Question 1

Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of:
A)negotiated rate adjustments between the U.S. government and the World Trade Organization.
B)decisions made by the Federal Reserve Board of Governors in order to implement monetary policy.
C)fluctuations in the world price of gold.
D)changes in the supply of and/or demand for dollars in the global currency market.

Accepted Answer

Under a system of floating exchange rates, the value of a currency is determined by the supply of and demand for that currency in the global currency market. Therefore, changes in the value of the U.S. dollar relative to other currencies are the result of changes in the supply of and/or demand for dollars.

Question 2

An influential foreign government official approached your firm requesting a large sum of money. In return for this bribe, the official promises that your firm will receive preferential treatment in future government contracts. You refuse the request, explaining that the Act of the United States prohibits you from making such payments.
A)Federal Trade Commission
B)Sherman Anti-trust
C)Foreign Corrupt Practices
D)Celler-Kefauver

Accepted Answer

The Foreign Corrupt Practices Act (FCPA) prohibits companies and individuals from making bribes to foreign officials in order to obtain or retain business. This includes bribes through intermediaries such as third-party agents or consultants. Therefore, in this scenario, the refusal to make a payment to a foreign government official aligns with the requirements of the FCPA. The other options - the Federal Trade Commission, Sherman Anti-trust, and Celler-Kefauver - do not address the issue of bribery of foreign officials.

Question 3

was an 18th century belief that a nation should try to sell more goods to other nations than it buys from them.
A)Capitalism
B)Comparative advantage
C)Mercantilism
D)Inflation

Accepted Answer

The belief that a nation should try to sell more goods to other nations than it buys from them is the central idea of mercantilism, which was prominent in the 18th century.

Question 4

Some governments initiate restrictive standards that detail exactly how a product must be sold in a country. Trade experts call these restrictions .
A)monetary tariffs
B)countertrade policies
C)nontariff barriers
D)export constraint policies

Accepted Answer

The term "nontariff barriers" refers to any government policy or regulation that restricts trade without imposing a tax or duty. This includes things like import quotas, product standards, and safety regulations. The question specifically mentions restrictive standards, which would fall under this category of nontariff barriers. Monetary tariffs are taxes or duties imposed on imported goods, countertrade policies are agreements to exchange goods instead of money, and export constraint policies limit the amount or type of goods that can be exported from a country. None of these options fit the description given in the question.

Question 5

The three countries participating in NAFTA are:
A)Canada, Panama, and the United States.
B)Mexico, Panama, and the United States.
C)Canada, Nicaragua, and Mexico.
D)Canada, Mexico, and the United States.

Accepted Answer

NAFTA, or the North American Free Trade Agreement, is a trilateral trade bloc agreement between Canada, Mexico, and the United States. Thus, the correct answer is choice D.

Question 6

The Ozark Bike Company recently entered into an agreement with a large Japanese retailer to distribute its bicycles in Japan. Ozark Bike Company sees itself in a favorable position because:
A)the yen is gaining strength compared to the U.S. dollar making it cheaper for Japanese customers to buy U.S. products.
B)the yen is down against the U.S. dollar making it cheaper for Japanese customers to buy U.S. products.
C)it was traditionally against Japanese culture to ride bicycles, so the U.S. bike company would be dealing with a niche market.
D)the Japanese do not permit foreign direct investment. U.S. companies will make all the bikes in the U.S. which creates more jobs on U.S. soil.

Accepted Answer

The answer of The Ozark Bike Company recently entered into...

Question 7

If global trade experts predict that the value of the dollar will soon fall, it will result in:
A)Both the prices of imported goods rising and prices of U.S. goods sold overseas rising, as well.
B)Prices of imported goods rising, but prices of U.S. goods sold overseas falling.

Accepted Answer

The answer of If global trade experts predict that the...

Question 8

Hennessy Hardware, a U.S. retailer, buys much of its inventory from Asian countries. Hennessy Hardware would benefit if the value of the dollar relative to the currencies of the countries from which Hennessy imports.
A)rose
B)fell
C)remained constant
D)floated unpredictably

Accepted Answer

Hennessy Hardware would benefit if the value of the dollar relative to the currencies of the countries from which it imports rose. This is because a stronger dollar would allow Hennessy to purchase more goods for the same amount of U.S. dollars, thus potentially increasing their profit margins.

Question 9

A is a regional group of countries that have no internal tariffs among participants, a common external tariff, and the coordination of laws to facilitate exchange among the member countries.
A)trade cartel
B)mutual trade association
C)common market
D)joint venture

Accepted Answer

A common market involves the elimination of internal tariffs, the establishment of a common external tariff, and the coordination of laws to facilitate trade among member countries. This definition matches the description given in the question. A trade cartel typically refers to a group of companies that work together to fix prices and limit competition. A mutual trade association is a more general term that could refer to any organization formed to promote mutual trade and commerce, but does not necessarily involve the elimination of internal tariffs or a common external tariff. A joint venture refers to a business partnership between two or more parties to undertake a specific project or business activity, and does not necessarily involve the establishment of a common market.

Question 10

The European Union created a single monetary unit to replace the national currencies of twelve member nations. This common currency is known as the:
A)e-dollar.
B)pound.
C)mercosur.
D)euro.

Accepted Answer

The European Union created a single monetary unit called the euro to replace the national currencies of twelve member nations.

Question 11

In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:
A)revenue tariffs.
B)protective tariffs.
C)import quotas.
D)tariffs.

Accepted Answer

Revenue tariffs are taxes on imported goods, while protective tariffs are designed to make imported goods more expensive so that domestic products become more competitive. Tariffs, in general, refer to taxes on imports or exports. Import quotas, on the other hand, are physical limits on the amount of certain types of products that can be imported into a country. They are used to limit the amount of foreign competition in domestic markets, thereby protecting domestic jobs and industries.

Question 12

When studying abroad last year, Blake found that his U.S. dollars did not stretch as far as he had hoped. Each time he exchanged U.S. dollars for euros, he gave up more U.S. dollars in exchange for less euros. The exchange rate indicates:
A)the dollar has gained strength against the euro.
B)the euro is weak against the U.S. dollar.
C)the euro has gained strength against the dollar.
D)the demand for dollars is stronger than the demand for euros.

Accepted Answer

The exchange rate indicates that the euro has gained strength against the dollar, meaning that it takes less euros to buy one U.S. dollar. This is why Blake received less euros in exchange for his U.S. dollars.

Question 13

The two basic types of tariffs are:
A)goods and services.
B)general and limited.
C)comparative and absolute.
D)revenue and protective.

Accepted Answer

The two basic types of tariffs are revenue tariffs, which are intended to generate income for the government, and protective tariffs, which are intended to increase the price of imported goods in order to protect domestic industries.

Question 14

The represents the first attempt to establish a truly global mediation center to resolve international trade disputes.
A)International Trade Court
B)World Trade Organization
C)Global Trade Commission
D)United Nations Arbitration Center

Accepted Answer

The World Trade Organization (WTO) was established in 1995 with the goal of creating a global mediation center to resolve international trade disputes. It succeeded the General Agreement on Tariffs and Trade (GATT) and represents the first comprehensive attempt to establish a global organization dedicated to the regulation of international trade. While the WTO is not a court, it provides a platform for trade negotiations and serves as a forum for the resolution of disputes that arise between its member countries.

Question 15

U.S. recording studios are feeling the pinch in profits due to the fact that artists' music is copied and sold overseas within 24 hours of the music selling in the U.S. market. As a student who is now aware of the challenges businesses face in global trade, which of the following statements is an accurate representation of this situation?
A)The copying and selling of the artist's original music is illegal and enforceable by international copyright law.
B)The copying and selling of the artist's music is legal due to the fact that the Internet has changed copyright laws.
C)U.S. copyright laws do not necessarily apply globally.
D)Copyright laws only protect the artist, but not the recording studios.

Accepted Answer

U.S. copyright laws only apply within the United States, so it is difficult for recording studios to enforce their rights in other countries where the music is being copied and sold. While international copyright laws do exist, they are often difficult to enforce in practice, particularly in countries with weaker intellectual property protections.

Question 16

tariffs are designed to raise money for the government.
A)Regulatory
B)Revenue
C)Price
D)Profit

Accepted Answer

Tariffs are taxes that are imposed on imported goods as they enter a country. The primary purpose of tariffs is to generate revenue for the government rather than to regulate trade or set prices.

Question 17

A tariff is designed to raise the price of imported products so that domestic goods are more competitively priced.
A)protective
B)restrictive
C)progressive
D)revenue

Accepted Answer

A protective tariff is meant to protect domestic industries by making foreign products more expensive, thereby making locally produced goods more competitive.

Question 18

The common market arrangement that groups Brazil, Argentina, Paraguay, Uruguay, Chile, and Bolivia is called the:
A)South American Six.
B)World Trade Organization (WTO).
C)Latin Free Trade Zone.
D)Mercosur.

Accepted Answer

Mercosur is the common market arrangement that groups Brazil, Argentina, Paraguay, Uruguay, Chile, and Bolivia. Option A (South American Six) is not the correct name for the arrangement, option B (World Trade Organization) is a global organization that deals with international trade, and option C (Latin Free Trade Zone) is not the correct name for this specific arrangement.

Question 19

A United States firm recently won a large contract with a company in Malaysia, by providing the foreign nation's government officials with American cars and a promise of additional monetary gifts. Clearly, this procedure:
A)violates the Foreign Corrupt Practices Act.
B)violates the Fair and Balanced Competitive Practices Act.
C)defines the common business practices of the foreign nation and should be respected.
D)defines the terms of the business contract, and as long as both parties sign, the agreement is binding.

Accepted Answer

The procedure violates the Foreign Corrupt Practices Act, which prohibits bribing foreign officials to gain a business advantage.

Question 20

Jake's family business sells and installs tile in bathrooms and kitchens. He is convinced that heater coils under bathroom floor tiles is the best thing since sliced bread. In his effort to avoid domestic competition, he sets his sights on the vast Chinese market. Much to his surprise, most Chinese people do not yet have indoor plumbing and are accustomed to government-run communal baths. Jake realized that his global marketing effort is hampered by:
A)Legal and regulatory constraints.
B)Cultural constraints.
C)Physical and environmental constraints.
D)The floating exchange rate.

Accepted Answer

The answer of Jake's family business sells and installs tile...

Quiz 3: Doing Business in Global Markets

Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of:

was an 18th century belief that a nation should try to sell more goods to other nations than it buys from them.

Some governments initiate restrictive standards that detail exactly how a product must be sold in a country. Trade experts call these restrictions .

The three countries participating in NAFTA are:

The Ozark Bike Company recently entered into an agreement with a large Japanese retailer to distribute its bicycles in Japan. Ozark Bike Company sees itself in a favorable position because:

If global trade experts predict that the value of the dollar will soon fall, it will result in:

Hennessy Hardware, a U.S. retailer, buys much of its inventory from Asian countries. Hennessy Hardware would benefit if the value of the dollar relative to the currencies of the countries from which Hennessy imports.

A is a regional group of countries that have no internal tariffs among participants, a common external tariff, and the coordination of laws to facilitate exchange among the member countries.

The European Union created a single monetary unit to replace the national currencies of twelve member nations. This common currency is known as the:

In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:

When studying abroad last year, Blake found that his U.S. dollars did not stretch as far as he had hoped. Each time he exchanged U.S. dollars for euros, he gave up more U.S. dollars in exchange for less euros. The exchange rate indicates:

The two basic types of tariffs are:

The represents the first attempt to establish a truly global mediation center to resolve international trade disputes.

tariffs are designed to raise money for the government.

A tariff is designed to raise the price of imported products so that domestic goods are more competitively priced.

The common market arrangement that groups Brazil, Argentina, Paraguay, Uruguay, Chile, and Bolivia is called the:

A United States firm recently won a large contract with a company in Malaysia, by providing the foreign nation's government officials with American cars and a promise of additional monetary gifts. Clearly, this procedure: