Question 1

The United States is a member of the ____, which is the successor to GATT.
A)World Trade Organization
B)North American Free Trade Agreement
C)United Nations
D)Economic Community
E)Kennedy Round

Accepted Answer

The World Trade Organization (WTO) is the successor to the General Agreement on Tariffs and Trade (GATT), and the United States is a member of the WTO.

Question 2

When a country's currency is devalued, this ____ the cost of foreign goods and ____ the cost of domestic goods to foreign firms.
A)increases; decreases
B)reduces; reduces
C)decreases; increases
D)neutralizes; raises
E)neutralizes; decreases

Accepted Answer

When a country's currency is devalued, it becomes cheaper in terms of foreign currencies. This makes foreign goods more expensive for residents of the devaluing country (since they have to spend more of their now less valuable currency to buy the same amount of foreign currency), and domestic goods become cheaper for foreign firms (since they can now buy more with their stronger currency).

Question 3

Despite trade restrictions, international business is
A)moving slowly.
B)growing.
C)slowing down.
D)struggling for survival.
E)decreasing.

Accepted Answer

Despite trade restrictions, international business is still growing as companies are finding ways to adapt to the new rules and regulations. They are exploring new markets and expanding their business operations to compensate for any losses incurred due to trade restrictions.

Question 4

Balance of payments is a ____ concept than balance of trade.
A)more difficult
B)less difficult
C)nearly identical
D)broader
E)narrower

Accepted Answer

Balance of payments is a broader concept than balance of trade as it includes not only the trade of goods and services but also includes investments, transfers, and other financial transactions between a country and the rest of the world.

Question 5

A new country is formed in central Africa. It has no absolute advantage in crude oil, diamonds, or wool. However, it does manufacture high-quality bows and arrows for specialized safari adventures. Which of the following statement is true?​
A)​The new country should try to produce its own crude oil, diamonds, and wool.
B)​The new country has a comparative advantage in the production of bows and arrows.
C)​The new country has an unqualified advantage in the production of bows and arrows.
D)​The new country has a determined advantage in the production of arrows.
E)​The new country is engaged in dumping bows and arrows.

Accepted Answer

Since the new country has no absolute advantage in crude oil, diamonds, or wool, it can focus on producing goods in which it has a comparative advantage. In this case, it has a comparative advantage in the production of bows and arrows for specialized safari adventures. This means that it can produce bows and arrows at a lower opportunity cost compared to other goods, such as crude oil or diamonds. Therefore, the new country should specialize in the production of bows and arrows and trade with other countries for goods that it cannot efficiently produce.

Question 6

Which of the following best defines balance of trade?
A)Purchasing products in other countries and bringing them into one's own country.
B)The total value of a nation's exports minus the total value of its imports over some period of time.
C)The total flow of money into the country minus the total flow of money out of the country over some period of time.
D)The ability to specialize in the production of a specific product and trade it for other needed products.
E)The ability to produce a certain product more efficiently than any other nation.

Accepted Answer

Balance of trade refers to the difference between the total value of exports and the total value of imports of a country over a certain period of time. If the value of exports exceeds the value of imports, the country is said to have a positive balance of trade, and if the value of imports exceeds the value of exports, the country is said to have a negative balance of trade.

Question 7

The United States wishes to import no more than 100 million tons of sugar from India in any given year. The type of import restriction it should impose is a(n)
A)import duty.
B)foreign exchange control.
C)import quota.
D)embargo.
E)export duty.

Accepted Answer

An import quota would limit the amount of sugar that can be imported from India to no more than 100 million tons, which is the desired maximum amount for the United States. An import duty would impose a tax on sugar imports, but would not necessarily limit the quantity of sugar that could be imported. Foreign exchange controls would regulate the exchange rate for transactions involving sugar imports, but would not necessarily limit the quantity of sugar. An embargo would completely ban imports from India, which would be overly restrictive if the United States sought to import any sugar at all. An export duty would tax sugar exports from India, but would not necessarily limit the quantity of sugar that could be imported into the United States.

Question 8

​When importers and exporters do not trust one another and want to ensure that the importer receives the promised merchandise and the exporter gets paid, the go-between representative they employ is (are)
A)​the local domestic banks involved in international business.
B)​sales agents.
C)​international trade organizations.
D)​the World Bank

Accepted Answer

The answer of ​When importers and exporters do not trust...

Question 9

Countertrade is an international barter transaction in which
A)goods and services are exchanged for different goods and services.
B)one company sells goods and services under the counter.
C)the buyers and sellers trade illegally.
D)one company manufactures and the other company owns the assets.
E)none of the above is correct.

Accepted Answer

Countertrade involves exchanging goods and services for other goods and services, rather than using traditional currency. This can include bartering, offset trading, and other similar arrangements. Option B refers to illegal business practices, and options C and D do not accurately reflect the nature of countertrade. Therefore, option A is the best choice.

Question 10

All of the following are ways to export a product to a foreign market except
A)using an export-import merchant.
B)using an export-import agent.
C)establishing a foreign sales office.
D)establishing a foreign sales branch.
E)all of the above are ways to export a product to a foreign market.

Accepted Answer

All of the options listed (using an export-import merchant, using an export-import agent, establishing a foreign sales office, and establishing a foreign sales branch) are all ways to export a product to a foreign market. Therefore, the correct answer is E, all of the above.

Question 11

The United States sells industrial supplies and materials to many nations around the world. The United States thus engages in
A)dumping.
B)tariffing.
C)importing.
D)exporting.
E)deficit trading.

Accepted Answer

Exporting refers to the act of selling goods or services produced in one country to buyers located in another country. In this case, the United States is selling industrial supplies and materials to other nations, which falls under the category of exporting.

Question 12

In addition to political considerations, all of the following are reasons for trade restrictions except
A)equalizing a nation's balance of payments.
B)protecting new and weak industries.
C)protecting the health of citizens.
D)protecting national security.
E)all of the above are reasons for trade restrictions.

Accepted Answer

All of the options mentioned (equalizing balance of payments, protecting new and weak industries, protecting health of citizens, and protecting national security) are reasons for trade restrictions.

Question 13

Janet hires an export merchant to help expand her business internationally. After signing contracts with a foreign purchaser outlining the terms of sale and delivery, the exporter will send Janet's merchandise when
A)Janet's bank receives a letter of credit from the importer's bank.
B)it receives a letter of credit from Janet's bank.
C)its bank receives a draft from the importer's bank.
D)Janet receives a bill of lading.
E)the ultimate consumer sends a bill of lading to the exporter's bank.

Accepted Answer

Typically, in international trade transactions, the exporter will require the importer to provide a letter of credit from their bank, which acts as a guarantee that the importer will pay for the shipment. Once the exporter's bank receives the letter of credit, they will release the merchandise for shipment. Therefore, in this situation, the exporter will send Janet's merchandise when her bank receives a letter of credit from the importer's bank.

Question 14

Because Saudi Arabia and Australia have ____, Saudi Arabia can specialize in the production of crude oil and petroleum products, and Australia can specialize in the production of wool.
A)a company advantage
B)an absolute advantage
C)a comparative advantage
D)an effective manufacturing system
E)very low labor costs

Accepted Answer

The answer of Because Saudi Arabia and Australia have ____,...

Question 15

If Germany exports $100,000 of sauerkraut to Jamaica and purchases $100,000 of Blue Mountain coffee beans from Jamaica, Germany has
A)an overall favorable balance of trade.
B)an overall unfavorable balance of trade.
C)a favorable balance of trade with Jamaica.
D)neither a favorable nor an unfavorable balance of trade with Jamaica.
E)an unfavorable balance of trade with Jamaica.

Accepted Answer

Germany's trade with Jamaica is balanced, as the value of exports equals the value of imports, resulting in neither a favorable nor unfavorable balance of trade with Jamaica.

Question 16

A limit on the amount of a particular good that may be brought into a country during a given period of time is called a(n)
A)import duty.
B)import deficit.
C)trade embargo.
D)import tariff.
E)import quota.

Accepted Answer

An import quota is a limit on the amount of a particular good that may be brought into a country during a given period of time. This type of trade barrier is often used to protect domestic industries and limit competition from foreign producers. Import quotas are different from import tariffs or duties, which are taxes on imported goods, and trade embargoes, which prohibit all trade with a particular country or set of countries.

Question 17

Purchasing products or materials in other nations and bringing them into one's own country is
A)trading.
B)balancing.
C)exporting.
D)importing.
E)dumping.

Accepted Answer

Importing refers to purchasing products or materials from other nations and bringing them into one's own country.

Question 18

When was GATT first established?
A)At the turn of the twentieth century
B)Following World War I
C)At the end of World War II
D)During the Great Depression
E)In the early 1960s

Accepted Answer

GATT was first established in 1947 with the signing of the GATT agreement by 23 countries at the end of World War II.

Question 19

Lynn Bernerd, Inc.
Lynn Bernerd, Inc., manufactures and sells reclining furnitur
-Refer to Lynn Bernerd, Inc. When the transport carriers notify the exporter that the product has been shipped, they use a
A)bill of lading.
B)receipt.
C)letter of credit.
D)draft.
E)shipping verification.

Accepted Answer

When the transport carriers notify the exporter that the product has been shipped, they use a bill of lading to acknowledge receipt of the goods and to indicate the terms and conditions of the shipment.

Question 20

​Apple is an example of a company that makes products using international resources. This company is an example of international
A)​interconnectedness and independence.
B)​cooperation.
C)​friction.
D)​economic derailing.

Accepted Answer

Apple's production process involves sourcing materials and components from different countries and assembling them in different locations around the world. This demonstrates the interconnectedness and interdependence of different economies in the globalized world.

Quiz 3: Exploring Global Business

The United States is a member of the ____, which is the successor to GATT.

When a country's currency is devalued, this the cost of foreign goods and the cost of domestic goods to foreign firms.

Despite trade restrictions, international business is

Balance of payments is a ____ concept than balance of trade.

A new country is formed in central Africa. It has no absolute advantage in crude oil, diamonds, or wool. However, it does manufacture high-quality bows and arrows for specialized safari adventures. Which of the following statement is true?

Which of the following best defines balance of trade?

The United States wishes to import no more than 100 million tons of sugar from India in any given year. The type of import restriction it should impose is a(n)

When importers and exporters do not trust one another and want to ensure that the importer receives the promised merchandise and the exporter gets paid, the go-between representative they employ is (are)

Countertrade is an international barter transaction in which

All of the following are ways to export a product to a foreign market except

The United States sells industrial supplies and materials to many nations around the world. The United States thus engages in

In addition to political considerations, all of the following are reasons for trade restrictions except

Janet hires an export merchant to help expand her business internationally. After signing contracts with a foreign purchaser outlining the terms of sale and delivery, the exporter will send Janet's merchandise when

Because Saudi Arabia and Australia have ____, Saudi Arabia can specialize in the production of crude oil and petroleum products, and Australia can specialize in the production of wool.

If Germany exports $100,000 of sauerkraut to Jamaica and purchases $100,000 of Blue Mountain coffee beans from Jamaica, Germany has

A limit on the amount of a particular good that may be brought into a country during a given period of time is called a(n)

Purchasing products or materials in other nations and bringing them into one's own country is

When was GATT first established?

Lynn Bernerd, Inc. Lynn Bernerd, Inc., manufactures and sells reclining furnitur -Refer to Lynn Bernerd, Inc. When the transport carriers notify the exporter that the product has been shipped, they use a

Apple is an example of a company that makes products using international resources. This company is an example of international