Deck 3: Business in a Borderless World

Question 1

The World Trade Organization agreements are the optional ground rules for international commerce.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

In most countries,participation in international business is restricted to large corporations.

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

Absolute advantage exists when a country is the only source of an item.

Question 8

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

Question 9

The U.S.set up maquiladoras in China.

Question 10

The General Agreement on Tariffs and Trade was a precursor to the World Trade Organization and provided a forum for tariff negotiations.

Question 11

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

Question 12

Protective tariffs raise the price of foreign goods to allow expensive domestic goods to compete with foreign ones.

Question 13

A consistent increase in a country's imports has a favorable impact on its production and employment.

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

Exporting is the purchase of products from another nation.

Question 19

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

Question 20

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

Question 21

The country of Southernberg is the only producer of oil.This gives Southernberg a(n)_____.

A)absolute advantage
B)absolute disadvantage
C)comparative advantage
D)comparative disadvantage
E)domestic advantage

Question 22

A favorable balance of trade exists when a country:

A)imports more than it exports.
B)exports more than it imports.
C)has more debt liabilities than assets.
D)spends more than it saves.
E)saves more than it spends.

Question 23

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

A)Importing
B)Exporting
C)Outsourcing
D)Dumping
E)Insourcing

Question 24

Multinational corporations (MNCs)are often criticized on the grounds that they adversely affect production in the host countries and also contribute to higher unemployment.

Question 25

Companies doing business internationally have traditionally used a globalization strategy.

Question 26

A negative balance of trade exists when a country:

A)imports more than it exports.
B)exports more than it imports.
C)has more assets than debt liabilities.
D)spends more than it saves.
E)saves more than it spends.

Question 27

Which of the following terms can be best defined as the purchase of goods and services from foreign sources?

A)Licensing
B)Franchising
C)Dumping
D)Exporting
E)Importing

Question 28

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

Question 29

Globalization involves standardizing products for the whole world as if it were a single entity.

Question 30

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

A)Franchising
B)Offshoring
C)Outsourcing
D)Exporting
E)Importing

Question 31

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

A)Many jobs have moved overseas where those tasks can be accomplished for lower costs.
B)Outsourcing empowers the outsourcing company with more managerial control.
C)The losses incurred out of the hidden costs of outsourcing are making companies go bankrupt.
D)Delegation of several processes leaves the outsourcing company with much lesser time to concentrate on to its core business process.
E)The outsourced products end up having sub-standard quality because their producers lack expertise.

Question 32

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

A)When a country invests more on producing domestic goods than services
B)When a country focuses on increasing the domestic output of one sector over another
C)When a country focuses on long-term benefits than short-term gains
D)When a country reduces taxes on imports
E)When a country increases export of products and services

Question 33

Snowland and Pledza are neighboring countries.Pledza imports more products than it exports.Over the last decade,Pledza imports from Snowland have been rapidly increasing but not fast enough to offset the exports to Snowland.As a result,Pledza has a(n)_____.

A)domestic gain
B)trade surplus
C)trade deficit
D)absolute advantage
E)comparative advantage

Question 34

A(n)_____ exists when a country is the only source or producer of an item.

A)comparative advantage
B)comparative disadvantage
C)absolute advantage
D)absolute disadvantage
E)domestic advantage

Question 35

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

A)balance of import
B)balance of export
C)balance of trade
D)positive trade surplus
E)negative trade deficit

Question 36

Which is one of the implications of trade deficits?

A)The success of businesses
B)The import of more products
C)The loss of jobs
D)The export of more services
E)A higher standard of living

Question 37

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

A)comparative advantage
B)comparative disadvantage
C)absolute advantage
D)absolute disadvantage
E)domestic advantage

Question 38

A multinational strategy involves customizing products,promotion,and distribution according to cultural,technological,regional,and national differences.

Question 39

When compared to all other countries,the country called Theoria can produce wheat in the most efficient manner.This gives Theoria a(n)_____.

A)comparative advantage
B)comparative disadvantage
C)absolute advantage
D)absolute disadvantage
E)domestic advantage

Question 40

Colombia can produce coffee much more efficiently than it can produce other items; this gives Colombia a(n)_____ advantage.

A)absolute
B)competitive
C)domestic
D)marginal
E)comparative

Question 41

Which of the following is one of the most common reasons for setting quotas or tariffs?

A)To increase licensing
B)To increase sales
C)To relax embargoes
D)To prohibit dumping
E)To encourage franchising

Question 42

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

A)The Japanese imports of U.S.goods would increase.
B)The number of Japanese tourists in the U.S.would increase.
C)Trips to Japan would become more expensive for foreign tourists.
D)Imports would become relatively expensive for Japanese consumers.
E)The cost of Japanese goods abroad would become higher.

Question 43

Identify the industrialized nation from among the following.

A)Iraq
B)Myanmar
C)Pakistan
D)North Korea
E)Japan

Question 44

Identify the less-developed country from among the following.

A)The United States
B)New Zealand
C)Great Britain
D)Somalia
E)Canada

Question 45

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

A)Franchising
B)Monopolizing
C)Outsourcing
D)Offshoring
E)Dumping

Question 46

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

A)is a specific amount of money levied on each unit of a product sold by a country.
B)is a specific amount of money levied on each unit of a product brought into a country.
C)is based on the value of an item.
D)prohibits trade in a particular product.
E)limits the number of units of a particular product that can be imported into a country.

Question 47

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

A)Quota
B)Value-added tax
C)Tariff
D)Embargo
E)Subsidy

Question 48

The country of Thelisia pays a 12 percent duty on imported TV sets which is calculated as a fixed percentage of the value of the imported TV sets.Thelisia is paying a(n)_____.

A)sales tax
B)transactional tax
C)ad valorem tariff
D)fixed tariff
E)export tariff

Question 49

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

A)ad valorem tariff
B)value-added tariff
C)fixed tariff
D)prohibitive tariff
E)zero tariff

Question 50

Which is the correct statement regarding tariffs and trade restrictions?

A)Supporters of protective tariffs say they insulate new domestic industries against well-established foreign competitors.
B)Tariffs are part of a country's legal structure,and thus,cannot established or removed for political reasons.
C)Countries cannot control their foreign trade by forcing businesspeople to buy and sell foreign products through central banks.
D)Embargoes are created to encourage the trade of particular products.
E)Items purchased in different countries cannot have different tariffs if the items are identical.

Question 51

When a country devalues its currency,it causes an increase in:

A)its imports.
B)its exports.
C)the sale of international goods in the domestic market.
D)the sale of international services in the domestic market.
E)the cost of American goods abroad.

Question 52

Muslim generally nations forbid the importation of alcoholic beverages on _____ grounds.

A)religious
B)political
C)economic
D)geographical
E)technological

Question 53

Find out the correct statement about less-developed countries (LDCs).

A)Their consumers are more likely to purchase nonessential products.
B)They are characterized by low per-capita income.
C)Although they are called less developed,they are economically advanced.
D)The rising middle class has caused many consumers in India to opt for public transport.
E)Countries like Japan,Great Britain,and Canada fall into this category.

Question 54

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

A)Exchange rate
B)National rate
C)Exchange ratio
D)Value ratio
E)Currency ratio

Question 55

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

A)Dumping
B)Offshoring
C)Outsourcing
D)Exporting
E)Importing

Question 56

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.

A)trade tariff
B)trade embargo
C)quota limit
D)fixed tariff
E)ad valorem tariff

Question 57

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

A)ad valorem
B)excise
C)cartel
D)quota
E)embargo

Question 58

Identify the true statement about tariffs and trade restrictions.

A)Countries are not allowed to levy tariffs for political reasons.
B)Protective tariffs allow more expensive domestic goods to compete with foreign ones.
C)Critics of protective tariffs argue that their use inhibits free trade and competition.
D)Countries cannot allow citizens traveling abroad to bring home merchandise without paying an import tariff.
E)Quotas cannot be established by voluntary agreements.

Question 59

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

A)balance of trade
B)domestic gain
C)balance of payments
D)credit balance
E)exchange rate

Question 60

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

A)Devaluation discourages the sale of domestic goods and tourism.
B)Revaluations occur daily because of the daily changes in exchange rates.
C)Legal and ethical requirements for successful business are decreasing globally.
D)Many of the legal rights that Americans take for granted do not exist in other countries.
E)The Webb-Pomerene Export Trade Act of 1918 allows selected U.S.firms to limit free trade within the United States.

Question 61

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

A)language.
B)dialect.
C)religious practices.
D)ethics.
E)body language.

Question 62

Which of the following makes short-term loans to member countries with trade deficits and provides foreign currencies to member nations?

A)Foreign Credit Insurance Association
B)Exim Bank
C)World Bank
D)World Trade Organization
E)International Monetary Fund

Question 63

Which of the following is formally called the International Bank for Reconstruction and Development?

A)World Bank
B)International Monetary Fund
C)International Trade Bank
D)Organization for Economic Cooperation and Development
E)World Trade Organization

Question 64

Identify the statement that is true about the Association of Southeast Asian Nations (ASEAN).

A)It will not have fully free labor flows between member-nations.
B)In 1993,it began to increase tariffs among countries.
C)It will have a common currency.
D)It has a 21-member alliance.
E)It was established in 1989.

Question 65

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

A)Vietnam
B)Japan
C)China
D)Hong Kong
E)Chile

Question 66

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 their production cost.This process is termed as _____.

A)dumping
B)offshoring
C)outsourcing
D)monopolizing
E)franchising

Question 67

Tiffany & Co.learned that more attentive customer service was necessary in order to succeed in Japan.This is an example of a(n)_____ barrier.

A)technological
B)political
C)legal
D)social
E)economic

Question 68

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

A)Canada and Alaska
B)Brazil,Mexico,and the United States
C)Chile,Brazil,and the United States
D)Canada,Mexico,and the United States
E)Canada and Chile

Question 69

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

A)political barriers.
B)cultural barriers.
C)legal barriers.
D)the presence of export quotas.
E)the differences in body language.

Question 70

Identify the correct statement about dumping.

A)Dumping occurs when the country of origin has products with the latest technologically that are in high demand in overseas markets.
B)Dumping occurs when a business sells products at much more than what it costs to produce them.
C)Dumping occurs when the domestic market for a firm's product is too big for match the level of production.
D)Quotas cannot be imposed based on suspicion of dumping unless proven.
E)Dumping permits quick entry into a market.

Question 71

A forum to discuss trade problems and negotiate a reduction of trade barriers was first provided by the:

A)General Agreement on Tariffs and Trade (GATT).
B)North American Free Trade Agreement (NAFTA).
C)World Bank.
D)Exim bank.
E)International Monetary Fund (IMF).

Question 72

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

A)Mexico
B)India
C)China
D)Japan
E)Canada

Question 73

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

A)political
B)cultural
C)economic
D)political
E)religious

Question 74

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

A)It is trying to create opportunities to trade with South America.
B)It is working toward the creation of a standardized currency.
C)It is striving to impose customs checks within Europe.
D)It is working toward the abolition of import duties.
E)It is trying to increase value-added taxes.

Question 75

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

A)International Monetary Fund
B)World Bank
C)Citicorp Bank
D)Organization for Economic Cooperation and Development
E)World Trade Organization

Question 76

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?

A)General Agreement on Tariffs and Trade (GATT)
B)Asia-Pacific Economic Cooperation (APEC)
C)North American Free Trade Agreement (NAFTA)
D)European Union (EU)
E)Association of Southeast Asian Nations (ASEAN)

Question 77

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

A)political barrier
B)cultural barrier
C)exchange barrier
D)language barrier
E)geographic barrier

Question 78

In which of the following regions is forming a circle with one's fingers to signify the "O.K." sign considered rude or unacceptable?

A)India
B)Mexico
C)Germany
D)Great Britain
E)The United States

Question 79

A(n)_____ can be best defined as a group of nations or companies that agrees to act together as a monopoly and not compete with each other in order to generate a competitive advantage in world market .

A)conglomerate
B)licensor
C)cartel
D)embargo
E)licensee

Question 80

Choose 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),which deals with the rules of trade between nations.

A)The European Union
B)The World Trade Organization
C)The World Bank
D)The Association of Southeast Asian Nations
E)The Asia-Pacific Economic Cooperation