International Business The New Realities 4th Edition By Cavusgil – Test Bank

International Business The New Realities 4th Edition By Cavusgil – Test Bank

International Business: The New Realities, 4e (Cavusgil)
Chapter 6 Political and Legal Systems in National Environments

1) Which of the following terms indicates potential loss or adverse effects on company operations and profitability caused by developments in a country’s political and/or legal environments.
A) commercial risk
B) currency risk
C) cross-cultural risk
D) country risk
Answer: D
Diff: 1: Easy
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking

2) Country risk is considered similar to ________.
A) political risk
B) commercial risk
C) currency risk
D) cross-cultural risk
Answer: A
Diff: 1: Easy
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking

3) An individual from a country with a high degree of political risk would most likely be from ________.
A) Canada
B) Singapore
C) Iraq
D) Japan
Answer: C
Diff: 1: Easy
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking

4) An individual from a country with a low degree of political risk would most likely be from ________.
A) Venezuela
B) Canada
C) Zimbabwe
D) Iraq
Answer: B
Diff: 1: Easy
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking
5) Which of the following best explains why India was once characterized by high country risk?
A) taxes and financial incentives benefited Indian businesses over foreign firms
B) Indian business leaders distrusted most European corporations
C) political leaders enacted laws that targeted foreign firms for harassment
D) Indian leaders feared the modern influences of American firms
Answer: C
Diff: 2: Moderate
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking

6) Which of the following characterizes country risk?
A) The political and legal systems of adjacent nations greatly impact the country risk of nations that host foreign firms.
B) Country risk will change only after the creation of laws and regulations that affect foreign firms.
C) A nation’s country risk level remains fairly constant until the election and installation of a new political leader.
D) Country risk is always present, but its nature and intensity vary over time and from country to country.
Answer: D
Diff: 2: Moderate
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking

7) ________ are the people and organizations that support the political system and receive government resources.
A) Subsidiaries
B) Regional trade blocs
C) Constituents
D) Shell corporations
Answer: C
Diff: 1: Easy
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking