Test Bank for ISE International Business: Competing in the Global Marketplace, 14th Edition (Chapters 1-10)

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SECTION11)Debatethecharacteristicsofglobalization.Useanexampleinyourdiscussion.2)Explain whatever is meant by the globalization of markets. Provide an example.Whatever are themostglobal markets?3)Debatetheconceptoftheglobalizationofproduction.4)WhateveristheWorldTradeOrganization?Whateverisitsroleintheworldeconomy?FORM11

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5)Whatever is the International Monetary Fund? Whatever is the World Bank?Whatever is theirrelationship,if any, with each other?6)WhateveristheUruguayRound?Listthemeasuresimplementedin theUruguayRound.7)Explainthetrendsinworldtradeandforeigndirectinvestmentsince1960.8)ExplainhowtheCOVID-19globalpandemichasimpactedglobalization.9)Debatetheimpactoftechnologicalchangeandautomationonglobalmarkets.FORM1

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Debatethe demographics of world trade since the 1960s. How has the role of the UnitedStateschanged?How isworld tradeexpected tochangein thefuture?10)Why does China represent both opportunities and threats for established internationalbusinesses?11)Consider whether the shift toward a more integrated and interdependent global economyis a good thing. Debatethe shift from the eyes of the consumer, the worker, the company, andtheenvironmentalist.FORM13

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12)Debatewhatever occurred in Seattle in 1999 at the meeting of the WTO and why theeventswereimportantto thefutureof global trade.13)Falling barriers to international trade destroy manufacturing jobs in wealthy advancedeconomies.Debatethis statement.Do you agree?Why or why not?14)Why is managing an international business different from managing a purely domesticbusiness?15)Whatever are some of the issues a manager of an international business must confrontthat amanagerof adomesticbusiness never confronts?FORM14

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16)refers to the shift toward a more integrated and interdependent worldeconomy.A)OutsourcingB)InternationalmarketingC)PrivatizationD)Globalization17)In2008 and 2009, thebecame the forumthrough which major nationsattempted to launch a coordinated policy response to the global financial crisis, which started inAmerica.A)UnitedNationsB)Groupof Seven(G7)C)Groupof Twenty(G20)D)WorldTradeOrganization18)Whichfactorhascontributedtotheglobalizationofmarkets?A)adecreaseinforeigndirectinvestmentB)globalconvergenceofconsumertastesandpreferencesC)anincreaseincross-borderbarrierstotradeD)thetrendtoseparateahomogeneousmarketintoseparatenationalmarkets19)GlobalizationhasresultedinA)lessinterdependencebetweennationaleconomies.B)anincreaseintheuseof outsourcing.C)acollectivematerialculturebecomingmorediverse.D)increasingbarrierstocross-bordertrade.FORM15

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20)Whichfactorhindersglobalizationofconsumergoodsmarket?A)nationalandculturaldifferencesintastesandpreferencesB)increasingincomesinemergingmarketsC)homogenizationofmaterialcultureD)increasedoutsourcingofgoodsandservices21)GlobalizationofmarketsresultsinmarketsbecomingA)lessinterdependent.B)lessdiverse.C)moreprotected.D)lesscompetitive.22)A U.S. investment firm set up a customer service call center in India to take advantage oflowerlabor costs. This is calledA)homogenizingmarkets.B)verticalintegration.C)outsourcing.D)horizontalintegration.23)EarlyoutsourcingeffortswereprimarilyconfinedtoA)healthcare.B)serviceactivities.C)technologicalresearch.D)manufacturingactivities.FORM16

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24)Whatever impedes firms from achieving the optimal dispersion of their productiveactivitiestolocations around theglobe?A)transportationcostsB)governmentderegulationsC)reductionofbarrierstotradebetweencountriesD)reductionofbarrierstoforeigndirectinvestment25)TheGeneralAgreementonTariffsandTrade(GATT)wasresponsibleforA)protectinggovernment-ownedenterprises.B)promotingfreetradeandreducingtradebarriers.C)limitingnucleartesting.D)promotingenvironmentfriendlytechnology.26)Theis primarily responsible for policing the world tradingsystem andmakingsurenation-statesadheretotheruleslaiddownintradetreatiessignedbymemberstates.A)InternationalDevelopmentAssociationB)WorldBankC)InternationalCourtofjusticeD)WorldTradeOrganization27)TheWorldTradeOrganizationpromotesA)theloweringofbarrierstocross-bordertradeandinvestment.B)thedevelopmentofpoornationsthroughlow-interestloans.C)stateownershipofmajorenterprises.D)theregulationofnationaleconomies.FORM17

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28)WhichstatementiscorrectabouttheInternationalMonetaryFund(IMF)?A)Itisprimarilyresponsibleforpolicingtheworldtradingsystem.B)Itisseenasthelenderoflastresorttonation-stateswhoseeconomiesareinturmoil.C)It is responsible for establishing multinational treaties to govern the global businesssystem.D)It was established to formulate a coordinated policy response to financial crises indevelopingnations.29)Thewas established on October 24, 1945, by 51 countries committed topreservingpeacethrough internationalcooperation andcollectivesecurity.A)WorldTradeOrganizationB)UnitedNationsC)G20D)WorldBank30)TheG20wasoriginallyestablishedtoA)preservepeacethroughinternationalcooperationandcollectivesecurity.B)maintainorderintheinternationalmonetarysystem.C)formulateacoordinatedpolicyresponsetofinancialcrisesindevelopingnations.D)manage,regulate,andpolicetheglobalmarketplace.31)Whichitemisafactorofproduction?A)tariffsB)transportationcostsC)capitalD)governmentFORM18

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32)Which institution focuses on making low-interest loans to cash-strapped governments inpoornations that wishto undertakesignificantinfrastructureinvestments?A)theWTOB)theGATTC)theWorldBankD)theIMF33)Whichinstitutionwasestablishedtomaintainorderintheinternationalmonetarysystem?A)theWTOB)theG20C)theWorldBankD)theIMF34)WhichstatementiscorrectoftheInternationalMonetaryFund(IMF)?A)It is often seen as the lender of first choice to nation-states whose economies are inturmoil.B)Itsloanscomewithnostringsattached.C)Itisthelesscontroversialofthetwosisterinstitutions, theIMFand theWorldBank.D)Ithasemergedasasignificantplayerintheglobaleconomy.35)The volume of world merchandise trade and production is growing faster than worldGDP.This implies thatFORM19

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other.A)morefirmsaredispersingtheirproductionprocessestogloballocations.B)theeconomiesoftheworld’snation-statesarebecomingmoreindependentfromeachC)theglobaleconomyisheadedforalargedownwardcorrection.D)theworldisbecomingpoorer.36)occurs After a firmtransfers goods or services to consumers inanothercountry.A)InternationaltradeB)ForeigndirectinvestmentC)InwardinvestmentD)Outsourcing37)Thenegotiations intheUruguayRound ofGATT ledtoA)aneasingoflendingrestrictionsforcash-strappednation-states.B)enhancedprotectionforpatents,trademarks,andcopyrights.C)increasedtradebarriers.D)reducedcoverageofservicesandmanufacturedgoods.38)predicts that the power of microprocessor technology doubles and its cost ofproductionfalls in half every 18 months.A)Keynes’sLawB)Say’sLawC)Moore’sLawD)SullivanPrincipleFORM110

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39)ContainerizationhasrevolutionizedthetransportationbusinessbyA)reducingthetimeneededtogetfromonelocationtoanother.B)simplifyingthetransportationprocessandloweringthecostofshippinggoods.C)providingameansforbuyersandsellerstofindeachothereasilyinaglobaleconomy.D)offeringenterprisestocoordinateandcontrolagloballydispersedproductionsystem.40)ThevolumeofworldtradeinmerchandisedgoodshasbeenA)growingatthesamerateasworldGDP.B)growingfasterthanworld GDP.C)growingslowerthanworld GDP.D)decliningfasterthanworldGDP.41)Smith Global Industries has decided to invest resources in business activities outside itshomecountry. This is calledA)foreigndirectinvestment(FDI).B)directinternationalinvestment(DII).C)internationaltrade(IT).D)foreigndirectproduction(FDP).42)In2009,thefinancialcrisisintheUnitedStateswastriggeredbyA)theglobalhikein thepriceofcrudeoil.B)theslowdownin U.S.imports,duetopoliticalpressure.C)liberallendingpoliciesbyU.S.bankstohomeowners.D)theartificialfixingofthecurrencyratebyChina.FORM111

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43)The relative decline of the United States in the share of world output and worldtransfersreflectsA)anincreaseinthebarrierstoforeigntradeintheUnitedStates.B)thedeepeningoftheglobalfinancialcrisis.C)thereducedindustrializationindevelopingnations.D)the growth in the economic development of emerging markets and other industrializedcountries.44)WhydidmanyJapanesefirmsinvestinNorthAmericaandEuropeinthe1970s?A)toavoidahighlycompetitivedomesticmarketB)toexploithighdomestictariffbarriersC)to provide a hedge against unfavorable currency movements and imposition of tradebarriersD)totakeadvantageoftheremovalofalltradebarriers45)Throughout the 1990s, the amount of foreign direct investment directed at bothdevelopedanddevelopingnationsincreaseddramatically.ThistrendreflectsA)aslowdowninglobaleconomicactivity.B)theincreasingshareoftheUnitedStatesinthetotal FDIstock.C)thedeclineincross-borderflowsofforeigndirectinvestment.D)theincreasinginternationalizationofbusinesscorporations.46)Which country has been the largest recipient of foreign direct investment and, in 2020,receivedabout$250 billion in inflows?A)BrazilB)RussiaC)IndiaD)ChinaFORM112

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47)Procter&Gambleisamultinationalenterprise(MNE),whichisafirmthatA)transfersitsproductstomultiplecountries.B)ownsbusinessoperationsin morethanonecountry.C)doesmost ofits businesson theInternet.D)listsitssecuritiesonapublicexchange.48)Since the 1960s, whatever has been a notable trend in the demographics of themultinationalenterprise?A)thedeclineofmultinationalcompaniesinthemanufacturingsectorB)thegrowthofgovernment-ownedmultinationalenterprisesC)thedeclineofnon-U.S.multinationalsD)thegrowthofmini-multinationals49)Inthelasttwodecades,LatinAmericancountriessuchasBrazil,Mexico,andChilehaveA)embracedcommunistprinciples.B)promotedgovernmentownershipofenterprises.C)experiencedincreasingdebtandinflation.D)welcomedforeigninvestment.50)Whateverisariskassociatedwithglobalization?A)restrictionsoncompetitionB)globalfinancialcontagionC)excessivemarketregulationD)differentiationofmarketsFORM113

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51)Theriseinthenumberofmini-multinationalsmeansthatA)small businesses are becoming increasingly involved in international trade andinvestment.B)itisincreasinglydifficulttoenterthelargemultinationalmarket.C)countriesareworkingtogethertominimizeMNEinfluence.D)thereisgreaterstateinvolvementinindustry.52)ThedownsideofincreasedglobalizationisA)globalfinancialcontagionsarelesslikely.B)aseverecrisisinoneregioncanaffecttheentireglobe.C)onenationmaybecometoopowerful.D)thepotentialforincreasedexploitationofundevelopednationsbydevelopednations.53)Duringthepasttwodecades,changeinLatinAmericahasbeencharacterizedbyA)anincreaseindebt.B)hyperinflation.C)thesaleofstate-ownedenterprisestoprivateinvestors.D)protestsagainstforeigninvestment.54)IfChinacontinuestomovetowardgreaterfreemarketreformsitA)maymovefrombeinganindustrialsuperpowertoastrugglingeconomy.B)willlikelyseeadecreaseinGDPpercapita.C)maymovefromathird-worldbusinessgianttoanindustrialsuperpower.D)willlikelygiveglobalmarketsharetoWesternandJapaneseenterprises.FORM114

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55)TobeclassifiedasanMNE,acompanymusthaveproductiveactivitiesinatleastcountries.A)twoB)threeC)tenD)twenty56)Supporters ofglobalization maintain that the apparent decline in real wage rates ofunskilledworkersA)is due to technological changes and automation that create greater demand for skilledworkers.B)isduetothemigrationoflow-wagemanufacturingjobsoffshore.C)canbecheckedbyincreasinggovernmentownershipofenterprises.D)canbecheckedbylimitingfreetradeandforeigninvestment.57)Several studies published by the Organisation for Economic Co-operation andDevelopment(OECD) noted thatA)the real household income of unskilled workers in the United States increased more incomparisonto that of skilled workers.B)inalmostallcountriesrealincomelevelsdeclinedoverthe20-yearperiodstudied.C)the falling unemployment rates brought gains to low-wage workers andfairly broad-basedwagegrowth.D)the gap between the poorest and richest segments of society in some OECD countrieshadwidened.58)A number of econometric studies have found consistent evidence of a hump-shapedrelationship between income levels and pollution levels. According to this, as an economy growsandincomelevels riseFORM115

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A)initiallypollutionlevelsremainlow.B)afterawhile,pollutionlevelsdecrease.C)pollutionlevelsalsoriseinproportiontotheeconomicgrowth.D)thereisincreasingindustrialization,whichleadstogreaterpollution.59)ThetradeagreementknownasNAFTAwaspassedonlyafterA)Chinaagreedtoestablishahigherminimumwage.B)theUnitedStatesagreedtolimitthenumberofjobsthatcouldbeoutsourced.C)Mexicocommittedtotougherenforcementofenvironmentalprotectionregulations.D)CanadacommittedtoestablishnewlimitsonFDI.60)GlobalizationiscriticizedbecauseitincreasesthepowerofA)governmentstoownenterprises.B)unskilledlabortoformlabor unions.C)supranationalorganizationsovernation-states.D)nation-statestoregulatemarketsandreducecompetition.61)The World Trade Organization has estimated that the developed nations of the world canraiseglobal economicwelfareby $128 billion byA)removingsubsidiesgiventotheiragriculturalproducers.B)increasingtariffbarrierstotradeinagriculture.C)increasingoutsourcingofmanufacturingprocesses.D)reducingdefenseexpenditure.62)Which factor is viewed by large segments of the population in many countries as adetrimentaleffect of globalization?FORM116

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A)jobgrowthinindustriesunderattackfromforeigncompetitorsB)upwardpressureonthewageratesof unskilledworkersC)environmentaldegradationD)culturalisolationismofglobalmediaandMNEs63)While the hump-shaped relationship between income levels and pollution levels seems toholdacrossawiderangeofpollutants,representan importantexception.A)sulfurdioxideemissionsB)leadconcentrationsC)carbondioxideemissionsD)waterqualitystandards64)Basedonseveralstudies,thedatasuggestthatrealwagesA)for unskilled workers have decreased while real wages for skilled workers haveincreased.B)forbothskilledandunskilledlaborhavedecreased.C)forbothskilledandunskilledlaborhaveincreased.D)for unskilled workers have increased while real wages for skilled worker havedecreased.65)Why has little progress has been made toward the ambitious goals set at the 1992 EarthSummitin Rio deJaneiro?A)Chinahasshownastrongappetitetoadopttighterpollutioncontrols.B)PoliticalcooperationintheU.S.Congresspromotesdomesticaction.C)ThereisacultureofdenialintheUnitedStates.D)Tradeliberalizationeffortshavenotbeenrolledback.FORM117

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66)ThetwolargestemittersofcarbondioxideareA)ChinaandtheUnitedStates.B)ChinaandtheUnitedKingdom.C)CanadaandtheUnitedStates.D)MexicoandtheUnitedStates.67)Howwouldeconomistscharacterizetherelationshipbetweenglobalizationandpoverty?A)Globalization has improvedthe lot of the world’s poorer nations which has led to anoveralldecreasein poverty.B)Globalization has caused the gap between rich and poor nations to shrink and povertylevelsto decline.C)Globalization has caused an increase in poverty as well as an increase in the gapbetweenrich and poor nations.D)The movement of labor to developed nations because of globalization has contributedsignificantlyto theincreasein poverty.68)Whichstatementiscorrectof“highlyindebtedpoorercountries”(HIPCs)?A)About100nationsfallinthis category.B)The average debt burden has never been more than 75 percent of the value of theHIPC'seconomy.C)ServicingheavydebtleavesHIPCswithlittlelefttoinvestinpublicinfrastructure.D)Theannualcostofservingdebtconsumesabout30percentofHIPCtransferearnings.69)Supportersofdebtrelieffor HIPCsFORM118

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A)arguethatfreetradealoneis sufficienttobringHIPCsoutof poverty.B)argue that new democratic governments should be forced to honor debts incurred bypreviouscorruptpredecessors.C)areenergizedbyhigh-profileendorsementsfromBono,theDalaiLama,andJeffreySachs.D)areworkingagainstthepoliciesoftheIMFandWorldBank.70)Aninternationalbusiness,unlikeamultinationalenterprise,A)needstohavemanufacturingunitsinatleasttwoforeignnations.B)needstomanufactureproductsorprovideservicesthattargetaglobalmarket.C)neednotcustomizeitsproductstotherequirementsofnationalmarkets.D)neednotinvestdirectlyinoperationsinothercountries.71)ExoticCollectiblesisaninternationalbusiness.Assuch,itA)needstohavemanufacturingunitsinatleasttwoforeignnations.B)needstomanufactureproductsorprovideservicesthattargetaglobalmarket.C)neednotcustomizeitsproductstotherequirementsofnationalmarkets.D)investsininternationaltradeorinvestment.72)Whichstatementiscorrectregardinganinternationalbusiness?A)Aninternationalbusinessneedstoinvestdirectlyinoperationsinothercountries.B)Aninternationalbusinessneedstohavehomogenouspracticesacrosscountries.C)An international business can be managed in the same way that a domestic business ismanaged.D)An international business must find ways to work within the limits imposed bygovernmentintervention.FORM119

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73)Howdoesmanaginganinternationalbusinessdifferfrommanagingadomesticbusiness?A)Internationalmanagersaremoreexperienced.B)Countriesdifferintheirculturesandsystems.C)Countrieswanttodobusinesswiththeir neighbors.D)Countrieswanttokeeptheirtransactionssimple.74)Whichstatementischaracteristicofaninternationalbusinesses?A)AllMNEsareinternationalbusinesses.B)Onlyfirmsthattransferproductsareinternationalbusinesses.C)Onlyfirmsthatinvestabroadareinternationalbusinesses.D)AllinternationalbusinessesareMNEs.75)Managing an international business is different from managing a purely domesticbusinessbecauseA)countriesprefertokeepbusinesstransactionsbetweendomesticpartners.B)therangeofproblemsconfrontediswiderandmorecomplex.C)internationalbusinesseshaveanaddedlayerofU.N.regulations.D)international transactions involve exchanging currencies through each country’streasury.76)Since Mercury Machine is a medium-size business, it would not benefit fromglobalization.⊚correct⊚wrongFORM120

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77)By sourcing goods and services from around the globe, companies may lower theiroverallcoststructureorimprovethequality orfunctionality oftheir productoffering.⊚correct⊚wrong78)Manufacturers of industrial goods and materials are more likely to participate in globalmarketsthan producers of consumer products.⊚correct⊚wrong79)Outsourcingisaprocessthatislimitedtomanufacturingenterprises.⊚correct⊚wrong80)The World Bank has focused on policing the world trading system and making surenation-statesadhereto therules laiddown in tradetreaties.⊚correct⊚wrong81)Nations faced with a financial crisis can turn to the World Bank, known as the lender oflastresort, to bail it out.⊚correct⊚wrong82)One of the UN's central mandates is to make sure nation-states adhere to the rules laiddownin tradetreaties signed by member states.⊚correct⊚wrongFORM121

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83)As part of thenegotiations in the General Agreement on Tariffs and Trade, the UruguayRound,finalizedinDecember1993,enhancedprotectionforpatents,trademarks,andcopyrights.⊚correct⊚wrong84)"Beggar thy neighbor" retaliatory trade policies involved countries progressivelyincreasing trade barriers against each other, which contributed to the Great Depression of the1930s.⊚correct⊚wrong85)Thera-sure Inc., a U.S.-based manufacturer of temperature regulators, sets up aproduction unit in Korea to take advantage of the lower labor costs there. This is an example offoreigndirect investment.⊚correct⊚wrong86)The value of foreign direct investment has steadily declined over the past few decadesdueinpartto increasedbarriersplaced oncompanieswantingtoinvestoverseas.⊚correct⊚wrong87)World events such as the COVID-19 global pandemic have forced companies to openoperations in many parts of the world rather than invest in local production to try to offsetdisruptionsin global supply chains.⊚correct⊚wrongFORM122

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88)One result of the globalization of markets and the resulting growth of world trade, foreigndirect investment, and imports is the increasing competition in domestic markets from foreigncompetitors.⊚correct⊚wrong89)The cost of microprocessors continues to fall, while their power increases. This statementsupportsthepredictions madeby Moore's Law.⊚correct⊚wrong90)Foreign direct investment by non-U.S. firms increased because they wanted to disperseproductionactivitiestooptimallocationsandtobuildadirectpresenceinmajorforeignmarkets.⊚correct⊚wrong91)A current trend in international business is the decline of medium-sized and smallmultinationals,known as mini-multinationals.⊚correct⊚wrong92)Because Russia has shown signs of shifting back toward greater state involvement ineconomicactivityandauthoritariangovernment,doingbusinessinRussiaisconsideredriskier.⊚correct⊚wrongFORM123

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93)According to globalization critics, the decline in unskilled wage rates is due to themigration of low-wage manufacturing jobs offshore and a corresponding reduction in demand forunskilledworkers.⊚correct⊚wrong94)Evidence suggests that technological change has had a bigger impactthan globalizationonthedeclining shareof nationalincomeenjoyed by labor.⊚correct⊚wrong95)According to supporters of free trade, as countries become more integrated into globaleconomyandtrade,theyaremorelikelytoenforcestricterenvironmentalandlaborregulations.⊚correct⊚wrong96)According to critics of globalization, today’s interdependent global economy places moreeconomicpower in thehands of nationalgovernments.⊚correct⊚wrong97)According to supporters of debt relief, newdemocratic governments in poor nationsshouldnotbeforced tohonordebtsincurredby corruptanddictatorialpredecessors.⊚correct⊚wrong98)Afirmneedstobecomeamultinationalenterprisetoengageininternationalbusiness.⊚correct⊚wrongFORM124

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99)Managinganinternationalbusinessisquitesimilartomanagingadomesticbusiness.⊚correct⊚wrongFORM125

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AnswerKeyTestname:Chap01_14thEdition17)D18)C19)B20)B21)A22)B23)C24)D25)A26)B27)D28)A29)B30)B31)C32)C33)C34)D35)D36)A37)A38)B39)C40)B41)B42)AFORM126

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43)C44)D45)C46)D47)D48)B49)D50)D51)B52)A53)B54)C55)C56)A57)A58)D59)B60)C61)C62)A63)C64)C65)A66)C67)A68)A69)C70)C71)D72)DFORM127

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73)D74)B75)A76)B77)WRONG78)CORRECT79)CORRECT80)WRONG81)WRONG82)WRONG83)WRONG84)CORRECT85)CORRECT86)CORRECT87)WRONG88)WRONG89)CORRECT90)CORRECT91)CORRECT92)WRONG93)CORRECT94)CORRECT95)CORRECT96)CORRECT97)WRONG98)CORRECT99)WRONG100)WRONGFORM128

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