Deck 3: The Global Marketplace

Question 1

The legal systems in the United States and the United Kingdom are based on civil law.

Answer 1

False
Explanation:The legal systems in the United States and the United Kingdom are based on common law whereas legal systems in countries such as France and Germany are based on civil law.

Question 2

Export subsidies are a form of financial assistance given to exporters.

Answer 2

True
Explanation:Export subsidies are a form of financial assistance in which producers receive enough money from the government to allow them to lower their prices in order to compete more effectively in the world market.

Question 3

An embargo is a complete ban on the import or export of certain products or even all trade between certain countries.

Answer 3

True
Explanation:An embargo is a complete ban on the import or export of certain products or even all trade between certain countries.

Question 4

Economies of scale are savings from not buying too much of any one thing.

Question 5

A country's balance of trade is the total value of its imports less the total value of its exports.

Question 6

Comparative advantage theory states that countries should produce and sell to other countries those things it can produce most efficiently.

Question 7

Theocratic law is law based on religious principles.

Question 8

The European Union has created a currency of its own.

Question 9

Ethnocentrism is the tendency to assign a wide range of generalized attributes to an individual.

Question 10

The North American Free Trade Agreement was formed by twelve North American countries.

Question 11

Tariffs are politically motivated restrictions that revoke a company's normal trade relations status.

Question 12

The number of units of one currency that must be exchanged for a unit of the second currency is known as the exchange rate between the currencies.

Question 13

The World Bank is an agency of the U.S.federal government.

Question 14

A country that imports more than it exports would have a trade surplus.

Question 15

Strong dollar will lower the cost of goods that the U.S.exports.

Question 16

Culture is a shared system of symbols,beliefs,attitudes,values,expectations,and norms for behavior.

Question 17

Providing short-term loans to countries that are unable to meet their financial obligations is a primary function of the International Monetary Fund.

Question 18

International travel would be more expensive for U.S.residents if the dollar is strong.

Question 19

Trade that takes place without interferences is known as free trade.

Question 20

The World Trade Organization is a permanent forum for negotiating,implementing,and monitoring international trade procedures.

Question 21

Which of the following arguments supports the idea of free trade?

A) Dumping rules and tariffs should be stricter in developing countries.
B) International trade must take place without any interference.
C) Organizations should prefer local workers to foreign workers.
D) Local businesses should obtain help from governments.
E) Governments should subsidize exporters to promote global trade.

Question 22

The classic theory of comparative advantage suggests that each country should ________.

A) attempt to maintain a trade surplus by exporting more than what it imports
B) attempt to maintain a trade deficit by importing more than what it exports
C) produce all goods and services it requires for domestic consumption
D) specialize in those areas where it can produce more efficiently than other countries
E) produce a wide range of products to maintain an attractive international portfolio

Question 23

Joint ventures are short-term partnerships between two or more companies to jointly develop,produce,or sell products.

Question 24

On a vacation to Italy,you exchange $100 to get 70 Euros in return.This amount is significantly lower than what you received last year.This indicates that the ________.

A) U.S has a trade surplus against Italy
B) Euro has depreciated in value recently
C) U.S. dollar has weakened in the past year
D) U.S has a trade deficit against Italy
E) balance of payment between U.S. and Europe is unfavorable

Question 25

A country has a trade deficit when the ________.

A) exchange rate of its currency with other currencies is fixed
B) exchange rate of its currency with other currencies is variable
C) value of its exports exceeds the value of its imports
D) total flow of money into the country equals the total flow of money out of the country
E) value of its imports exceeds the value of its exports

Question 26

A company creates highly independent operating units in each new country when using the multidomestic strategy.

Question 27

Which of the following is an objective of protectionism?

A) reducing the purchasing power of individuals
B) guard specific industries in a nation
C) enhancing trade between nations
D) increasing foreign direct investment
E) helping developing nations engage in global trade

Question 28

Which of the following changes in the exchange market is disadvantageous to Charles Associates?

A) The U.S. dollar has weakened against the Renminbi.
B) The U.S. dollar has strengthened against the Rupee.
C) The U.S. dollar has strengthened against the Euro.
D) The Yen has become strong against U.S. dollars.
E) The Euro became weaker against most major currencies.

Question 29

Managerial control with the global strategy is highly decentralized.

Question 30

When the U.S.dollar is strong,U.S.exports will likely ________.

A) become more competitive in foreign markets
B) cost more in other countries
C) be limited by the U.S. government
D) face embargoes in developing nations
E) be restricted by governments across the world

Question 31

Exporting is the least risky form of international business activity.

Question 32

A company benefits from economies of scale when it ________.

A) does not use centralization of production and distribution
B) produces goods or services in multiple locations
C) adopts a highly differentiated marketing strategy
D) engages in the production of personalized products
E) manufactures and distributes products in higher quantities

Question 33

Brazil is said to have a(n)________ in coffee beans because it can produce coffee beans more efficiently than other countries.

A) credit advantage
B) balance of trade
C) trade surplus
D) trade deficit
E) comparative advantage

Question 34

A country's balance of payment equals the ________.

A) money spent on procuring services minus money spent on procuring goods
B) total flow of money into the country minus the total flow of money out of the country
C) gross domestic product of the country minus the gross national product of the country
D) money spent on producing services minus money spent on producing goods
E) money spent on buying goods minus money spent on producing goods

Question 35

All U.S.companies are bound by the Foreign Corrupt Practices Act.

Question 36

The exchange rate of Euro and Yen,in two consecutive years,against U.S.dollars is given below:
Which of the following is a valid conclusion that you can derive from this information?

A) The U.S. dollar weakened against the Euro in 2011.
B) The U. S. dollar was stronger against the Euro in 2010.
C) The Euro has strengthened against the Yen in 2011.
D) The U.S. dollar weakened in 2011 against the Yen.
E) The U. S. dollar was weaker against the Yen in 2010.

Question 37

The number of units of one currency that must be exchanged for a unit of the second currency is known as the ________ between the currencies.

A) balance payment
B) trading bloc
C) tariff rate
D) exchange rate
E) trade balance

Question 38

A country has a trade surplus when the ________.

A) value of its exports exceeds the value of its imports
B) exchange rate of its currency with other currencies is variable
C) exchange rate of its currency with other currencies is fixed
D) value of its imports exceeds the value of its exports
E) total flow of money into the country equals the total flow of money out of the country

Question 39

Trade that takes place without governmental interferences is known as ________.

A) subsidized trade
B) protected trade
C) illegal trade
D) free trade
E) moderated trade

Question 40

Which of the following changes in the exchange market is beneficial to Charles Associates?

A) The U.S. dollar has strengthened against the Rupee.
B) The U.S. dollar has strengthened against the Renminbi.
C) The U.S. dollar has strengthened against the Euro.
D) The Yen has become weak against U.S. dollars.
E) The Euro has become strong against U.S. dollars

Question 41

When France wanted to reduce video cassette recorder (VCR)imports,it established elaborate procedures for importers to obtain customs clearances on shipments of VCRs and required importers to obtain special licenses to import these products.This is an example of a(n)________.

A) export subsidy
B) embargo
C) import quota
D) tariff
E) restrictive import standard

Question 42

The North American Free Trade Agreement (NAFTA)was formed by the United States,Canada,and ________.

A) Costa Rica
B) Jamaica
C) Cuba
D) Mexico
E) Honduras

Question 43

The World Bank was founded to ________.

A) help countries form their economic policies
B) investigate financial allegations
C) regulate exchange rates
D) provide short-term loans to firms
E) finance reconstruction after World War II

Question 44

Trading blocs are ________.

A) international organizations that provide funds to advanced countries
B) regional organizations that promote protectionist principles
C) financial intermediaries that facilitate international transactions
D) regional organizations that promote trade among member nations
E) international organizations that provide funds to developing nations

Question 45

The ________ was established to foster international financial cooperation and its primary functions include providing short-term loans to countries that are unable to meet their financial obligations and working to alleviate poverty in developing economies.

A) World Trade Organization
B) World Commerce Center
C) European Union
D) North American Free Treaty
E) International Monetary Fund

Question 46

Which of the following is a main feature of protectionism?

A) high levels of risks for domestic industries
B) increased risk for local workers
C) compromise on national security
D) governmental intervention in trade
E) formation of trade blocs between nations

Question 47

Which of the following is an example of a trading bloc?

A) International Monetary Fund
B) United Nations
C) European Union
D) World Bank
E) World Trade Organization

Question 48

Dumping ________.

A) involves selling a product at a price lower than the cost of production
B) is a strategy used by firms to enter an industrialized nation
C) refers to the practice of selling products in small quantities
D) is a strategy used by organizations to enter a developed market
E) is typically prevented by providing export subsidies to local producers

Question 49

Which of the following is a principle that governs the world trade organization's work?

A) giving preference to trading partners who provide maximum business
B) protecting domestic industries by offering financial assistance
C) making trade policies more predictable and less arbitrary
D) establishing dumping procedures to prevent pollution in developed countries
E) implementing protectionist ideologies to establish fair trade between nations

Question 50

________ are politically motivated embargoes that revoke a country's normal trade relations status.

A) Subsidies
B) Tariffs
C) Sanctions
D) Quotas
E) Restrictive standards

Question 51

The U.S.restricts the import of peanuts to a maximum of 1.7 million pounds per year to protect the price that domestic producers can charge.This is an example of a(n)________.

A) import subsidy
B) embargo
C) import quota
D) import tariff
E) restrictive import standard

Question 52

The United States has banned the export of super-computers and lasers to non-allies.This is an example of a(n)________.

A) export subsidy
B) export quota
C) tariff
D) embargo
E) restrictive import standard

Question 53

Which of the following statements is true of the European Union (EU)?

A) The EU has imposed hundreds of local regulations and variations in product standards for its member nations.
B) The European Union's membership now encompasses more than 150 countries.
C) Viewed as a whole, the EU now constitutes the world's largest economy.
D) The EU adopts protectionist measures to regulate trade among member countries.
E) The EU was formed primarily to monitor global financial developments and to alleviate poverty in developing economies.

Question 54

________ are a form of financial assistance in which producers receive enough money from the government to allow them to lower their prices.

A) Export subsidies
B) Embargoes
C) Tariffs
D) Sanctions
E) Export quotas

Question 55

The Asia Pacific Economic Cooperation Council's long term goal is ________.

A) imposing tariffs and quotas on imports to the land areas that surround the Pacific Ocean
B) protecting the pacific rim from the perils of international trade
C) liberalizing and simplifying trade and investment among member countries
D) preventing the trade of destructive goods such as arms and ammunition
E) preventing terror attacks and other organized crime in the land areas that surround the Pacific Ocean

Question 56

________ is a permanent forum for negotiating,implementing,and monitoring international trade procedures and for mediating trade disputes among its more than 150 member countries.

A) International Monetary Fund
B) World Trade Organization
C) World Bank
D) European Union
E) International Labor Organization

Question 57

________ limit the amount of particular goods that countries allow to be imported during a given year.

A) Import subsidies
B) Embargoes
C) Import quotas
D) Import tariffs
E) Restrictive import standards

Question 58

Taxes,surcharges,or duties levied against imported goods are known as ________.

A) import sanctions
B) embargoes
C) tariffs
D) import quotas
E) restrictive import standards

Question 59

China imposes duties on automobiles imported to China.This is an example of a(n)________.

A) import sanction
B) tariff
C) import quota
D) embargo
E) restrictive import standard

Question 60

An embargo is a ________.

A) quantity restriction on the import of particular goods or services
B) surcharge imposed on import of certain products
C) subsidy offered to products exported from a country
D) complete ban on the import or export of certain products
E) form of financial assistance extended to domestic producers

Question 61

Foreign direct investment (FDI)________.

A) usually does not receive support from domestic governments
B) carries much lesser political risk
C) typically gives companies greater control
D) carries much lesser economic risk
E) is less complex than any other form of global entry

Question 62

________ agreements entitle one company to use some or all of another firm's intellectual property in exchange for a royalty payment.

A) Joint venture
B) Exporting
C) Franchising
D) Licensing
E) Strategic alliance

Question 63

________ are long-term partnerships between two or more companies to jointly develop,produce,or sell products.

A) Strategic alliances
B) Global franchises
C) Joint ventures
D) Strategic mergers
E) Incorporated partnerships

Question 64

Transparency International is a(n)________.

A) accounting agency that promotes the use of unified accounting systems across the world
B) watchdog group that works to reduce business-government corruption around the world
C) agency that works toward implementing protectionist regimes across the globe
D) agency of the United Nations that is formed to mediate international negotiations
E) agency of the United Nations that is formed to investigate transparency issues in international trade

Question 65

France and Germany rely on a legal system known as ________,in which legal parameters are specified in detailed legal codes.

A) theocratic law
B) case law
C) common law
D) precedent law
E) civil law

Question 66

________ refers to buying goods or services from a supplier in another country.

A) Franchising
B) Importing
C) Licensing
D) Partnering
E) Intermediating

Question 67

Legal systems in Great Britain and the U.S.are based on ________ law.

A) bijuridical
B) theocratic
C) common
D) civil
E) civilian

Question 68

Quiznos has sold individual owners the rights to use its trademark and business system.Quiznos has opened restaurants in 21 foreign countries in this fashion.This is an example of ________.

A) a strategic alliance
B) export licensing
C) franchising
D) joint venturing
E) a foreign direct investment

Question 69

Electrobox is a firm that manufactures commercial kitchen equipment.The firm decides to enter China and bonds with a Chinese firm to form a new company named Electrokitchen.This is an example of a(n)________.

A) transactional alliance
B) operational partnership
C) strategic alliance
D) joint venture
E) international franchise

Question 70

Drobex Technologies is a manufacturer of electronic home appliances.The company has operations in 17 countries.The company operates as an independent unit in each of these countries and the head of operations in each unit makes decisions themselves.Drobex is following a(n)________ strategy.

A) transnational
B) global
C) multidomestic
D) franchising
E) integrated marketing

Question 71

Theocratic law is found in Iran and Pakistan and is based on ________.

A) traditions and customs
B) religious principles
C) detailed legal codes
D) legal parameters
E) judicial interpretations

Question 72

A firm wants to enter foreign markets to expand its business.However,it does not want to make significant investments before assessing foreign conditions.Which of the following strategies is best suited to enter a foreign market slowly and then design the firm's product offerings?

A) foreign direct investment
B) exporting
C) business merger
D) joint venture
E) franchising

Question 73

In a(n)________,two or more firms bond together to create a new business entity that is legally separate and distinct from its parents.

A) operational partnership
B) strategic alliance
C) joint venture
D) operational alliance
E) international franchise

Question 74

In the ________ strategy,a company creates highly independent operating units in each new country and gives local managers a great deal of freedom to run their operations almost as though they are independent companies.

A) integrated marketing
B) transnational
C) global
D) franchising
E) multidomestic

Question 75

________ refers to assigning a wide range of generalized (and often superficial or even false)attributes to an individual on the basis of membership in a particular culture or social group.

A) Ethnocentrism
B) Stereotyping
C) Protectionism
D) Discerning
E) Culture shock

Question 76

Almex is a U.S.based transportation company.In order to enter the Brazilian transportation market,the company purchases one of the leading transporters in Brazil.This strategy is known as ________.

A) operational licensing
B) service exporting
C) foreign direct investing
D) brand licensing
E) outstation franchising

Question 77

Multinational corporations are companies that ________.

A) export to multiple countries from a central location
B) have formed strategic alliances with companies across the world
C) have formed operational alliances with companies across the world
D) procure supplies from multiple countries to improve their production
E) establish a physical presence in multiple countries through FDI

Question 78

Which of the following acts outlaws payments with the intent of getting government officials to break the laws of their own countries?

A) Mustering-out Payment Act
B) Export-Import Bank Act
C) Foreign Corrupt Practices Act
D) Special Payment Act
E) Federal Corrupt Practices Act

Question 79

________ is the tendency to judge all other groups according to one's own group's standards,behaviors,and customs.

A) Stereotyping
B) Protectionism
C) Discerning
D) Culture shock
E) Ethnocentrism

Question 80

John,a jewelry maker in Montana,receives international orders through his website.He ships the products from the production plant at Montana after receiving confirmed orders.This scenario is an example of ________.

A) importing
B) exporting
C) licensing
D) FDI
E) franchising