Question 1

Which of the following is the first step in the decision for a business to expand globally?

Accepted Answer

Determining which foreign markets to enter is the first step in the decision for a business to expand globally. This involves conducting market research, analyzing consumer behavior and preferences, and evaluating potential risks and opportunities in different markets. Once the target foreign markets are identified, the company can then move on to assessing the costs of entering those markets, deciding how to organize operations, and applying for any necessary financing or export credits.

Question 2

A less-developed nation is facing a financial crisis due to the rapid devaluation of its currency. Which of the following might aid this country?

Accepted Answer

The International Monetary Fund (IMF) specializes in providing financial assistance to countries facing economic turmoil. They could potentially offer loans or other forms of support to help stabilize the currency and address the financial crisis. The World Bank primarily provides loans for long-term development projects and is not as well-equipped to address immediate financial crises. The United Nations and World Trade Organization focus on broader global issues rather than individual country financial crises.

Question 3

Decisions made by the ______ regarding trade disputes are binding on the parties involved.

Accepted Answer

The GATT was formed to regulate international trade and its decisions regarding trade disputes are binding on the parties involved. It has been replaced by the World Trade Organization (WTO) but its rules and agreements still apply. The World Bank, NAFTA, and IMF are not primarily focused on trade dispute resolution.

Question 4

Berry Corp. sells microprocessors to an electronic equipment manufacturer in this country who then sells equipment containing the microprocessors to Japan. Berry Corp. is engaging in ______.

Accepted Answer

Indirect exporting involves a middleman or intermediary in which a company sells its products to a domestic intermediary who then exports the product. In the given scenario, Berry Corp. is selling its product to a domestic electronic equipment manufacturer who then exports the product to Japan, making it an example of indirect exporting. Countertrade involves the exchange of goods and services instead of money, foreign licensing involves a company licensing its technology to a foreign company, and international production involves a company establishing its manufacturing facilities in foreign countries.

Question 5

The hypothetical country of Austrica requires foreign companies that buy and sell Austrica products to use only Austrica currency in these transactions. Austrica is using ______ as a means of controlling international trade.

Accepted Answer

Austrica is using exchange control as a means of controlling international trade by requiring the use of Austrica currency in transactions involving Austrica products. This is a form of restriction on the use of foreign currency in the country, which falls under the category of exchange control measures.

Question 6

All of the following are part of the European community's plan to eliminate all barriers to free trade among its members with the exception of ______.

Accepted Answer

While the European community has worked to standardize business regulations, trade duties, and eliminate custom checks, there has been no effort to standardize legal systems. Each member state retains its own legal system and this is not seen as a barrier to free trade.

Question 7

A Canadian software company that specializes in developing computer games enters into an agreement with a Japanese software company. Under this agreement, the Japanese firm has the right to manufacture and sell the Canadian firm's games in Japan. This agreement is an example of ______.

Accepted Answer

The agreement described is an example of foreign licensing, as the Canadian firm is granting the Japanese firm the right to manufacture and sell their games in Japan.

Question 8

Countries may establish ______ where they can trade among themselves with no tariffs or other trade restrictions.

Accepted Answer

The answer of Countries may establish ______ where they can...

Question 9

International trade agreements outline the conduct expected by the partners when trading with each other. One resource that has no international regulation though is ______.

Accepted Answer

Water supply is not currently regulated under any international trade agreement. Trademarks, taxes, and patents are all subject to international regulation through agreements such as the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Agreement on Subsidies and Countervailing Measures.

Question 10

Which of the following is NOT a social or cultural barrier in international trade?

Accepted Answer

The answer of Which of the following is NOT a...

Question 11

The ______ promotes trade by providing financial assistance and waiving debt payments.

Accepted Answer

The answer of The ______ promotes trade by providing financial...

Question 12

A less-developed country wants to build new port facilities, which will allow it to increase agricultural exports. Financing for this project could come from the ______.

Accepted Answer

The World Bank provides funding for development projects in less-developed countries, including infrastructure such as ports, to promote economic growth and poverty reduction. The International Monetary Fund focuses more on macroeconomic stability and providing financial assistance during crises, while the United Nations and World Trade Organization do not typically provide direct financing for specific projects.

Question 13

The most common first step in engaging in international business is ______.

Accepted Answer

Indirect exporting is often the most common first step for companies entering international markets, as it involves selling products to a domestic intermediary who then exports them, minimizing risk and investment.

Question 14

Amit, CEO of Charter Chemical, has recognized the financial opportunities in China. Amit has hired a foreign freight forwarder to coordinate selling Charter Chemical's products outside Canada. Charter Chemical is now involved in ______.

Accepted Answer

Charter Chemical is involved in direct exporting as they are selling their products outside Canada through a foreign freight forwarder.

Question 15

A Canadian agricultural producer sells wheat to a small country in Africa. The country pays the Canadian firm in seafood. This is an example of ______.

Accepted Answer

This is an example of countertrade, where payment for goods is made in other goods instead of cash. In this case, the Canadian agricultural producer is receiving seafood as payment instead of cash.

Question 16

Which of these countries is NOT a member in the Central American-Dominican Republic Free Trade Agreement?

Accepted Answer

Canada is not a member of the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR). The agreement includes the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the United States.

Question 17

One effect of the North American Free Trade Agreement (NAFTA) is

Accepted Answer

NAFTA has led to an increase in trade among its member nations (the United States, Canada, and Mexico). The agreement has eliminated many tariffs and trade barriers between these countries, making it easier for them to exchange goods and services. While some argue that NAFTA has led to the outsourcing of jobs and a decrease in wages for workers in certain industries, it has overall had a positive effect on trade between these nations.

Question 18

Dumping ______ domestic consumers and ______ domestic producers.

Accepted Answer

The answer of Dumping ______ domestic consumers and ______ domestic...

Question 19

A major concern of labour unions regarding trade agreements is

Accepted Answer

Labour unions are primarily concerned with protecting Canadian workers' jobs and promoting fair wages and working conditions. Trade agreements often result in the outsourcing of Canadian manufacturing jobs to other countries with lower labour costs, so loss of Canadian jobs is a major concern for labour unions. The other options do not directly impact Canadian workers in the same way.

Question 20

The European Union (EU) ______.

Accepted Answer

The EU has not become part of NAFTA (A) and it has not made trade with the United States more difficult (C). The euro was introduced to replace national currencies, not coincide with them (D). The EU has been actively promoting the concept of European citizenship to complement national citizenship (B).

Quiz 4: Competing in World Markets