Question 1

A foreign subsidiary that is totally owned and controlled by an organization is called a multinational.

Accepted Answer

A wholly owned subsidiary is a foreign subsidiary that is totally owned and controlled by an organization.

Question 2

The United States exports more to China than to any other nation.

Accepted Answer

Our foremost trading partners in terms of exports are our immediate neighbors, Canada and Mexico .China is third for our exports, though the United States imports more from this country than from any other.

Question 3

The organization that assists in smoothing the flow of money between nations is the International Monetary Fund.

Accepted Answer

The International Monetary Fund (IMF) is designed to assist in smoothing the flow of money between nations.

Question 4

Trade protectionism is a term for government measures that promote and preserve free trade globally.

Accepted Answer

Countries often use trade protectionism, which is the use of government regulations to limit the import of goods and services, to protect their domestic industries against foreign competition.

Question 5

As a result of recent negotiations, the General Agreement on Tariffs and Trade (GATT) is expected to supersede the WTO by 2015.

Accepted Answer

The World Trade Organization (WTO) is designed to monitor and enforce trade agreements.WTO succeeded GATT as the world forum for trade negotiations in 1995 and has the formal legal structure for deciding trade disputes.

Question 6

Recently, the International Monetary Fund has had a high-profile role in assisting some weaker European countries, including making loans to Greece, Portugal, and Ireland.

Accepted Answer

The International Monetary Fund (IMF) is designed to assist in smoothing the flow of money between nations.In recent times, the IMF has become more high profile because of its role in trying to shore up some weaker European economies, including making loans to Greece, Portugal, and Ireland and considering how to assist Italy and Spain.

Question 7

Tariffs are common today and still growing in number since they have a long history of successfully protecting jobs in this country.

Accepted Answer

In the 1920s, the institution of tariff barriers did not so much protect jobs as depress the demand for goods and services, thereby leading to the loss of jobs anyway, and the massive unemployment of the Great Depression of the 1930s.As a result of this lesson, after World War II the advanced nations of the world began to realize that if all countries could freely exchange the products that each could produce most efficiently, this would lead to lower prices all around.Thus began the removal of barriers to free trade.

Question 8

If Toys R Us provides the use of its name plus its operating know-how to a company in Poland in return for an upfront fee plus a percentage of the profits, Toys R Us would be participating in franchising.

Accepted Answer

Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.Toys R Us recently opened a store in Poland using franchising.

Question 9

A revenue tariff is designed to protect domestic products from foreign imports by raising the price of the latter.

Accepted Answer

There are two types of tariffs: One is designed simply to raise money for the government (revenue tariff).The other is to raise the price of imported goods to make the prices of domestic products more competitive (protective tariff).

Question 10

When DuPont agrees to let a Brazilian company make its product Teflon, the nonstick coating, in its local market for a fee it is called franchising.

Accepted Answer

In licensing, a company allows a foreign company to pay it a fee to make or distribute the first company's product or service.For example, the DuPont chemical company might license a company in Brazil to make Teflon, the nonstick substance that is found on some frying pans.

Question 11

Cuban cigars and sugar cannot legally be imported into the United States because of a trade embargo.

Accepted Answer

An embargo is a complete ban on the import or export of certain products such as the U.S.ban on Cuban cigars and sugar.

Question 12

An import quota is a trade barrier in the form of a customs duty, or tax, levied mainly on imports.

Accepted Answer

An import quota is a trade barrier in the form of a limit on the numbers of a product that can be imported.Its intent is to protect domestic industry by restricting the availability of foreign products.

Question 13

Dumping is the practice of a foreign company exporting products abroad at a lower price than the price in the home market, or even below the costs of production, in order to drive down the price of the domestic product.

Accepted Answer

Dumping is the practice of a foreign company exporting products abroad at a lower price than the price in the home market, or even below the costs of production, in order to drive down the price of the domestic product.

Question 14

An example of a trading bloc is the European Union.

Accepted Answer

A trading bloc, also known as an economic community, is a group of nations within a geographical region that has agreed to remove trade barriers with one another.The six major trading blocs are the NAFTA nations, the European Union, the ASEAN countries, the APEC countries, the Mercosur, and CAFTA.

Question 15

The rate at which one country's currency can be swapped for another country's currency is called the substitution rate.

Accepted Answer

The exchange rate is the rate at which one country's currency can be exchanged for another country's currency.

Question 16

If a country's currency drops dramatically and it is unable to import the goods it needs, then an exporter who trades with that country may turn to countertrading.

Accepted Answer

Sometimes other countries may wish to import American goods but lack the currency to pay for them.In that case, the exporting U.S.company may resort to countertrading, which is bartering goods for goods.When the Russian ruble plunged in value in 1998, some goods became a better medium of exchange than currency.

Question 17

Mexico is part of NAFTA.

Accepted Answer

Formed in 1994, the North American Free Trade Agreement (NAFTA) is a trading bloc consisting of the United States, Canada, and Mexico.

Question 18

A greenfield venture is a foreign subsidiary created to exploit previously untapped natural resources in another country.

Accepted Answer

A greenfield venture is a foreign subsidiary that the owning organization has built from scratch.

Question 19

General Motors working with Shanghai Automotive Industry Group to build Buicks in China is an example of a strategic alliance.

Accepted Answer

A U.S.firm may form a joint venture, also known as a strategic alliance, with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country.For instance, General Motors operates a joint venture with Shanghai Automotive Industry Group to build Buicks in China.

Question 20

Free trade is the movement of goods and services among nations without political or economic obstruction.

Accepted Answer

Free trade is the movement of goods and services among nations without political or economic obstruction.

Quiz 4: Global Management: Managing Across Borders

A foreign subsidiary that is totally owned and controlled by an organization is called a multinational.

The United States exports more to China than to any other nation.

The organization that assists in smoothing the flow of money between nations is the International Monetary Fund.

Trade protectionism is a term for government measures that promote and preserve free trade globally.

As a result of recent negotiations, the General Agreement on Tariffs and Trade (GATT) is expected to supersede the WTO by 2015.

Recently, the International Monetary Fund has had a high-profile role in assisting some weaker European countries, including making loans to Greece, Portugal, and Ireland.

Tariffs are common today and still growing in number since they have a long history of successfully protecting jobs in this country.

If Toys R Us provides the use of its name plus its operating know-how to a company in Poland in return for an upfront fee plus a percentage of the profits, Toys R Us would be participating in franchising.

A revenue tariff is designed to protect domestic products from foreign imports by raising the price of the latter.

When DuPont agrees to let a Brazilian company make its product Teflon, the nonstick coating, in its local market for a fee it is called franchising.

Cuban cigars and sugar cannot legally be imported into the United States because of a trade embargo.

An import quota is a trade barrier in the form of a customs duty, or tax, levied mainly on imports.

Dumping is the practice of a foreign company exporting products abroad at a lower price than the price in the home market, or even below the costs of production, in order to drive down the price of the domestic product.

An example of a trading bloc is the European Union.

The rate at which one country's currency can be swapped for another country's currency is called the substitution rate.

If a country's currency drops dramatically and it is unable to import the goods it needs, then an exporter who trades with that country may turn to countertrading.

Mexico is part of NAFTA.

A greenfield venture is a foreign subsidiary created to exploit previously untapped natural resources in another country.

General Motors working with Shanghai Automotive Industry Group to build Buicks in China is an example of a strategic alliance.

Free trade is the movement of goods and services among nations without political or economic obstruction.