Which of the following is true of countertrade?
A)The governments of developing nations sometimes insist on a certain amount of countertrade.
B)Countertrade is a means of structuring an international sale when conventional means of payment are cost-effective.
C)Nonconvertibility is an advantage for exporters.
D)Nonconvertibility implies that the exporter will be paid only in his or her home currency.
E)Most exporters desire payment in a currency that is not convertible.

Question

Quizplus · Accepted Answer

Countertrade is often demanded by governments of developing nations as a way to promote domestic industry, conserve foreign exchange reserves, or attain other economic or political objectives.

Answer: B
 Countertrade is used when conventional means of payment, such as currency exchange or credit arrangements, are either not available or too expensive to use.

Answer: D
 Nonconvertibility means that the foreign currency obtained from the sale cannot be exchanged for the exporter's home currency, and the exporter must be paid in the foreign currency received.

Therefore, options A, B, and D are true of countertrade. The statements in options C and E are not true, as nonconvertibility is generally seen as a disadvantage for exporters, and most exporters prefer to receive payment in a convertible currency.

Which of the Following Is True of Countertrade