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Financial Management > Economics for manager > Flashcards

Economics for manager Flashcards

1
Q

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

The long-run historical view
The new-force view
The pendulum view
The balanced surplus-deficit view

A

The new-force view

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2
Q

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 countries.

Which view does this statement portray?

City-based view
Country-based view
Resource-based view
Institution-based view

A

Resource-based view

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3
Q

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

Loss
Profit
Revenue
Balance of trade

A

Balance of trade

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4
Q

What is a cost of foreign direct investment?

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

Human rights firms may help the 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 governments in host countries may promote corporate social responsibilities on behalf of multinational enterprises (MNEs).

A

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

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5
Q

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

Sustained leverage
Sustained influence
Sustained competitive disadvantage
Sustained comparative advantage

A

Sustained comparative advantage

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6
Q

Which theory states that patterns of international trade change across new, maturing, and standardized stages?

Product life cycle theory
Strategic trade theory
Factor endowment theory
Sustainability theory

A

Product life cycle theory

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7
Q

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

International monetary system
Stock exchange
Commodity exchange
Intercontinental exchange

A

International monetary system

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8
Q

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

Exchange rates depreciate; interest rates decrease.
Exchange rates appreciate; interest rates increase.
Exchange rates appreciate; interest rates decrease.
Exchange rates depreciate; interest rates increase.

A

Exchange rates depreciate; interest rates increase.

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9
Q

What is the easiest method nonfinancial companies use to handle currency fluctuations?

Currency diversification
Export sales
Foreign direct investment
Commodity trading

A

Currency diversification

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10
Q

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

Currency swap
Spot transaction
Sensitivity analysis
Speculation

A

Currency swap

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11
Q

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?

Market-seeking
Efficiency-seeking
Innovation-seeking
Natural-resource seeking

A

Innovation-seeking

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12
Q

What advantage comes with not sharing benefits with late entrants?

Laggard advantage
Late-mover advantage
First-mover advantage
Early-mover advantage

A

First-mover advantage

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13
Q

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

Joint-venture
Green-fields
Acquisitions
Licensing

A

Licensing

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14
Q

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

Small commitment
Larger commitment
No commitment
Standard commitment

A

Small commitment

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15
Q

What are two supportive pillars for an informal institution?

Choose 2 answers

Cognitive		
Coercive		
Normative		
Regulatory		
Protection
A

Cognitive

Normative

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16
Q

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

To identify problems
To reduce uncertainty
To challenge laws
To develop a new business culture

A

To reduce uncertainty

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17
Q

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

Industries
Companies
Businesses
Institutions

A

Institutions

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18
Q

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

Bounded rationality
Theoretical rationality
Substantive rationality
Formal rationality

A

Bounded rationality

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19
Q

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

Monarchy
Democracy
Totalitarianism
Communism

A

Democracy

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20
Q

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

Common law
Civil law
Tort law
Property law

A

Civil law

21
Q

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

Property gains
Property propaganda
Property rights
Universal property

A

Property rights

22
Q

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

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

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

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

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

A

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

23
Q

What are the two polar types of economies?

Choose 2 answers

Centrally planned economies
Market economies
Mixed economies
Open economies

A

Centrally planned economies

Market economies

24
Q

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

To promote equality
To increase profits
To ensure changes
To prop up self-interest

A

To promote equality

25
Q

What is the relationship between total and marginal cost?

Marginal cost is price multiplied by total cost.
Marginal cost is quantity multiplied by total cost.
Marginal cost is total cost divided by quantity.
Marginal cost is the change in total cost divided by the change in quantity.

A

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

26
Q

A farmer sells wheat in a perfectly competitive market.

Which action should the farmer take to maximize profits?

Produce the quantity at the average fixed cost

Produce at a price where marginal cost equals the average total cost

Produce the quantity that minimizes average variable cost

Produce the quantity where the price equals the farmer’s marginal cost

A

Produce the quantity where the price equals the farmer’s marginal cost

27
Q

What is the economic profit of a competitive firm?

The difference between total revenue and price
The difference between total revenue and total cost
The difference between marginal revenue and marginal cost
The difference between average fixed cost and price

A

The difference between total revenue and total cost

28
Q

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

Fixed costs are above variable costs.
Marginal costs are above average total costs.
Marginal costs are above average variable costs.
Average variable costs are above the price.

A

Average variable costs are above the price.

29
Q

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

Vertical
Horizontal
Upward sloping
Downward sloping

A

Downward sloping

30
Q

Which statement describes a competitive firm’s demand curve?

It is identical to a monopoly’s demand curve.
It is more elastic than a monopoly’s demand curve.
It lies above the marginal cost curve.
It is perfectly inelastic.

A

It is more elastic than a monopoly’s demand curve.

31
Q

What is the point at which a monopoly maximizes profit?

Where price equals total cost

Where marginal cost equals price

Where demand equals marginal cost

Where marginal cost equals marginal revenue

A

Where marginal cost equals marginal revenue

32
Q

What is a characteristic of monopolistic competition?

A few firms and identical products
Many firms and differentiated products
A few firms and differentiated products
Many firms and identical products

A

Many firms and differentiated products

33
Q

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

Both prisoners confess.
Both prisoners benefit.
Neither prisoner confesses.
Only one prisoner confesses.

A

Both prisoners confess.

34
Q

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

Company strategies must consider actions by rival firms.
Companies always reach cooperative solutions.
Company success is hampered by too many decision makers.
Companies lack strategic thinking.

A

Company strategies must consider actions by rival firms.

35
Q

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

Supply curves
Relative prices
Budget constraints
Indifference curves

A

Indifference curves

36
Q

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

More normal goods and more inferior goods

More normal goods and fewer inferior goods

Fewer normal goods and fewer inferior goods

Fewer normal goods and more inferior goods

A

Fewer normal goods and more inferior goods

37
Q

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?

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

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 increase.

A

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

38
Q

What will happen to equilibrium quantity and price if both demand and supply decrease?

Quantity will decrease and price will decrease.

Quantity will decrease but price can either increase or decrease.

Quantity can either increase or decrease but price will decrease.

Quantity will increase and price will increase.

A

Quantity will decrease but price can either increase or decrease.

39
Q

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

Demand stays the same.
Demand increases.
Demand decreases.
Demand increases and then decreases.

A

Demand increases.

40
Q

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

Normal or inferior
Substitutes or complements
Necessities or luxuries
Expensive or inexpensive

A

Substitutes or complements

41
Q

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

By altering deposit requirements
By altering interest requirements
By altering reserve requirements
By altering capital requirements

A

By altering reserve requirements

42
Q

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

Reducing government spending
Enacting a permanent income tax cut
Repealing the tax credit for capital investment
Lowering target interest rates

A

Enacting a permanent income tax cut

43
Q

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

Interest rates decrease and aggregate demand for goods and services increase.
Interest rates increase and aggregate demand for goods and services decrease.
Interest rates decrease and stock prices decrease.
Interest rates increase and stock prices increase.

A

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

44
Q

How is consumer surplus represented on a graph?

The area below the demand curve and above price
The area between the supply and demand curves
The area below the price and above the supply curve
The area below the demand curve and to the right of the equilibrium point

A

The area below the demand curve and above price

45
Q

Which two statements define producer surplus?

Choose 2 answers

The amount the seller is paid minus the cost of production
The area below the price and above the supply curve on a graph
The value to the sellers multiplied by the cost to sellers
The area between the demand and supply curve on a graph
The value to buyers minus the cost to sellers

A

The amount the seller is paid minus the cost of production

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

46
Q

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)?

$200
$800
$1,000
$1,200

A

$1,000

47
Q

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?

Choose 2 answers

Consumption increases.		
Net exports decrease.		
Imports decrease.		
Government expenditures increase.		
Net investment decreases.
A

Net exports decrease.

Government expenditures increase.

48
Q

A nation ends a tariff on bananas, which is an imported product.

What will be the effect on banana prices within that nation?

The price will remain the same.
The price will be set at a fair standard by importers.
The price will increase.
The price will match the global market price.

A

The price will match the global market price.

49
Q

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

Tax revenue increases.
Tax revenue decreases.
Tax revenue remains the same.
Tax revenue variance is unpredictable.

A

Tax revenue increases.

Financial Management (2 decks)

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