Chapter 4 Test Bank Docx Competing In World Markets - Contemporary Business 18e | Test Bank by Louis E. Boone by Louis E. Boone. DOCX document preview.
Package Title: Chapter 4, Testbank
Course Title: Boone, 18
Chapter Number: 4
Question type: Multiple Choice
1) _____ are foreign-made products purchased by domestic consumers.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
2) Countries establish a(n) ______where they can trade among themselves without trade barriers.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
3) A(n) _____ is a tax levied on imported products.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
4) A nation’s _____ is the rate at which currency can be exchanged for the currency of another nation.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
5) _____ refers to selling goods abroad at a price lower than that charged in the domestic market.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
6) _____ describes the fall of currency’s value relative to other currencies.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
7) A country has _____ in the marketing of a product if it has a monopolistic position or it produces the product at the lowest cost.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
8) A country’s _____ is the difference between its exports and imports.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
9) Relocation of business processes to a lower-cost location overseas is known as ________.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
10) A(n) _____ develops and markets products to serve different needs and tastes of separate national markets.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
11) A limit on the amount of a particular product that a country can import during a specified time period is a(n) _____.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
12) A country’s _____ is the overall flow of money into and out of a country.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
13) _____monitors agreements among General Agreement on Tariffs and Trade (GATT) member nations, mediates disputes, and works to reduce trade barriers throughout the world.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
14) A(n) _____ allows a company to share risks, costs, profits, and management responsibilities with another company.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
15) A nation can have a(n) _____ in a product if it can supply it more efficiently and at a lower price.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
16) The _____ was created to promote trade through financial cooperation, while eliminating barriers in the process.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
17) A(n) _____ uses a standardized product and marketing strategy worldwide.
a) offshoring
b) balance of trade
c) joint venture
d) Dumping
e) Imports
f) tariff
g) International Monetary Fund
h) World Trade Organization
i) free trade area
j) Devaluation
k) exchange rate
l) absolute advantage
m) global business strategy
n) Quota
o) multidomestic strategy
p) balance of payments
q) comparative advantage
Difficulty: Medium
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
Bloomcode: Knowledge
Question type: Essay
18) What is the difference between absolute advantage and comparative advantage? Provide an example of each.
Solution: Absolute advantage is when a country makes a product for which it can maintain a monopoly or produce the product at a lower cost than any competitor. For centuries, China enjoyed an absolute advantage in silk production. Comparative advantage occurs when a country can supply a product more efficiently and at a lower price than it can supply other goods, compared with the outputs of other countries. Thus, all countries have a comparative advantage. For example, China enjoys a comparative advantage in producing textiles.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
19) Describe floating exchange rates. Identify factors that influence foreign exchange rates.
Solution: Foreign exchange rates are influenced by a number of factors, including domestic economic and political conditions, central bank intervention, balance-of-payments position, and speculation over future currency values. Currency values fluctuate, depending on the supply and demand for each currency in the international market. In this system of floating exchange rates, currency traders create a market for the world’s currencies based on each country’s relative trade and investment prospects. In theory, this market permits exchange rates to vary freely according to supply and demand. In practice, exchange rates do not float in total freedom. National governments often intervene in currency markets to adjust their exchange rates.
Difficulty: Hard
Bloomcode: Comprehension
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
20) What is balance of trade? Describe its relation to trade surplus and trade deficit.
Solution: A nation’s balance of trade is the difference between its exports and imports. If a country exports more than it imports, it achieves a positive balance of trade, called a trade surplus. If it imports more than it exports, it produces a negative balance of trade, called a trade deficit.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
21) List and describe the major types of obstacles confronting international trade.
Solution: The major types of obstacles confronting international trade are cultural barriers, physical barriers, and tariffs and other trade restrictions. Cultural barriers refer to differences in language, religion, social values, and buying habits that make it difficult for companies from one nation to succeed in another country. For example, business practices considered acceptable in the United States are often considered rude or inappropriate by businesspeople in other nations. Physical barriers refer to difficulties associated with location, distance, terrain, and transportation. Tariffs are taxes on goods imported into a nation. Although some tariffs are levied for the purpose of raising revenue, most are protective—they are designed to increase the price of foreign goods and place them at a competitive disadvantage. Other trade restrictions include quotas (numerical limits on the amount of a good that can be imported) and exchange controls (which require companies to buy and sell foreign exchange only through a nation’s central bank or some other designated agency).
Difficulty: Hard
Bloomcode: Comprehension
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
22) What are the advantages and disadvantages of imposing trade restrictions?
Solution: Trade restrictions may limit consumer choices while increasing the costs of foreign-made products. Trade restrictions also are imposed to protect citizens’ security, health, and jobs. Other restrictions are imposed to promote trade with certain countries. Still others protect countries from unfair competition.
Difficulty: Hard
Bloomcode: Comprehension
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
23) Describe exchange control.
Solution: A form of administrative trade restriction is exchange control. Imposed through a central bank or government agency, exchange controls affect both exporters and importers. Companies that gain foreign currencies through exporting are required to sell them to the central bank or another agency. Importers must buy foreign currencies to pay for their purchases from the same agency. The exchange control authority can then allocate, expand, or restrict foreign exchange in accordance with national policy.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
24) Discuss why the World Trade Organization (WTO) has been the object of controversy in recent years. What concerns have been expressed?
Solution: The WTO has become increasingly controversial in recent years as it issues decisions that have implications for working conditions and the environment in member nations. Concerns have been expressed that the WTO’s focus on lowering trade barriers encourages businesses to keep costs down through practices that may increase pollution and human rights abuses. Particularly worrisome is the fact that the organization’s member countries must agree on policies, and developing countries tend not to be eager to lose their low-cost advantage by enacting stricter labor and environmental laws. Other critics claim that if well-funded U.S. firms such as fast-food chains, entertainment companies, and online retailers can freely enter foreign markets, they will eliminate smaller foreign businesses serving the distinct tastes and practices of other countries. Trade unions in developed nations complain that the WTO’s support of free trade makes it easier to export manufacturing jobs to low-wage countries.
Difficulty: Easy
Bloomcode: Comprehension
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
25) Explain the concept of FOREX.
Solution: The foreign exchange market, also called FOREX, FX, or currency market, is a global market where investors can buy, sell, exchange, and speculate on currencies. The largest financial market in the world, with average daily volume of about $5.5 billion in U.S. dollars, the FX market determines the relative values of different currencies.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
26) How will United Airlines’ decision of equipping its staff with Apple iPhones improve its customer service?
Solution: The iPhones will enable agents and other customer service representatives to help customers who have checked into their flights with several pre-departure actions that include printing boarding passes and baggage tags anywhere throughout the airport. In addition, using United’s own custom-built software for iOS, customer service representatives carrying the iPhones will be able to assist other United employees at locations throughout the airport with problem solving, troubleshooting, and, when needed, developing alternate flight options. The iPhones include tools that allow full check-in capabilities in airport lobbies and the ability to offer customers the same service levels and functionality as traditional kiosk locations. According to the company’s head of airport operations, the iPhone is also a great way to empower employees.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
27) How does political climate affect international business?
Solution: An important factor in any international business investment is the stability of the political climate. The political structures of many nations promote stability similar to that in the United States. Other nations, such as Indonesia, Thailand, and Congo, feature quite different—and frequently changing—structures. Host nations often pass laws designed to protect their own interests, sometimes at the expense of foreign businesses.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
28) Describe the Campbell Soup Company’s efforts to prevent wastage of food.
Solution: The company has implemented strategic initiatives to reduce food waste by diverting a product that doesn’t meet specifications or standards from local landfills to a facility that can remove the container to reuse the food material as ingredients for animal feed. It reduces the volume of surplus food generated and donates it to local food banks, soup kitchens, and shelters.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
29) Differentiate between the World Bank and the International Monetary Fund.
Solution: The World Bank was formed to lend money to less-developed and developing nations. The World Bank primarily funds projects that build or expand nations’ infrastructures such as transportation, education, and medical systems and facilities. The International Monetary Fund (IMF) was created to promote trade through financial cooperation and, in the process, eliminate barriers. The IMF makes short-term loans to member nations that are unable to meet their expenses and operates as a lender of last resort for troubled nations.
Difficulty: Hard
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
30) Define the role of the European Union (EU).
Solution: The EU’s goals include promoting economic and social progress, introducing European citizenship as a complement to national citizenship, and giving the EU a significant role in international affairs. To achieve its goal of a borderless Europe, the EU is removing barriers to free trade among its members. This highly complex process involves standardizing business regulations and requirements, standardizing import duties and taxes, and eliminating customs checks so that companies can transport goods from England to Italy or Poland as easily as from New York to Boston.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
31) Explain why the World Bank has been criticized.
Solution: In exchange for granting loans, the World Bank imposes requirements intended to build the economies of borrower nations. The World Bank has been criticized for making loans with conditions that ultimately hurt the borrower nations. When developing nations are required to balance government budgets, they are sometimes forced to cut vital social programs. Critics also say that the World Bank should consider the impact of its loans on the environment and working conditions.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.3
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
32) Define offset agreement and describe how it might be beneficial to a small company.
Solution: An offset agreement matches a small business with a major international company. It basically makes the small company a subcontractor to the larger one. Such an entry strategy helps a new exporter by allowing it to share in the larger company’s international expertise. The small company also benefits in such important areas as international transaction documents and financing, while the larger company benefits from the local expertise and capabilities of its smaller partner.
Difficulty: Hard
Bloomcode: Comprehension
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
33) Explain countertrade, and describe why this form of international trade is a viable option for certain nations.
Solution: Countertrade is an international bartering system that involves payments made in the form of local products instead of currency. Countertrade may be necessary for certain countries when there is inadequate access to needed foreign currency. For developing countries, countertrade may be the only opportunity to enter a particular market, and countries with heavy debt also resort to countertrade. Other countries, such as Russia, have less acceptable currency in the market and may use countertrade. Finally, countries that restrict imports may need countertrade to win government approval for import-needed products.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
34) Describe three contractual agreements companies can enter into when going global.
Solution: The three contractual agreements are franchising, foreign licensing, and subcontracting. Franchising is a contractual agreement in which the franchisee gains the right to produce and/or sell the franchisor’s products under that company’s brand name under operating agreements. In foreign licensing, one company allows another to produce or sell its product, or use its trademark, patent, or manufacturing process in a specific geographical area. Subcontracting involves hiring local companies to produce, distribute, or sell goods and services in a specific country or geographical region.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
35) Summarize the decisions a company faces when going global.
Solution: When going global, a company must determine the growth potential of each of the foreign markets being considered, analyze the expenditures required to enter new markets, understand the operational complexities, decide the best way to organize overseas operations, and understand foreign regulations and standards.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
36) Outline the responsibilities of an import coordinator.
Solution: An import coordinator plans and coordinates business transactions involving receiving of goods from or delivering goods to foreign countries. The coordinator’s responsibilities include preparing commercial documentation for shipments to international customers; working with customs brokers, forwarders, and international partners in a variety of industries; arranging financial transactions with worldwide banks, including letters of credit and wire transfers; ensuring smooth trade operations with a variety of entities, including retailers, manufacturers, freight forwarders, third-party logistics companies, distributors, and sales professionals; arranging shipments; preparing and confirming order approvals; handling and verifying pricing information; and issuing invoices.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
37) What is the difference between a global strategy and a multidomestic strategy for marketing goods in other nations?
Solution: In a global business strategy, a company sells the same product in essentially the same manner throughout the world. Under a multidomestic business strategy, the company treats each national market in a different way. It develops products and marketing strategies that appeal to the customs, tastes, and buying habits of particular national markets.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
38) Define the Chinese term guanxi. What are some advantages and disadvantages of foreign business people to practice guanxi when conducting business in China?
Solution: Guanxi is the Chinese word for relationships and involves making business connections with local companies and officials. Some say guanxi is a local custom and a generally accepted business practice, while others say it is a form of bribery to extort money from companies anxious to do business in that country.
The concept of guanxi is a local custom, and Chinese companies and officials expect foreign companies to seek their advice and expertise to navigate the complicated business environment in China. Building mutually beneficial relationships with connected networks of local businesses and government officials provides foreign companies with strategic advantages. However, there are possible disadvantages too. Guanxi is another word for doing whatever it takes (no matter the cost) to make headway in the Chinese business marketplace. Although they are doing business in a foreign land, U.S. companies must abide by the Foreign Corrupt Practices Act, federal legislation that prohibits the exchange of money for obtaining or retaining business, this creates a difficult obstacle for U.S. businesspeople who want to do business in many foreign countries.
Difficulty: Medium
Bloomcode: Comprehension
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
Question type: Multiple Choice
39) ________ are domestically produced goods and services sold in other countries.
a) Exports
b) Countertrades
c) Imports
d) Outsourcing
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
40) ______ are foreign-made products purchased by domestic consumers.
a) Exports
b) Countertrades
c) Imports
d) Outsourcing
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
41) Washing machines that are manufactured in the United States and sold in Germany are categorized as U.S. _____.
a) Exports
b) countertrades
c) Imports
d) Outsourcing
Difficulty: Easy
Bloomcode: Application
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
42) IS Systems, a U.S. company, produces computer parts and sells them to Asian countries. IS Systems is engaging in the international business activity known as _____.
a) importing
b) dumping
c) countertrade
d) exporting
Difficulty: Easy
Bloomcode: Application
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
43) Florida-based WeText purchases cell phones manufactured in Taiwan and sells them in the United States. PMI is engaging in the international business activity known as _____.
a) exporting
b) importing
c) countertrade
d) dumping
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
44) Which of these countries have a population of over a billion people each?
a) China and Russia
b) India and Russia
c) China and India
d) United States and China
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
45) U.S. _____ make up about a quarter of the U.S. gross domestic product (GDP).
a) petroleum exports
b) computer technology
c) exports and imports of goods and services
d) production of consumer electronic products
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
46) When a company operates in other countries, it _____ risk.
a) has no impact on
b) eliminates
c) controls
d) spreads out
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
47) Although people in developing nations have lower per capita incomes than more highly developed nations, their ______represents a lucrative market for global trade.
a) technology
b) political stability
c) huge populations
d) infrastructure
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
48) Which of the following countries has experienced the greatest annual rate of GDP growth during the past decade?
a) United States
b) China
c) Canada
d) Japan
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
49) An absolute advantage occurs when a country can maintain _____.
a) a monopoly by outlawing foreign imports
b) a monopoly by levying high taxes on imports
c) a monopoly by being the lowest-cost producer of a good or service
d) its advantage by producing a good or service more efficiently
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
50) Even though the United States manufactures textiles, China is able to produce them more efficiently. Thus, China has a _____ in manufacturing textiles.
a) tariff
b) quota
c) trade restriction
d) comparative advantage
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
51) A nation can develop a _______ if it can supply its products more efficiently and at a lower price than it can supply other goods, compared with the outputs of other countries.
a) tariff
b) quota
c) trade restriction
d) comparative advantage
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
52) Which of the following statements is true regarding comparative advantage?
a) Comparative advantage is becoming rare these days.
b) Ensuring that its people are well educated is another way a nation can develop a comparative advantage in skilled human resources.
c) Developing countries possess no comparative advantage.
d) A nation must first possess an absolute advantage in a particular area before it can gain a comparative advantage.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
53) The country of Gevalia exported products totaling $86 billion last year. During the same year, Gevalia imported products valued at $43 billion. Gevalia has a(n) _____.
a) exchange rate of 2 to 1
b) trade deficit of $43 billion
c) trade surplus of $43 billion
d) unfavorable balance of payments
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
54) A trade deficit occurs when _____.
a) imports are sold at low profits
b) foreign-aid payments exceed exports
c) imports exceed exports
d) there is a net flow of money into a country
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
55) The United States has a trade surplus in which of the following items?
a) Oil
b) Textiles
c) Technology products
d) Services
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
56) Which country leads the world in the international trade of goods and services?
a) India
b) China
c) Russia
d) The United States
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
57) What does it mean when a country has a balance of payments surplus means?
a) Monetary inflow exceeds monetary outflow
b) Monetary outflow exceeds monetary inflow
c) Imports exceed exports
d) Exports exceed imports
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
58) A balance of payments deficit occurs when _____.
a) the net inflow of money from abroad exceeds the net outflows of money to other countries
b) imports exceed exports
c) the net outflow of money from a country exceeds the net inflow of money from abroad
d) exports exceed imports
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
59) Samantha, a U.S. citizen, travels to Australia and spends $3,500 on souvenirs and clothing. She is contributing to the _____.
a) U.S. trade surplus
b) growing exchange rate
c) U.S. balance of payments surplus
d) U.S. balance of payments deficit
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
60) A Japanese insurance company purchases U.S. government securities. From the perspective of the United States, the balance of trade with Japan will _____ and the balance of payments with Japan will _____.
a) not change, improve
b) not change, get worse
c) improve, improve
d) Improve, get worse
Difficulty: Hard
Bloomcode: Application
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
61) What is a country’s exchange rate based on?
a) The rate at which its currency can be exchanged for currencies of other countries
b) The number of foreign banks it has
c) Tariffs and related trade restrictions
d) The relationship between its imports and exports
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
62) ______ describes a drop in a currency’s value relative to other currencies or to a fixed standard.
a) Exporting
b) Importing
c) Devaluation
d) Countertrade
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
63) A country has a good chance of selling more of its goods abroad if it _____.
a) increases the value of its currency
b) more tourists decide to travel abroad
c) devalues its currency
d) sets high tariffs on imported goods
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
64) Which of the following would result from devaluation of the U.S. dollar?
a) Foreign goods would be less expensive for American consumers.
b) Foreign companies would have to pay more to purchase U.S. assets.
c) The cost of foreign vacations for U.S. citizens would be reduced.
d) U.S. goods would sell for less abroad.
Difficulty: Hard
Bloomcode: Application
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
65) Assume a nation has a comparative advantage in the production of clothing. If the value of this country’s currency rises, _____.
a) its comparative advantage will decrease
b) its comparative advantage will stay the same
c) its comparative advantage will increase
d) an absolute advantage will be created
Difficulty: Hard
Bloomcode: Application
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
66) Regarding hard currencies, which of the following statements is true?
a) Countries with hard currency typically use the barter system when exporting goods.
b) The U.S. dollar is an example of hard currency, which is easily converted into other currencies.
c) Hard currency is difficult to convert into other currency.
d) A country with hard currency is likely to have a trade deficit.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
67) Which of the following factors affects a country’s exchange rate?
a) The country’s geographical position
b) The neighboring country’s exchange rate
c) The country’s political conditions
d) The country’s population
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
68) Why does Mexico appeal to U.S. and foreign car makers?
a) Low demand for cars in South America
b) Lower wages
c) Its distance from the largest auto market in the world
d) Easy availability of qualified engineers
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
69) To overcome which of the international trade barriers, an understanding of religious holidays is essential?
a) Political
b) Physical
c) Cultural
d) Legal
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
70) Live Machines, Inc., a U.S. based company, is trying to establish a supplier relationship with a parts manufacturer in a small Asian country. Alejandro, the purchasing manager, is attempting to get to know the general manager and staff of the company to help finalize the agreement. Alejandro is attempting to overcome what type of barrier?
a) Physical barrier
b) Tariff restriction
c) Exchange controls
d) Cultural barrier
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Communication
71) All of the following are social and cultural barriers EXCEPT _____.
a) language
b) currency shifts
c) religious attitudes
d) gift-giving traditions
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Communication
72) ________ is the most widely spoken language in the world
a) English
b) Mandarin Chinese
c) Hindi
d) Spanish
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Communication
73) Samira is the Middle Eastern sales manager for a large company. She avoids giving pork products and wine to Arab customers as gifts. Samira is being sensitive to _____.
a) religious differences
b) language differences
c) differences in consumer habits
d) differences in business practices
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Communication
74) Which of the following does NOT constitute a country’s infrastructure?
a) Political climate
b) Communication
c) Energy facilities
d) Transportation
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
75) Patents, trademarks, and intellectual property are important concerns in the _______environment.
a) economic
b) political
c) cultural
d) legal
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
76) The Foreign Corrupt Practices Act:
a) forbids U.S. companies from bribing foreign officials, political candidates, or government representatives.
b) funds projects that build or expand a nation’s infrastructure.
c) mediates trade disputes among trade agreement member nations.
d) promotes trade through financial cooperation.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
77) The country of Velvita is experiencing severe competition to its domestic auto industry in the form of foreign imports. Many jobs are threatened. Velvita places a 25 percent tariff on the price of imported cars. This type of tariff is known as a(n) _____ tariff.
a) revenue
b) quota
c) infant industry
d) protective
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
78) The purpose of ______is to make imports more expensive for domestic buyers.
a) exchange controls
b) embargo
c) dumping
d) tariffs
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
79) Taxes, surcharges, or duties on foreign products are referred to as _________.
a) exchange controls
b) embargo
c) dumping
d) tariffs
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
80) A country raises the tariff on imported beef in order to increase its price above the price of domestically produced beef. This is an example of _____.
a) an exchange control
b) a quota
c) a protective tariff
d) dumping
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
81) Samira spent a two-week vacation in Italy and purchased more than $1,000 worth of Venetian glass. Upon returning to the United States, she was required to pay a _____ on the items.
a) protective tariff
b) revenue tariff
c) service tax
d) exchange rate tax
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
82) Which of these limit the amounts of particular products that countries can import during specified time periods?
a) Exchange controls devaluation
b) Embargo
c) Quotas
d) Foreign trade zone
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
83) The objective of quotas is to _____.
a) prevent dumping
b) raise revenue for the government
c) ban the importation of certain goods
d) protect domestic industries
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
84) A German-made household appliance is popular and is highly competitive with the same product manufactured here in the USA. To give the domestic industry a better chance to operate profitably, the government restricts the number of these appliances that can be imported by applying a(n) _____.
a) quota
b) embargo
c) protective tariff
d) revenue tariff
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
85) If a foreign company offers steel in the United States below the company’s cost of production, the company might be accused of _____.
a) protective tariffs
b) dumping
c) a managed trade agreement
d) quota
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
86) Dumping _____domestic consumers and _____domestic producers in an importing market.
a) harms, benefits
b) harms, harms
c) benefits, harms
d) benefits, benefits
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
87) Marco has to make a deal with a Chinese company. When he is in China, he learns that it is customary to spend money getting to know the other businessmen and building trust. If he participates in this custom, which of the following is he violating?
a) The General Agreement on Tariffs and Trade (GATT)
b) The Foreign Corrupt Practices Act
c) The North American Free Trade Agreement (NAFTA)
d) The Foreign Licensing Agreement
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
88) Pushpa works for an American beverage company that is entering new global markets. She has been sent to Japan to oversee the launch of the company’s products in the country. Which of the following should she pay more attention to while managing the launch?
a) Translating words in the slogan and other associated phrases in a way that they convey the intended meaning
b) Choosing indigenous actors in the commercials for the products
c) Modifying the product to suit the taste preferences of the local population
d) Following local business customs and traditions
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
89) In order to regulate international commerce, the United States has entered into friendship, _____, and navigation (FCN) treaties with other nations.
a) capital planning
b) contract
c) commerce
d) creative strategy
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
90) A major diplomatic incident occurred between the leaders of Litania and Kaleria. In response, Kaleria banned import of all Litanian goods into Kaleria. This is called a(n) _____.
a) quota
b) protective tariff
c) exchange control
d) embargo
Difficulty: Easy
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
91) A country’s department of trade and commerce decides to regulate imports from a neighboring country in order to curb the exit of large amounts of domestic capital. This is an example of a(n) _____.
a) embargo
b) exchange control
c) quota
d) protective tariff
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
92) Decisions made by the _______regarding trade disputes are binding on the parties involved.
a) North American Free Trade Agreement (NAFTA)
b) International Monetary Fund (IMF)
c) World Trade Organization
d) General Agreement on Tariffs and Trade (GATT)
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
93) Which of the following is an international trade accord that substantially reduced worldwide tariffs and other trade barriers?
a) North American Free Trade Agreement (NAFTA)
b) International Monetary Fund (IMF)
c) World Trade Organization
d) General Agreement on Tariffs and Trade (GATT)
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
94) ABC, a less-developed country, wants to build new port facilities, which will allow it to increase agricultural exports. Financing for this project could come from the _____.
a) International Monetary Fund
b) World Trade Organization
c) World Bank
d) United Nations
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
95) ABC, a less-developed nation is facing a financial crisis due to the rapid devaluation of its currency. Which of the following might aid this country?
a) International Monetary Fund
b) World Bank
c) United Nations
d) World Trade Organization
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
96) One effect of the North American Free Trade Agreement (NAFTA) is:
a) an increase in trade among the NAFTA member nations
b) an increase in the number of low-wage jobs in the United States
c) a decrease in trade among NAFTA member nations
d) an increase in trade restrictions among the member nations
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
97) Which of the following promotes trade by providing financial assistance and waiving debt payments?
a) The United Nations
b) The European Union
c) The World Bank
d) The International Monetary Fund
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
98) The European Union (EU) _____.
a) recently became part of the North American Free Trade Agreement
b) wants to introduce European citizenship as a complement to national citizenship
c) made trade with the United States more difficult
d) introduced the euro to coincide with each country’s own currency
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
99) The most common first step for companies entering foreign markets is _________.
a) Countertrade
b) foreign licensing
c) indirect exporting
d) direct exporting
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
100) Fulton Corp. manufactures microprocessors and sells it to a computer manufacturing company in Japan. Fulton Corp. is engaging in _____.
a) international production
b) foreign licensing
c) Countertrade
d) indirect exporting
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
101) Sunil, CEO of Chem Globe International (CGI), has recognized the financial opportunities in China. Sunil has hired a foreign freight forwarder to coordinate selling CGI’s products outside the United States. CGI is now involved in _____.
a) overseas marketing
b) international production
c) direct exporting
d) foreign licensing
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
102) A U.S. agricultural producer sells wheat to a small country in Africa. The country pays the U.S. company in seafood. This is an example of _____.
a) countertrade
b) direct exporting
c) foreign licensing
d) international production
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
103) ABC International, a Canadian software company that specializes in developing computer games enters into an agreement with XYZ Software, a Japanese software company. Under this agreement, XYZ has the right to manufacture and sell the ABC’s games in Japan. This agreement is an example of _____.
a) countertrade
b) foreign licensing
c) international production
d) direct exporting
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
104) Baby Toys, Inc. (BTI) enters into a contract with a foreign company to produce and distribute its products in a specific geographic area. BTI is involved in _____.
a) foreign licensing
b) countertrade
c) international production
d) direct exporting
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
105) An American company that makes plastic garden furniture wants to market its products in a foreign country that has a high tariff barrier against imported plastic goods. One way the company can get around this problem is to _____.
a) hire an export management team
b) violate the Foreign Corrupt Practices Act
c) enter into a licensing agreement with companies within the foreign country to produce the furniture there
d) submit a complaint to the U.S. Department of Commerce
Difficulty: Easy
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
106) By allowing a company to purchase another existing company in the host country, a(n) _____ permits a largely domestic business to gain an international presence very quickly.
a) joint venture
b) foreign licensing agreement
c) counter trade
d) acquisition
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
107) How do export trading companies earn profits?
a) They charge a revenue tariff on the goods.
b) They ensure that no other export trading company deals in the same goods.
c) They buy competitively priced local goods and sell them at a higher price abroad.
d) They earn incentives from the government to increase exports.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
108) Maverick’s company helps the exporters of electronic items in his country to complete paperwork and comply with local laws about product labeling and performance testing. According to the information given in this scenario, Maverick most likely works for a(n) _____.
a) export management company
b) export trading company
c) local electronics vendor
d) shipping company
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
109) A small handicrafts producer enters an agreement with a large corporation to take advantage of its international presence to sell local handicrafts in the foreign market. This is an example of _____.
a) a joint venture
b) export trading
c) export management
d) an offset agreement
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
110) Speedy Motors is merging its individual operations into one so that it can offer a standardized product. It also plans to sell the product in essentially the same manner throughout the world. This strategy can best be described as a(n) _____.
a) international marketing strategy
b) orderly marketing strategy
c) global business strategy
d) multidomestic strategy
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
111) The Coca-Cola Company designs its ads around the world to emphasize a common theme. These ads are modified only slightly for local markets. Coca-Cola is using which of the following strategies in its international operations?
a) Global business strategy
b) Host country strategy
c) Uniform pricing strategy
d) Multidomestic strategy
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
112) When companies develop products and marketing strategies that appeal to the customer tastes and buying habits of particular national markets, they are using a _____.
a) global business strategy
b) free trade strategy
c) uniform strategy
d) multidomestic strategy
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
113) Film distributors sometimes change movie titles when marketing overseas due to language or slang barriers. Studios usually allow modification of its product as part of a _____ strategy.
a) Multinational
b) global business
c) multidomestic business
d) Uniform
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
114) Companies such as Dell Computer adapt their Web sites to specific countries. These companies are following a(n) _____ strategy.
a) international marketing
b) orderly marketing
c) global business
d) multidomestic
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
115) Argonia imposes a total ban on importing sugar from Paldia. What type of trade restrictions has Argonia used?
a) Quota
b) Embargo
c) Protective tariff
d) Revenue tariff
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
116) The country of Shampur has imposed a quantitative restriction on the number of luxury automobiles imported in a year. What type of trade restriction has Shampur used?
a) Quota
b) Embargo
c) Protective tariff
d) Revenue tariff
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
117) Vvey Inc., a pet accessories manufacturer, exports large quantities of its products to the United States and sells them at lower prices than it charges in its home market. Vvey Inc. could be accused of _____.
a) exporting
b) embargo
c) dumping
d) quota
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
118) The country of ABC sells mining equipment to the country of XYZ in return for cigars. This is an example of _____.
a) countertrade
b) direct exporting
c) foreign licensing
d) international production
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
119) A U.S. clothing manufacturer allows an overseas producer to use its designs and specifications to make clothes. This is an example of _____.
a) countertrade
b) direct exporting
c) foreign licensing
d) subcontracting
Difficulty: Medium
Bloomcode: Application
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
Question type: True/False
120) Selling domestically produced goods and services in foreign countries refers to importing.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
121) International trade is vital to a country and its businesses because it enhances economic growth by providing a market for its products and access to needed resources.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
122) Gross domestic product (GDP) growth in the United States is higher than GDP growth in any other country.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
123) People in developing nations have higher per-capita incomes than people in developed nations.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
124) Less-developed countries represent a lucrative market for U.S. companies because of their huge population.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
125) A country can still have an absolute advantage even if it cannot maintain a monopoly from producing a certain good.
Difficulty: Easy
Bloomcode: Application
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
126) Due to its highly educated workforce and low labor costs, India has a comparative advantage in software development.
Difficulty: Easy
Bloomcode: Application
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
Standard 1: AACSB || Analytic
127) According to the Word Bank, a country’s comparative advantage is measured only in manufactured goods.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.1
Section Reference 1: Explain why nations trade.
128) The U.S. imports more services than it exports.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
129) A country’s balance of trade is determined by comparing the total amount of its exports to its imports.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
130) A trade surplus is a favorable balance of trade.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
131) A trade deficit exists when a nation’s exports exceed its imports.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
132) If a nation has an unfavorable balance of trade, it also has an unfavorable balance of payments.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
133) The United States has an international trade deficit in the sale and purchase of goods but a trade surplus in services.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
134) The rate at which a nation’s currency can be exchanged for the currencies of other nations is called its exchange rate is.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
135) Exchange rates are set by the various national governments.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
136) If the value of the Canadian dollar falls relative to the U.S. dollar, Canadian exports to the United States should increase.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
137) A weak euro is a disadvantage to European exporters.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
138) National governments sometimes take deliberate action to devalue their currencies as a way to increase exports and stimulate foreign investment.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
139) Each country’s exchange rate is generally quoted in terms of another country’s currency.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
140) Soft currencies are currencies that can be easily converted into other currencies.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
141) Cultural sensitivity is not as important of an issue in cyberspace as it is in other communication realms.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
142) Compared with the United States, Europeans value employee benefits more than low unemployment and business efficiency.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
143) A U.S. company operating in the European Union (EU) is required to adhere to European regulations, such as mandatory vacation time.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
144) Unlike countries included in the EU, economically speaking, the United States is a national market with a single economy.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
145) Aside from Internet access, a nation’s infrastructure includes all facilities.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
146) If a country that produces wine enacts a tariff on imported wine to match the country’s domestic wine price, this would be an example of a protective tariff.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
147) A revenue tariff is designed to generate income for citizens.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
148) An example of a cultural barrier to global business is an import quota.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
149) If an imported product sells for more in the United States than it does in the producing country, the producing country could be accused of dumping.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
150) Interestingly, exchange controls affect exporters but not importers.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.3
Section Reference 1: Identify the barriers to international trade.
Standard 1: AACSB || Analytic
151) Controversies regarding the World Trade Organization (WTO) include pollution and human rights abuses.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
152) The WTO makes decisions that are binding on member nations involved in disputes.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
153) The GATT, an international trade accord, has sponsored a series of negotiations, called rounds, which substantially reduced worldwide tariffs and other barriers.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
154) The government of a less-developed country wants to build several new healthcare facilities in rural areas and improve port facilities to promote exports. The World Bank would likely deny a loan for related construction projects.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
155) The International Monetary Fund (IMF) was created to promote trade through financial cooperation.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
156) The North American Free Trade Agreement (NAFTA) is a trade accord designed to reduce trade restrictions between the two neighboring countries of the United States and Mexico.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
157) Since NAFTA, U.S. trade with Latin American countries has tripled.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
158) Western European countries that were a part of the European Union (EU) were at first hesitant towards inviting Eastern European countries to join.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
159) With the unification in place, the euro is the currency of all EU countries.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.2
Section Reference 1: Describe how trade is measured between nations.
Standard 1: AACSB || Analytic
160) U.S. sugar producers welcomed the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) because relaxed trade rules with Central America drove prices higher.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.4
Section Reference 1: Discuss reducing barriers to international trade.
Standard 1: AACSB || Analytic
161) Joint ventures allow companies to share risks, costs, profits, and management responsibilities with one or more host country nationals.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
162) Indirect exporting involves producing a component that becomes part of another product sold in foreign markets.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
163) Countertrade deals are generally avoided by countries with heavy debt burdens.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
164) Another term for international bartering is countertrade.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
165) China is the least-preferred company for offshoring.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
166) One advantage of a licensing agreement is that little or no investment is required to begin operating.
Difficulty: M Easy
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
167) A partnership between companies formed for a specific undertaking is called a joint venture.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.5
Section Reference 1: Explain the decisions to go global.
Standard 1: AACSB || Analytic
168) A global business strategy involves separate product and marketing strategies that vary from one nation to another.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
169) A global marketing approach is ideal for marketing luxury items due to their universal appeal.
Difficulty: Medium
Bloomcode: Knowledge
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
170) Under a multidomestic strategy, each national market is treated equally.
Difficulty: Easy
Bloomcode: Knowledge
Learning Objective 1: 4.6
Section Reference 1: Discuss developing a strategy for international business.
Standard 1: AACSB || Analytic
Document Information
Connected Book
Contemporary Business 18e | Test Bank by Louis E. Boone
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