Question 1

__________ 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's 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 2

Which of the following is a form of trade protectionism?

Accepted Answer

Countries often use trade protectionism, which the use of government regulations to limit the import of goods and services, to protect their domestic industries against foreign competition.The three devices by which countries try to exert protectionism consist of tariffs (protective, not revenue), import quotas, and embargoes.

Question 3

Eli Lilly has agreed to let a South African company manufacture several of Eli Lilly's diabetes drugs and pay Eli Lilly a fee to distribute the drugs with a different brand name in South Africa.Eli Lilly is engaging in

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.

Question 4

Wheat producers in the United States claim that the Canadian Wheat Board is selling wheat imported into the United States at unreasonably low prices, and they fear depression of their own prices.The U.S.producers are accusing the Canadians of

Accepted Answer

Dumping is the practice of a foreign company's 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 5

The ______ is controversial because it has been accused of financing projects, which harm the environment and of helping countries that permit sweatshops or suppress religious freedom.

Accepted Answer

In recent years, the World Bank has been the target of demonstrations.Protesters believe it finances projects that could damage the ecosystem, such as the Three Gorges Dam on China's Yangtze River.Others complain it supports countries that permit low-paying sweatshops or that suppress religious freedom.

Question 6

The movement of goods and services among nations without political or economic obstruction is called

Accepted Answer

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

Question 7

The principal organization that provides low-interest loans to developing nations for improving, for example, their transportation or education systems is

Accepted Answer

Today the purpose of the World Bank is to provide low-interest loans to developing nations for improving transportation, education, health, and telecommunications.

Question 8

Import quotas are designed to prevent

Accepted Answer

Quotas are designed to prevent dumping, the practice of a foreign company's 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 9

South Korea recently lifted its ban on beef and beef products imported from Canada, one that had originated because of cases of bovine spongiform encephalopathy (BSE) among Canadian cattle.The ban is an example of a(n)

Accepted Answer

An embargo is a complete ban on the import or export of certain products.

Question 10

Pizza Hut provides the use of its name plus operating know-how to companies in Costa Rica in return for a fee plus a percentage of profits.Pizza Hut is

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.

Question 11

The __________ is designed to monitor and enforce trade agreements.

Accepted Answer

The World Trade Organization (WTO) is designed to monitor and enforce trade agreements.

Question 12

A duty imposed on imported goods designed simply to raise money for the government is known as a(n)

Accepted Answer

There are two types of tariffs: One is designed simply to raise money for the government (revenue tariff).

Question 13

The EU has recently agreed to cut the taxes it charges on bananas imported from Central and South America.This tax is a type of

Accepted Answer

A tariff is a trade barrier in the form of a customs duty, or tax, levied mainly on imports.

Question 14

Skoda Auto, originally a Czech company and one that still manufactures there as well as in other international locations, is one of the largest automakers in Central Europe.In 2000, its acquisition by Germany's Volkswagen Group was complete, and it is now one of four brands for that company.Skoda is now a ______ of Volkswagen.

Accepted Answer

A wholly owned subsidiary is a foreign subsidiary that is totally owned and controlled by an organization.The foreign subsidiary may be an existing company that is purchased outright.

Question 15

A U.S.company agrees with a foreign company to start a new enterprise together in a foreign country, sharing the risks and the rewards.This is called a

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.

Question 16

When a company allows a foreign firm to pay it a fee to make or distribute the first company's product or service it is called

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.

Question 17

China does not allow foreign car manufacturers to sell vehicles independently in its country but instead requires them to partner with a Chinese company.This type of partnership is known as a

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.Sometimes a joint venture is the only way an American company can have a presence in a certain country, whose laws may forbid foreigners from ownership.Indeed, in China, this is the only way foreign cars may be sold in that country.

Question 18

Which of the following organizations succeeded GATT?

Accepted Answer

WTO succeeded GATT as the world forum for trade negotiations and has the formal legal structure for deciding trade disputes.

Question 19

When a government uses measures like tariffs and import quotas, it is called

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.Tariffs, embargoes, and import quotas are among the measures used in protectionism.

Question 20

The ________ has had a role in trying to shore up some weaker European countries during the recent financial crisis, 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.

Quiz 4: Global Management: Managing Across Borders