Chapter 3 Business In A Borderless World Full Test Bank

1.

International business involves the buying, selling, and trading of goods and services across national boundaries.

 
 
True    False

2.

Nations trade with other nations to obtain resources that would otherwise be unavailable to them.

 
 
True    False

3.

Importing is the sale of goods and services to foreign markets. 
 
True    False

4.

When a nation imports more than it exports, it has a positive balance of trade.

 
 
True    False

5.

Trade deficits can help businesses succeed, create more jobs, and improve the standard of living. 
 
True    False

6.

The Webb-Pomerene Export Trade Act allows selected U.S. firms to form monopolies to compete with foreign monopolistic organizations and also to operate as monopolies within the United States. 
 
True    False

7.

A common reason for establishing quotas or tariffs is to encourage dumping.

 
 
True    False

8.

Political unrest in countries often creates a hostile environment for foreign businesses and can act as a barrier to international trade.

 
 
True    False

9.

Sociocultural differences, such as variations in body language and personal space, usually have almost negligible impact on international business.

 
 
True    False

10.

The General Agreement on Tariffs and Trade provided a forum for tariff negotiations and a place where international trade problems could be resolved. 
 
True    False

11.

The World Trade Organization agreements were rejected by most of the world's trading nations. 
 
True    False

12.

Many U.S. companies have taken advantage of Mexico's low labor costs and proximity to the United States to set up maquiladoras. 
 
True    False

13.

The Association of Southeast Asian Nations (ASEAN) effectively united Singapore, Britain, and Japan into one market.

 
 
True    False

14.

The International Monetary Fund promotes trade among member nations by eliminating trade barriers and fostering financial cooperation.

 
 
True    False

15.

Only large businesses get involved in exporting. 
 
True    False

16.

Licensing allows a company to enter the international marketplace without spending large amounts of money abroad.

 
 
True    False

17.

A strategic alliance is a partnership formed to create competitive advantage on a worldwide basis.

 
 
True    False

18.

Direct investment gives lesser power and is the least expensive way to participate in foreign trade. 
 
True    False

19.

Multinational corporations (MNCs) rarely get targeted by activists because they provide so many benefits to the countries in which they do business. 
 
True    False

20.

Companies doing business internationally have traditionally used a globalization strategy.

 
 
True    False

21.

A global strategy involves standardizing products for the whole world. 
 
True    False

22.

Even when products are standardized, advertising often has to be modified to adapt to local cultures.

 
 
True    False

23.

A(n) _____ exists when a country is the most efficient producer of an item. 
 

24.

A mining company in Malyia that possesses the only mine where a specialty ruby can be found has a(n) 
 

25.

Malyia can produce sugar more efficiently than it can produce other items, giving it a(n) _____ advantage.

26.

_____ is the transferring of manufacturing or other tasks—such as data processing—to countries where labor and supplies are less expensive. 
 

27.

Why has outsourcing become a controversial practice in the United States? 
 

28.

_____ is best described as the sale of goods and services to foreign markets. 
 

29.

Sarah bought a new shirt at a U.S. boutique. When she checked the tag, she saw that her shirt was made in China. This means her shirt is a(n) _______ good. 
 

30.

A nation's _____ can be best defined as the difference in value between its exports and imports. 
 

31.

U.S. exports to China have been rapidly increasing but not fast enough to offset the imports from China. This means that the United States has a(n) 
 

32.

Which of the following is one of the implications of trade deficits? 
 

33.

A favorable balance of trade exists when a country 
 

34.

Which of the following is most likely to cause a trade surplus? 
 

35.

The difference between the flow of money into and out of a country is called its 
 

36.

Thelisia has a trade deficit, and it is receiving less money from trade with foreign countries than it is paying out in foreign investments, loans, and military expenditures. This means Thelisia may experience 
 

37.

Which of the following is an industrialized nation? 
 

38.

Which of the following statements is true about less-developed countries (LDCs)? 
 

39.

Thelisia has abundant railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems to support its economic activities. This means Thelisia has a strong 
 

40.

_____ can be best defined as the ratio at which one nation's currency can be exchanged for another nation's currency. 
 

41.

If the United States were to devalue its currency, the most likely result would be 
 

42.

Which of the following is likely to be an impact of a decrease in the value of the U.S. dollar in relation to the euro? 
 

43.

Which of the following is a true statement about barriers to international business? 
 

44.

AgroKing, a U.S. firm that produces agricultural products, relocated to Malyia to avoid having to pay the high U.S. tax rate. AgroKing prefers Malyia's low tax rate, low wages, and sufficient infrastructure. This is an example of tax 
 

45.

A specific amount of money levied on each unit of a product brought into a country is termed as a(n) _______ tariff. 
 

46.

A fixed tariff differs from an ad valorem tariff because an ad valorem tariff 
 

47.

A U.S. citizen may bring $200 worth of merchandise into the United States duty free. After that, U.S. citizens must pay a(n) _______ based on the cost of the item and the country of origin. 
 

48.

Which of the following statements is true about tariffs and trade restrictions? 
 

49.

Which of the following is a measure that does not yield revenue for the government of Malyia, but can effectively limit the quantity of a particular good being imported from Thetasia? 
 

50.

A(n) _____ is best defined as a prohibition on trade in a particular product. 
 

51.

Because of an unfavorable political situation between the countries, the country of Thetasia has placed a government order to prohibit the trade of private vehicles with the country of Calibria. Thetasia has maintained a(n) _____ with Calibria. 
 

52.

_____ can be best defined as the act of a country or business selling products at less than what it costs to produce them. 
 

53.

All of the following are nations that have been subject to economic sanctions for political reasons in recent years EXCEPT 
 

54.

Political concerns may lead a group of nations to form a(n) _______, a group of firms or nations that agrees to act as a monopoly and not compete with each other. 
 

55.

Which of the following statements is true about dumping? 
 

56.

Agro Corp., based in the country of Arahonia, is a company that produces agricultural products. The domestic market of Arahonia is not sufficient to support Agro Corp.'s large-scale level of production because Arahonia is a small but highly industrialized country. Thus, Agro Corp. decides to sell its products to the agriculture-based country of Petinberg at less than its production cost. This process is termed as 
 

57.

A sudden change in power can result in a regime that is hostile to foreign investment. This is a primary example of a(n) _______ barrier. 
 

58.

A catastrophic flood crippled Malyia's government. In an effort to help local businesses rebuild, the government forced foreign businesses out of the country. This is an example of a(n) ______ barrier to trade. 
 

59.

Auto Corp. learned that in order to sell more cars in Thelisia, it needed a bold and strategic advertising plan; while in Malyia, it needed more attentive customer service. This is an example of a(n) _____ barrier. 
 

60.

Understanding that Arab businessmen tend to stand face-to-face when holding a conversation reveals the importance of understanding another culture's use of 
 

61.

All of the following are true about gestures that are viewed as rude or unacceptable in particular countries EXCEPT 
 

62.

The effective translation of product names can be crucial to the success in foreign markets because of 
 

63.

Many countries do not allow children to be used in advertising. This is an example of a(n) _____ barrier. 
 

64.

Auto Corp. released an advertisement showing fair-skinned people driving their cars into an indigenous Malyian village, while the indigenous people watched in awe. Malyian activists claimed this ad reinforced negative stereotypes of the indigenous people and called for their government to issue sanctions against Auto Corp. This is an example of a(n) _______ barrier. 
 

65.

Which of the following is true about the General Agreement on Tariffs and Trade (GATT)? 
 

66.

Which of the following is the international organization based in Geneva, Switzerland, that was created in 1995 by the Uruguay Round of the General Agreement on Tariffs and Trade (GATT)? 
 

67.

Which of the following were merged into one market by the North American Free Trade Agreement (NAFTA)? 
 

68.

_____ is the single largest trading partner of the United States. 
 

69.

Which of the following is a true statement about the European Union? 
 

70.

Which of the following is an international trade alliance between 21 nations that promotes open trade and economic and technical cooperation among its member nations? 
 

71.

Which of the following countries was a member nation of Asia-Pacific Economic Cooperation (APEC) when it was established in 1989? 
 

72.

Which of the following is true about the Association of Southeast Asian Nations (ASEAN)? 
 

73.

Which of the following was established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries? 
 

74.

Which of the following is true of the World Bank? 
 

75.

The _____ is the closest thing the world has to an international central bank. 
 

76.

The usefulness of the International Monetary Fund (IMF) for developed countries is limited because 
 

77.

An intermediary who handles international transactions for other firms is acting as a(n) 
 

78.

Which of the following is an advantage of using an export agent? 
 

79.

Exporting may occur through _____, which involve bartering products for other products rather than currency. 
 

80.

Auto Corp. buys engines from Malyia and resells them in its stores in Thetasia. This is an example of 
 

81.

Which of the following is true regarding trading companies? 
 

82.

Which of the following can be best defined as a trade agreement in which one company allows another company to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty? 
 

83.

What type of company benefits the most from licensing? 
 

84.

Which of the following can be best defined as a form of licensing in which a company agrees to provide another company with its name, logo, methods of operation, advertising, products, and other elements associated with it in return for a financial commitment and the agreement to conduct business in accordance with its standard of operations? 
 

85.

If GloboTron hires a Thetasian company to manufacture many of its stereo components, and these products carry GlobalTron's name, this business arrangement is called 
 

86.

Offshoring is different from outsourcing because 
 

87.

Which of the following is true of offshoring? 
 

88.

DMC Inc., headquartered in Malyia, has completely transferred its tax services to Apex Corp in Thetasia because there are many well-educated workers and lower labor costs. This is an example of 
 

89.

Which of the following is likely to be a reason for some U.S. companies to bring their outsourced production processes back to the United States? 
 

90.

_____ can be best defined as the sharing of the costs and operations of a business between a foreign company and a local partner. 
 

91.

In industries where international competition is so fierce and the costs of competing on a global basis are so high that only a few firms have the resources to do it alone, they collaborate with other companies to form a 
 

92.

The purchase of overseas production and marketing facilities is an example of 
 

93.

When UPS invested in a foreign tech startup Ally Commerce Inc. to give it greater access to online sales, it was exemplifying 
 

94.

Which of the following can be best defined as a corporation that operates in several countries without significant ties to any of them? 
 

95.

Which of the following is true of multinational corporations (MNCs)? 
 

96.

GloboTron is headquartered in Argonia, and it operates over 500 factories around the world. It is one of the world's major producers of home entertainment equipment. Globotron is an example of a(n) 
 

97.

On which of the following grounds are multinational corporations (MNCs) often criticized by antiglobalization activists? 
 

98.

A _____ strategy can be best defined as a plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences. 
 

99.

All of the following are examples of multinational strategy EXCEPT 
 

100.

More and more companies are moving from the multinational strategy to a global strategy that involves _________ products. 
 

101.

When a firm's products are standardized in all countries 
 

102.

Which of the following is true of the Commercial Service of the U.S. Department of Commerce? 
 

103.

Which of the following is true about managing the challenges of global business? 
 

104.

In international trade, what is the difference between an absolute advantage and a comparative advantage?

105.

Explain the terms balance of trade, trade deficit, and trade surplus in the context of the United States.

106.

What are the different international barriers to trade? Give an example of each barrier.

107.

Briefly explain the economic barriers to trade and the important factors involved in it.

108.

Describe some of the ethical, legal, and political barriers to international trade.

109.

What social and cultural issues should a manager consider before doing business in a foreign country?

110.

Discuss the organizations and agreements, such as the General Agreement on Tariffs and Trade, the World Trade Organization, the World Bank, and the International Monetary Fund, that foster international trade and can help companies succeed in global markets.

111.

Discuss the various regional trade agreements, such as the North American Free Trade Agreement, the European Union, the Asia-Pacific Economic Cooperation, and the Association of Southeast Asian Nations.

112.

Explain the different levels of organizational involvement in international trade.

113.

Explain why a company may opt for a joint venture or a strategic alliance.

114.

Why does direct investment have a greater degree of commitment than a countertrade agreement?

115.

What is the difference between a multinational and a globalization strategy?