Only one prisoner confesses

  • Both prisoners confess

Explanation

Question 35 of 50

1

How does the prisoner's dilemma help in understanding company behavior in an oligopoly?

Select one of the following:

  • Companies lack strategic thinking

  • Companies always reach cooperative solutions

  • Company strategies must consider actions by rival firms

  • Company success is hampered by too many decision makers

Explanation

Question 36 of 50

1

What do economists use to represent a consumer's preferences?

Select one of the following:

  • Relative prices

  • Budget constraints

  • Indifferent curves

  • Supply curves

Explanation

Question 37 of 50

1

What can be assumed that the consumer will buy if it is observes that the consumer's budget constraint has shifted inward?

Select one of the following:

  • Fewer normal goods and more inferior goods

  • Fewer normal goods and fewer inferior goods

  • More normal goods and more inferior goods

  • More normal goods and fewer inferior goods

Explanation

Question 38 of 50

1

What 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?

Select one of the following:

  • The equilibrium price will decrease, and the equilibrium quantity will decrease

  • The equilibrium price will remain unchanged, and the equilibrium quantity will increase

  • The equilibrium price will increase, and the equilibrium quantity will remain unchanged

  • The equilibrium price will increase, and the equilibrium quantity will increase

Explanation

Question 39 of 50

1

What will happen to the output of a particular factory when there are negative externalities?

Select one of the following:

  • The quantity produced by that factor will be less than the optimal quantity

  • The quantity produced by that factory will be equal to its average total cost

  • The quantity produced by that factory will be greater than the optimal quantity

  • The quantity produced by that factory will be at the optimal quantity

Explanation

Question 40 of 50

1

What happens to demand quantity for normal goods as percentage change in income increases?

Select one of the following:

  • Demand stays the same

  • Demand increases

  • Demand decreases

  • Demand increases and then decreases

Explanation

Question 41 of 50

1

What do the positive or negative numbers of cross-price elasticity of demand represent?

Select one of the following:

  • Normal or inferior

  • Substitutes or complements

  • Necessities or luxuries

  • Expensive or inexpensive

Explanation

Question 42 of 50

1

What is one way the Federal Reserve influences the reserve ratio?

Select one of the following:

  • By altering deposit requirements

  • By altering reserve requirements

  • By altering capital requirements

  • By altering interest requirements

Explanation

Question 43 of 50

1

Which fiscal policy would be most effective at raising consumer spending and expanding aggregate demand?

Select one of the following:

  • Reducing government spending

  • Enacting a permanent income tax cut

  • Lowering target interest rates

  • Repeating the tax cut for capital investment

Explanation

Question 44 of 50

1

What is the effect of an increase in the money supply in the short run?

Select one of the following:

  • Interest rates increase and stock prices increase

  • Interest rates decrease and aggregate demand for goods and services increase

  • Interest rates decrease and stock prices decrease

  • Interest rates increase and aggregate demand for goods and services decrease

Explanation

Question 45 of 50

1

How is consumer surplus represented on a graph?

Select one of the following:

  • The area between the supply and demand curves

  • The area below the demand curve and above price

  • The area below the demand curve and to the right of the equilibrium point

  • The area below the price and above the supply curve

Explanation

Question 46 of 50

1

Which two statements define producer surplus?

Select one or more of the following:

  • The value to buyers minus the cost to sellers

  • The area between the demand and supply curve on a graph

  • The area below the price and above the supply curve on a graph

  • The amount the seller is paid minus the cost of production

  • The value to the sellers multiplied by the cost to sellers

Explanation

Question 47 of 50

1

A 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)?

Select one of the following:

  • $1,200

  • $1,000

  • $800

  • $200

Explanation

Question 48 of 50

1

A 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?

Select one or more of the following:

  • Net exports decrease

  • Net investment decreases

  • Imports decrease

  • Consumption increases

  • Government expenditures increase

Explanation

Question 49 of 50

1

A nation ends a tariff on bananas, which is an imported product. What will be the effect on banana prices within that nation?

Select one of the following:

  • The price will remain the same

  • The price will be set at a fair standard by importers

  • The price will match the global market price

  • The price will increase

Explanation

Question 50 of 50

1

What effect does implementing a new tariff have on the government that implements it?

Select one of the following:

  • Tax revenue increases

  • Tax revenue variance is unpredictable

  • Tax revenue remains the same

  • Tax revenue decreases

Explanation

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