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Economics Pretest

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Quiz on Economics Pretest, created by Chelsea Lee on 18/02/2015.
Chelsea Lee
Quiz by Chelsea Lee, updated more than 1 year ago
Chelsea Lee
Created by Chelsea Lee almost 10 years ago
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Resource summary

Question 1

Question
Which view claims that the phenomenon of globalization was initially driven by the desire of Western economies to exploit their power through multinational enterprises?
Answer
  • The new-force view
  • The long-run historical view
  • The balanced surplus-deficit view
  • The pendulum view

Question 2

Question
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?
Answer
  • Institution-based view
  • Country-based view
  • City-based view
  • Resource-based view

Question 3

Question
What is the aggregation of importing and exporting that leads to the country-level trade surplus or deficit?
Answer
  • Profit
  • Revenue
  • Balance of Trade
  • Loss

Question 4

Question
What is a cost of foreign direct investment?
Answer
  • 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)

Question 5

Question
Which type of managerial capability is both challenging and difficult to imitate?
Answer
  • Duplicative capability
  • Intangible capability
  • Factual capability
  • Dualistic Capability

Question 6

Question
What may precious, rare, and hard-to-duplicate resources and capabilities lead to for a firm?
Answer
  • Sustained competitive disadvantage
  • Sustained comparative advantage
  • Sustained influence
  • Sustained leverage

Question 7

Question
Which theory of international trade states that poor countries often experience faster rates of economic growth compared to wealthy countries?
Answer
  • The catch-up effect
  • The sustainability effect
  • The income effect
  • The ratchet effect

Question 8

Question
What is the financial environment in which exchange rates and payments for goods and services are conducted.
Answer
  • Stock exchange
  • Intercontinental exchange
  • International monetary system
  • Commodity exchange

Question 9

Question
What happens to a country's real exchange rate and nominal interest rate as the price level increases, assuming all other factors are unchanged?
Answer
  • Exchange rate appreciate, interest rates decrease
  • Exchange rates depreciate, interest rates increase
  • Exchange rates appreciate, interest rates increase
  • Exchange rates depreciate, interest rates decrease

Question 10

Question
What is the easiest method non-financial companies use to handle currency fluctuations?
Answer
  • Foreign direct investment
  • Commodity trading
  • Export sales
  • Currency diversification

Question 11

Question
Which strategy minimizes the risk of unanticipated changes in future exchange rates?
Answer
  • Sensitivity analysis
  • Currency swap
  • Speculation
  • Spot transaction

Question 12

Question
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?
Answer
  • Efficiency-seeking
  • Natural-resource seeking
  • Innovation-seeking
  • Market-seeking

Question 13

Question
What advantage comes with not sharing benefits with late entrants?
Answer
  • Early-mover advantage
  • Laggard advantage
  • First-mover advantage
  • Late-mover advantage

Question 14

Question
Which entry mode is a non-equity arrangement for a company contemplating entry into a foreign market?
Answer
  • Green-fields
  • Acquisitions
  • Licensing
  • Joint-venture

Question 15

Question
What size commitment is required for a non-equity mode of entry into a foreign market?
Answer
  • Standard commitment
  • Larger commitment
  • No commitment
  • Small commitment

Question 16

Question
What are two supportive pillars for an informal institution?
Answer
  • Normative
  • Protection
  • Regulatory
  • Cognitive
  • Coercive

Question 17

Question
What is the key role of an institution, according to the institution-based view?
Answer
  • To develop a new business culture
  • To reduce uncertainty
  • To identify problems
  • To challenge laws

Question 18

Question
What are the rules, enforcement mechanisms, and organizations that support market transactions?
Answer
  • Businesses
  • Companies
  • Industries
  • Institutions

Question 19

Question
What is a core proposition underpinning an institutional-based view of global business?
Answer
  • Substantive rationality
  • Bounded rationality
  • Formal rationality
  • Theoretical rationality

Question 20

Question
In which type of political system do citizens elect representatives to govern the country on their behalf?
Answer
  • Democracy
  • Communism
  • Monarchy
  • Totalitarianism

Question 21

Question
Which legal system uses comprehensive lists of rules and written codes?
Answer
  • Property law
  • Tort law
  • Common law
  • Civil law

Question 22

Question
What are the legal privileges associated with the use of economic property to obtain income and other benefits from its use?
Answer
  • Property propaganda
  • Property rights
  • Universal property
  • Property gains

Question 23

Question
What is the purpose of having property rights and intellectual property rights?
Answer
  • 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

Question 24

Question
What are the two popular types of economies?
Answer
  • Mixed economies
  • Market economies
  • Centrally planned economies
  • Open economies

Question 25

Question
In addition to encouraging efficiency, why might a government intervene in a market?
Answer
  • To promote equality
  • To prop up self-interest
  • To increase profits
  • To ensure changes

Question 26

Question
What is the relationship between total and marginal cost?
Answer
  • 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

Question 27

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

Question 28

Question
What is the economic profit of a competitive firm?
Answer
  • 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

Question 29

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

Question 30

Question
What is the producer's demand curve if the producer sells a differentiated product?
Answer
  • Horizontal
  • Vertical
  • Downward sloping
  • Upward sloping

Question 31

Question
Which statement describes a competitive firm's demand curve?
Answer
  • 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

Question 32

Question
What is the point at which a monopoly maximizes profit?
Answer
  • Where demand equals marginal cost
  • Where marginal cost equals price
  • Where marginal cost equals marginal revenue
  • Where price equals total cost

Question 33

Question
What is a characteristic of monopolistic competition?
Answer
  • A few firms and identical products
  • A few firms and differentiated products
  • Many firms and differentiated products
  • Many firms and identical products

Question 34

Question
What is a likely outcome of the standard prisoner's dilemma game?
Answer
  • Neither prisoner confesses
  • Both prisoners benefit
  • Only one prisoner confesses
  • Both prisoners confess

Question 35

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

Question 36

Question
What do economists use to represent a consumer's preferences?
Answer
  • Relative prices
  • Budget constraints
  • Indifferent curves
  • Supply curves

Question 37

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

Question 38

Question
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?
Answer
  • 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

Question 39

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

Question 40

Question
What happens to demand quantity for normal goods as percentage change in income increases?
Answer
  • Demand stays the same
  • Demand increases
  • Demand decreases
  • Demand increases and then decreases

Question 41

Question
What do the positive or negative numbers of cross-price elasticity of demand represent?
Answer
  • Normal or inferior
  • Substitutes or complements
  • Necessities or luxuries
  • Expensive or inexpensive

Question 42

Question
What is one way the Federal Reserve influences the reserve ratio?
Answer
  • By altering deposit requirements
  • By altering reserve requirements
  • By altering capital requirements
  • By altering interest requirements

Question 43

Question
Which fiscal policy would be most effective at raising consumer spending and expanding aggregate demand?
Answer
  • Reducing government spending
  • Enacting a permanent income tax cut
  • Lowering target interest rates
  • Repeating the tax cut for capital investment

Question 44

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

Question 45

Question
How is consumer surplus represented on a graph?
Answer
  • 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

Question 46

Question
Which two statements define producer surplus?
Answer
  • 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

Question 47

Question
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)?
Answer
  • $1,200
  • $1,000
  • $800
  • $200

Question 48

Question
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?
Answer
  • Net exports decrease
  • Net investment decreases
  • Imports decrease
  • Consumption increases
  • Government expenditures increase

Question 49

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

Question 50

Question
What effect does implementing a new tariff have on the government that implements it?
Answer
  • Tax revenue increases
  • Tax revenue variance is unpredictable
  • Tax revenue remains the same
  • Tax revenue decreases
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