Ch.9 Test Bank Answers Economic Development and the Americas

International Marketing, 18e (Cateora)

Chapter 9 Economic Development and the Americas

1) Of the three kinds of distances that international marketers must traverse, time zones have the greatest influence on the success of their commercial efforts abroad.

2) The liberalization of trade and investment policies in developing countries have little impact on the way countries will trade and prosper in the 21st century.

3) The level of political stability in a country is the single most important environmental element to which the foreign marketer must adjust the marketing task.

4) Consumption patterns change rapidly in static economies.

5) Economic development translates to rapid economic growth and increases in consumer demand.

6) According to the UN classification, industrially developing countries just entering world trade with relatively low per capita incomes are referred to as less-developed countries.

7) The UN classification of countries based on economic development has been criticized because it no longer seems relevant in the rapidly industrializing world.

8) Chile is a newly industrialized country. As such, it has per capita incomes lower than LDCs.

9) Under the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, Brazil falls under the group of more-developed countries (MDCs).

10) Newly industrialized countries (NICs) are characterized by markets with fewer restrictive trade practices and significant free market reforms.

11) Mercosur is a free trade group formed by the United States.

12) Privatization of state-owned industries released immediate capital to invest in strategic areas.

13) High transaction costs associated with the use of the Internet prevent smaller firms in emerging countries from selling into a global market.

14) Economic growth is measured solely in economic goals.

15) The trend toward privatization is occurring in industrialized as well as in developing countries.

16) The quality of an infrastructure directly affects a country's economic growth potential.

17) A more developed economy tends to have fewer types of marketing functions that are needed.

18) Marketing is an economy's arbitrator between productive capacity and growth potential.

19) According to Jagdish Sheth, rather than diffusion of innovations, the focus of new product development should be on affordability and accessibility.

20) For international marketing, the level of market development parallels the stages of economic development.

21) In the United States, the vast majority of the population lives in urban areas and has higher earnings than those who live in rural areas.

22) Big emerging markets are of major political importance within their regions.

23) Poland has been identified as a big emerging market by the Department of Commerce.

24) Canada is a member of NAFTA.

25) The United States–Canada Free Trade Area (CFTA) was a customs union like the European Community.

26) The DR-CAFTA includes a wide array of tariff reductions aimed at increasing trade and employment.

27) Mercosur is the largest common-market agreement in the Americas.

28) The Mercosur originally envisioned central institutions similar to those of the European Union institutions.

29) One of the most important aspects of the Latin American Integration Association (LAIA) that differs from LAFTA, its predecessor, is the differential treatment of member countries according to their level of economic development.

30) As a country develops, market behavior changes and eventually it leads to market segmentation.

31) Which country is an MDC (more-developed country)?

A) Brazil

B) Russia

C) Germany

D) Argentina

E) Vietnam

32) According to the U.S. Department of Commerce, Latin American and other emerging markets will account for ________ of the world's total growth in the next two decades and beyond.

A) 20%

B) 30%

C) 50%

D) 75%

E) 90%

33) What is considered the single most important environmental element of a country to which the foreign marketer must adjust the marketing task?

A) political stability

B) economic level

C) social norms

D) literacy level

E) cultural orientation

34) Dynamic economies differ from static economies in that dynamic economies

A) need not match marketing efforts with the market needs and wants.

B) have rapidly changing consumption patterns.

C) have a highly predictable and loyal consumer base.

D) define marketing as typically nothing more than a supply effort.

E) do not require a marketer to be prepared for economic shifts and emerging markets.

35) Economic ________ refers to an increase in national production that is reflected by an increase in the average per capita gross domestic product or gross national income.

A) repression

B) duress

C) equilibrium

D) development

E) sustainability

36) The ________ classifies a country's stage of economic development on the basis of its level of industrialization into three categories and the three categories are MDCs, LDCs, and LLDCs.

A) U.S. Department of Commerce

B) North Atlantic Treaty Organization

C) International Organization for Standardization

D) United Nations

E) International Development Association

37) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, in which category does an industrialized country with high per capita income fall?

A) less-developed countries

B) least-developed countries

C) more-developed countries

D) frontier markets

E) pre-emerging markets

38) Which statement is true about MDCs (more-developed countries)?

A) These countries are just entering world trade.

B) The majority of their populations stay in rural areas.

C) These countries have high per capita incomes.

D) These countries have little world trade involvement.

E) These countries have mainly agrarian economies.

39) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, Canada falls under the category of ________ countries.

A) Third World

B) least-developed

C) more-developed

D) less-developed

E) pre-emerging

40) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, ________ countries consist of industrially developing countries just entering world trade with relatively low per capita incomes.

A) first world

B) least-developed

C) less-developed

D) Third World

E) more-developed

41) A country that is industrially underdeveloped, agrarian, has a subsistence society with rural populations, and has extremely low per capita income levels falls under the category of

A) first world countries.

B) least-developed countries.

C) less-developed countries.

D) newly industrialized countries.

E) frontier markets.

42) The United Nations' classification of stages of economic development has been criticized primarily because

A) many countries that are classified as LDCs are industrializing at a very rapid rate, while others are advancing at more traditional rates of economic development.

B) countries classified as LLDCs are growing at a very rapid rate.

C) it no longer takes into account social overhead capital as an indicator of economic development.

D) it only focuses on the literacy level in a country.

E) countries that are classified as LDCs are industrializing at a slow rate.

43) Most newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms. As a result, these countries have

A) attracted both trade and foreign direct investment.

B) become poor importers as well as exporters.

C) experienced low gross national income.

D) stepped up their protectionist policies.

E) majorly given up on their domestic markets.

44) Newly industrialized countries (NICs) differ from less-developed countries in that NICs

A) include Canada, the United States, and Germany.

B) attract insignificant or no foreign investment.

C) have per capita incomes that are lower than other developing countries.

D) have moved away from restrictive trade practices and instituted significant free market reforms.

E) have shown slow industrialization and expansion of targeted industries.

45) Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan are examples of ________ countries.

A) least-developed

B) Third World

C) underdeveloped

D) newly industrialized

E) closed economy

46) Which country was involved in the formation of the free trade group Mercosur?

A) Australia

B) China

C) Argentina

D) Russia

E) Thailand

47) _________ is a free trade group that includes 200 million people, and was formed by Argentina, Brazil, Paraguay, and Uruguay.

A) NAFTA

B) Caricom

C) Mercosur

D) SACU

E) DR-CAFTA

48) When countries sell off state-owned enterprises and privatize them, it usually results in a(n)

A) lack of accommodation of outside investors.

B) decline in productivity throughout the private sector.

C) increase in modernization by new investors.

D) instant change in political leadership.

E) continuing drain on future natural resources.

49) What is true of privatization of state-owned enterprises?

A) It leads to a decline in productivity throughout the private sector.

B) It was done in order to stop the drain on national budgets due to inefficient state-owned enterprises.

C) It blocks capital mobility to strategic areas.

D) It leads to a change in political leadership.

E) It acts as a setback to the process of modernization.

50) What is a characteristic impact of privatization of state-owned enterprises?

A) It normally has a negative effect on economic growth.

B) It blocks investment of capital in strategic areas.

C) It often leads to new economic growth.

D) It results in a draining of the future national resources.

E) It brings about a political shift in the country.

51) During the early market growth of many countries, the first large open market was

A) Russia.

B) the United States.

C) Australia.

D) Germany.

E) the United Kingdom.

52) A country's investment in information technology is a key to economic growth. Specifically, the Internet

A) further increases the advantage of rich economies over the poor ones.

B) increases market transaction costs.

C) allows for innovative services but at a relatively higher cost.

D) enables smaller firms in emerging economies to sell into a global market.

E) decreases the economies of scale from vertical integration.

53) What is true about the activities of foreign investors in developing countries?

A) Foreign investors are seen as vital partners in economic development.

B) Today, most developing countries have more conservative attitudes toward foreign investments than before.

C) Foreign firms are expropriated and charged with excessively high tariffs and quotas by all developing countries.

D) Foreign businesses are generally not allowed to raise money by means of shares in developing countries.

E) Foreign investment is banned in most developing countries.

54) What is an indicator of a country's economic development?

A) population expansion

B) expanding state ownership

C) the country's infrastructure

D) social reformation

E) cultural diversity

55) Paved roads, railroads, seaports, communication networks, and financial networks are examples of

A) environmental resources.

B) inventory.

C) infrastructure.

D) factors of production.

E) freight claims.

56) Economic planners are often more ________ oriented than marketing oriented.

A) production

B) advertising

C) logistics

D) theory

E) distribution

57) Economic planners are least likely to be concerned with the problems related to

A) production.

B) finance.

C) capacity.

D) distribution.

E) investment.

58) ________ is an economy's arbitrator between productive capacity and consumer demand.

A) Warehousing

B) Marketing

C) Convergence

D) Procurement

E) Outsourcing

59) The level of market development roughly parallels the stages of economic

A) stagnation.

B) duress.

C) repression.

D) equilibrium.

E) development.

60) Estimating market potential in less-developed countries involves additional challenges, but most of the difficulty arises from the

A) coexistence of three distinct kinds of markets in each country.

B) dependence of the markets on the industrialized sectors.

C) lower wage rates of the workforce.

D) high fluctuation in the currency rate.

E) higher concentration of population residing in the urban areas.

61) The transitional sector differs from the modern urban sector in that the transitional sector

A) is an exclusively agriculture-oriented sector.

B) consists of population that works in the countryside.

C) consists of an expanding Westernized middle class.

D) represents the high-income urban slums.

E) consists of population that moves from the country to the large cities.

62) Which market sector has an expanding Westernized middle class?

A) the traditional sector

B) the modern sector

C) the rural services sector

D) the transitional sector

E) the agricultural sector

63) Developing countries with markets that are geographically large, have strong growth rates, are regional economic drivers, and represent sizable markets for a wide range of products have been identified by the U.S. Department of Commerce as ________ markets.

A) frontier

B) big emerging

C) two-sided

D) niche

E) grey

64) Country A is a developing country that has a significant population and represents a sizable market for a wide range of products. It has a strong growth rate and is considered a regional economic driver. Based on this information, Country A can be classified as a ________ market.

A) grey

B) big emerging

C) two-sided

D) frontier

E) niche

65) Which country has been identified by the Department of Commerce as a BEM (big emerging market)?

A) Philippines

B) Egypt

C) Venezuela

D) Mexico

E) Nicaragua

66) The type of growth that is happening in BEMs today is analogous to what happened in

A) Saudi Arabia in the 1800s.

B) India during the rule of the British Empire.

C) Russia after the fall of the Czar.

D) Europe after World War II.

E) Iraq between 1890 and 1990.

67) Which country is a part of the free trade area known as CFTA?

A) France

B) Uruguay

C) the United States

D) Argentina

E) Brazil

68) The three members of the North American Free Trade Agreement (NAFTA) are

A) the United States, the United Kingdom, and France.

B) the United States, Cuba, and Uruguay.

C) Canada, China, and Japan.

D) the United States, France, and Germany.

E) Canada, Mexico, and the United States.

69) The CFTA was designed to

A) establish tariffs between the U.S. and Europe.

B) create several independent commercial markets for goods and services.

C) become a customs union like the European Community.

D) involve both economic and political unions.

E) eliminate tariffs and other trade barriers between the United States and Canada.

70) Which country announced that it would seek free trade with the United States shortly after the ratification of the United States–Canada Free Trade Area (CFTA)?

A) Germany

B) Australia

C) Mexico

D) The United Kingdom

E) China

71) ________ required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped.

A) Mercosur

B) LAIA

C) CARICOM

D) NAFTA

E) DR-CFTA

72) What key provision of NAFTA restricts Japan from assembling autos in Mexico and avoiding U.S. or Canadian tariffs and quotas, unless the auto had a specific percentage of Mexican (i.e., North American) content?

A) services

B) standards

C) rules of origin

D) uniform customs procedures

E) government procurement

73) What is true about NAFTA?

A) It allows the use of standards and technical regulations as obstacles to trade.

B) It was ratified and became effective in the year 2000.

C) It prohibits U.S. and Canadian financial institutions to open wholly owned subsidiaries in Mexico.

D) Its provisions require goods to contain minimum of 10% North American content to be traded duty free.

E) Its provisions require Canada, Mexico, and the United States to implement uniform customs procedures and regulations.

74) NAFTA differs from Mercosur in that NAFTA

A) was provided legal basis by the Treaty of Asunción.

B) is the second-largest common-market agreement in the Americas after Mercosur.

C) includes Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay.

D) aims to address and improve all aspects of doing business within North America.

E) aims to establish a common currency for its Latin American members.

75) Given the fact that NAFTA is now effective in the U.S., Mexico, and Canada, an American company that has its production plant in Sri Lanka will be willing to relocate its production plant to Mexico mostly because

A) it will improve the image of its goods.

B) Mexico has lower wages than Sri Lanka.

C) it will enable the company to get an entirely western consumer base for its products.

D) moving finished goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka.

E) workers in Mexico are more skilled than those in Sri Lanka.

76) What country is a member of the free trade agreement DR-CAFTA?

A) Bahrain

B) Bhutan

C) Morocco

D) Costa Rica

E) Oman

77) Which is the comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States that includes a wide array of tariff reductions aimed at increasing trade and employment?

A) DR-CAFTA

B) NAFTA

C) CFTA

D) SAARC

E) Mercosur

78) The success of the Caribbean Free Trade Association led to the creation of the

A) Central American Integration System.

B) Community of Latin American and Caribbean States.

C) Caribbean Community and Common Market.

D) Union of South American Nations.

E) United Nations Economic Commission for Latin America and the Caribbean.

79) CARICOM established the CSME (CARICOM Single Market and Economy) with the major goal of

A) establishing central institutions similar to those of the European Union institutions.

B) forming a political union.

C) implementing a common currency for all member nations.

D) increasing nontariff barriers.

E) implementing uniform customs procedures.

80) In the context of a political and economic revolution that has been taking place in Latin America, state ownership has resulted in

A) inclusion of foreign and domestic private ownership.

B) efficient state treasuries.

C) efficient public companies.

D) predictable regulatory environments.

E) inefficient public companies.

81) What country is a member of the Latin American Integration Association (LAIA, aka ALADI)?

A) Bahamas

B) Cuba

C) Nicaragua

D) Costa Rica

E) Honduras

82) Haiti is a member of

A) CARICOM.

B) NAFTA.

C) CFTA.

D) LAIA.

E) Mercosur.

83) What is the largest common-market agreement in the Americas?

A) CFTA

B) NAFTA

C) Mercosur

D) DR-CAFTA

E) SAFTA

84) What is the second-largest common-market agreement in the Americas, after NAFTA?

A) CFTA

B) TPP

C) Mercosur

D) DR-CAFTA

E) SAFTA

85) Which of the following treaties provided the legal basis for Mercosur?

A) Treaty of Verdun

B) Treaty of Asunción

C) Treaty of Westphalia

D) Treaty of Versailles

E) Treaty of Montevideo

86) What accounts for the lion's share of Mercosur exports to Europe?

A) clothing and apparel

B) telecommunication equipment

C) consumer durables

D) petroleum and minerals

E) agricultural and agro-industrial products

87) What is true of state ownership in Latin America?

A) Privatization of state-owned enterprises blocked the release of immediate capital to invest in strategic areas.

B) State ownership is the most ideal engine for economic growth.

C) Privatization of state-owned enterprises continually drained the future national resources.

D) State ownership has resulted in complicated and unpredictable regulatory environments.

E) State ownership has consistently resulted in the inclusion of foreign and domestic private ownership, and the formation of efficient public companies.

88) The long-term goal of the LAIA (Latin American Integration Association), better known by its Spanish acronym, ALADI, is to

A) improve the literacy levels in member countries.

B) reduce the child mortality rates in member countries.

C) establish a Latin American common market.

D) establish a common currency for all its member countries.

E) standardize the industrial production in the member countries.

89) One way that LAIA differs from LAFTA, its predecessor, is

A) the differential treatment of member countries according to their level of economic development.

B) the inclusion of rules of origin.

C) the exclusion of tariff barrier.

D) the members are forbidden from establishing bilateral trade agreements among member countries.

E) the introduction of a common currency for the member countries.

90) More household money goes for ________ in emerging markets than in developed markets.

A) housing

B) durable goods

C) food

D) leisure

E) education

91) Explain the importance of time zones for trade relationships and marketing operations. What are the three multinational market regions that comprise major trading blocs?

92) Describe the political and economic changes affecting developing countries, including foreign investment, transition from socialist to market-driven economies, and trade policies.

93) Explain the concept of economic development.

94) Describe the three categories used by the United Nations to classify a country's stage of economic development on the basis of its level of industrialization.

95) List and briefly describe five of the nine factors that existed during the economic growth of newly industrialized countries (NICs).

96) Explain how the Internet impacts economic development in emerging economies.

97) Describe the origin and purpose of Mercosur and its role in improving trade associations among American nations.

98) Why was Caribbean Community and Common Market (CARICOM) created? What are its goals?