Question 1

Until 1970, the United States experienced a trade surplus. What factor contributed to this surplus?

Accepted Answer

Until about 1970, the United States had a trade surplus due to an abundance of natural resources and the relative efficiency of its manufacturing systems.

Question 2

A U.S. firm is considering doing business in a foreign country. What economic factor should the business consider regarding the country in which it will conduct its business?

Accepted Answer

Any firm considering international business must research the other country's economic, legal, political, social, cultural, and technological background. The economic factors that should be considered are the country's economic development, infrastructure, and exchange rates.

Question 3

Which statement about less-developed countries (LDCs) is true?

Accepted Answer

Many countries in Africa, Asia, and South America are less economically advanced than those in North America and Europe. These less-developed countries (LDCs) are characterized by low per-capita income, which means consumers are less likely to purchase nonessential items. Nonetheless, LDCs represent a potentially huge and profitable market for many businesses because they may be buying technology to improve their infrastructures, and much of the population may desire consumer products.

Question 4

Physical facilities such as railroads, highways, airfields, hospitals, and distribution systems all support a country's economic activities and are referred to as the country's

Accepted Answer

A country's level of development is determined in part by its infrastructure, the physical facilities that support its economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial and distribution systems.

Question 5

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

Accepted Answer

Devaluation decreases the value of currency in relation to other currencies. Devaluation encourages the sale of domestic goods and tourism.

Question 6

Which situation encourages the sale of domestic goods and tourism?

Accepted Answer

Devaluation decreases the value of currency in relation to other currencies. If the U.S. government were to devalue the dollar, it would lower the cost of American goods abroad and make trips to the United States less expensive for foreign tourists. Thus, devaluation encourages the sale of domestic goods and tourism.

Question 7

Janie took a vacation to Italy and bought $1,000 worth of jewelry in Florence. The United States will allow Janie to bring $800 back into the country duty free. What happens to the other $200 that is part of her total expenditure?

Accepted Answer

A U.S. citizen may bring $200, $800, or $1,600 worth of merchandise into the United States duty free depending on the country visited. After that, U.S. citizens must pay an ad valorem tariff based on the cost of the item and the country of origin. Thus, identical items purchased in different countries might have different tariffs.

Question 8

What is the primary purpose of a protective tariff?

Accepted Answer

Import tariffs are commonly imposed to protect domestic products by raising the price of imported ones. Protective tariffs allow more expensive domestic goods to compete with foreign ones. Such protective tariffs have become controversial, as Americans become increasingly concerned over the U.S. trade deficit.

Question 9

If Thailand wants to limit the amount of sugar that the United States imports into its country, it would do so by imposing a(n)

Accepted Answer

A quota limits the number of units of a particular product that can be imported into a country, whereas an embargo would prohibit the United States from importing sugar to Thailand.

Question 10

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

Accepted Answer

An embargo prohibits trade in a particular product.

Question 11

Because it goes against their religious beliefs, some Muslim nations forbid the importation of alcoholic beverages into their countries. This is an example of a(n)

Accepted Answer

An embargo prohibits trade in a particular product. Embargoes are generally directed at specific goods or countries and may be established for political, economic, health, or religious reasons. Some Muslim nations forbid the importation of alcoholic beverages on religious grounds.

Question 12

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

Accepted Answer

In recent years, Cuba, Iran, Syria, and North Korea have been subject to economic sanctions for political reasons.

Question 13

A country that imposes an embargo in response to some political event is attempting to

Accepted Answer

An embargo prohibits trade in a particular product. Political considerations affect international business daily as governments enact tariffs, embargoes, or other types of trade restrictions in response to political events.

Question 14

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

Accepted Answer

This is an example of a political barrier to trade. Natural disasters can cripple a country's government, making the region unstable. Forcing businesses out of a country altogether is a drastic example of international politics.

Question 15

Differences in spoken and written language represent a(n) ________ barrier to international trade.

Accepted Answer

Cultural differences include differences in spoken and written language. Although it is certainly possible to translate words from one language to another, the true meaning is sometimes misinterpreted or lost.

Question 16

At the conclusion of a business meeting in Brazil, David gave the A-OK sign to the people in the room. This hand gesture in America means OK, however, the Brazilians were embarrassed because in their culture the gesture is perceived as rude. This situation exemplifies how even simple differences in ________ can cause misunderstandings in international relationships.

Accepted Answer

Gestures vary from culture to culture, and gestures considered acceptable in American society-forming a circle with one's index finger and thumb, for example-may be considered rude in others.

Question 17

Schweppes Tonic Water discovered during an ad campaign in Italy that its name was translated to read "Schweppes Toilet Water." Effective translations of product names are an example of a(n) ________ barrier to international trade.

Accepted Answer

Cultural differences include differences in spoken and written language. Although it is certainly possible to translate words from one language to another, the true meaning is sometimes misinterpreted or lost.

Question 18

Americans value promptness in business meetings, while it is common in Mexico and Spain for a meeting to start thirty minutes late. This exemplifies how the perceptions of ________ differ among nations.

Accepted Answer

The people of other nations quite often have a different perception of time. Americans value promptness; a business meeting scheduled for a specific time seldom starts more than a few minutes late. In Mexico and Spain, however, it is not unusual for a meeting to be delayed half an hour or more.

Question 19

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

Accepted Answer

The General Agreement on Tariffs and Trade (GATT), originally signed by 23 nations in 1947, provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved. More than 100 nations abided by its rules. GATT sponsored rounds of negotiations aimed at reducing trade restrictions. The most recent round, the Uruguay Round, further reduced trade barriers for most products and provided new rules to prevent dumping.

Question 20

What is "Brexit"?

Accepted Answer

In 2016, the United Kingdom voted to exit the European Union. This decision to exit, called "Brexit,"
resulted in the value of the pound falling sharply.

Quiz 3: Business in a Borderless World

Until 1970, the United States experienced a trade surplus. What factor contributed to this surplus?

A U.S. firm is considering doing business in a foreign country. What economic factor should the business consider regarding the country in which it will conduct its business?

Which statement about less-developed countries (LDCs) is true?

Physical facilities such as railroads, highways, airfields, hospitals, and distribution systems all support a country's economic activities and are referred to as the country's

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

Which situation encourages the sale of domestic goods and tourism?

Janie took a vacation to Italy and bought $1,000 worth of jewelry in Florence. The United States will allow Janie to bring $800 back into the country duty free. What happens to the other $200 that is part of her total expenditure?

What is the primary purpose of a protective tariff?

If Thailand wants to limit the amount of sugar that the United States imports into its country, it would do so by imposing a(n)

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

Because it goes against their religious beliefs, some Muslim nations forbid the importation of alcoholic beverages into their countries. This is an example of a(n)

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

A country that imposes an embargo in response to some political event is attempting to

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

Differences in spoken and written language represent a(n) ________ barrier to international trade.

Schweppes Tonic Water discovered during an ad campaign in Italy that its name was translated to read "Schweppes Toilet Water." Effective translations of product names are an example of a(n) ________ barrier to international trade.

Americans value promptness in business meetings, while it is common in Mexico and Spain for a meeting to start thirty minutes late. This exemplifies how the perceptions of ________ differ among nations.

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

What is "Brexit"?