Global Business 4th Edition By Mike Peng - Test Bank

Chapter 1 Globalizing Business

TRUEFALSE

1. A multinational enterprise is a firm that engages in foreign direct investment by directly investing

in, controlling, and managing value-added activities in other countries.

(A) True

(B) False

Answer : (A)

2. The term "emerging markets" refers to all markets other than the developed markets.

(A) True

(B) False

Answer : (A)

3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and

governments operating in an economy.

(A) True

(B) False

Answer : (A)

4. Majority of the global GDP is contributed by the emerging markets.

(A) True

(B) False

Answer : (B)

5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods

and services different currencies can purchase.

(A) True

(B) False

Answer : (A)

6. Purchasing power parity (PPP) is calculated as the sum of value added by resident firms,households, and governments operating in an economy.

(A) True

(B) False

Answer : (B)

7. Emerging markets contribute about 30% of global GDP without adjusting for purchasing power

parity (PPP).

(A) True

(B) False

Answer : (A)

8. More than half the GDP produced by emerging markets comes from outside the BRIC countries.

(A) True

(B) False

Answer : (B)

9. On the global economic pyramid, the Triad refers to developed economies consisting of North

America, Western Europe, and Japan.

(A) True

(B) False

Answer : (A)

10. All the countries of the BRIC belong to the top tier of the global economic pyramid.

(A) True

(B) False

Answer : (B)

11. The second tier of the global economic pyramid is made up of countries with a per capita annual

income of more than $20,000.

(A) True

(B) FalseAnswer : (B)

12. The emerging markets of the world are placed at the top of the global economic pyramid.

(A) True

(B) False

Answer : (B)

13. The global economic pyramid does not represent countries that have a per capita annual income

of less than $2,000.

(A) True

(B) False

Answer : (B)

14. The term "base of the pyramid" represents economies where individuals make less than $2,000 a

year.

(A) True

(B) False

Answer : (A)

15. Reverse innovations are innovations that are adopted first in the Triad-based multinationals and

then diffused around the world.

(A) True

(B) False

Answer : (B)

16. Reverse innovation is an example of bottom up innovation.

(A) True

(B) False

Answer : (A)

17. The Group of 20 includes the European Union (EU)-a regional bloc.

(A) True(B) False

Answer : (A)

18. Globalization has driven up the salaries of low-level jobs.

(A) True

(B) False

Answer : (B)

19. An international premium is a significant pay raise awarded to expatriate employees working

abroad.

(A) True

(B) False

Answer : (A)

20. New York has more Fortune Global 500 company headquarters than any other city.

(A) True

(B) False

Answer : (B)

21. Overall, the focus on firm performance around the globe defines the field of global business

more than anything else.

(A) True

(B) False

Answer : (A)

22. An institution-based view suggests that the success and failure of firms are enabled and

constrained by business norms of the host nation.

(A) True

(B) False

Answer : (A)

23. Formal institutions include laws, regulations, and rules.(A) True

(B) False

Answer : (A)

24. The institution-based view places e