Deck 4: The Global Context of Business

Question 1

The purpose of the General Agreement on Tariffs and Trade is to reduce trade barriers.

Answer 1

True

Question 2

Local content laws guarantee that products sold in a country are at least partly made there.

Answer 2

True

Question 3

When a country's imports exceed its exports,that country experiences a trade surplus.

Answer 3

False

Question 4

A tariff is a tax on imported products.

Question 5

A trade deficit occurs when a nation imports more than it exports.

Question 6

Low-income countries are often called developing countries.

Question 7

An import is a product made or grown abroad but sold domestically.

Question 8

The North American Free Trade Agreement regulates trade between the United States,Canada,and Japan.

Question 9

NAFTA created fewer jobs than proponents had predicted.

Question 10

Dumping refers to the practice of selling a product abroad for less than the cost of production.

Question 11

The World Trade Organization (WTO)was created to encourage international trade.

Question 12

Globalization refers to the process by which countries around the world are becoming more self-sufficient.

Question 13

In a licensing arrangement,firms choose foreign organizations to manufacture their products in another country in return for a fee plus royalties.

Question 14

A subsidy is a tax designed to help companies who import products.

Question 15

Strategic alliances are also called joint ventures.

Question 16

Free market economies often establish some system of quotas and/or tariffs.

Question 17

The General Agreements on Tariffs and Trade opened foreign markets to most financial services.

Question 18

Products made domestically but shipped and sold abroad are known as imports.

Question 19

An exchange rate is the rate at which the currency of one nation can be exchanged for the currency of another nation.

Question 20

A subsidy is a government payment to help a domestic business compete.

Question 21

Many large firms entered international business as exporters; Coke is an example.

Question 22

The primary purpose of the World Trade Organization is to impose tariffs on imported products.

Question 23

International firms conduct a good deal of their business abroad and may even maintain overseas manufacturing facilities.

Question 24

Saudi Arabian oil is an example of an absolute advantage.

Question 25

Dumping and cartels are both illegal in the United States.

Question 26

Revenue tariffs are primarily designed to discourage the importation of foreign products.

Question 27

Today,fixed exchange rates are the norm for most major nations of the world.

Question 28

Strategic alliances give firms greater control over foreign activities than agents and licensees.

Question 29

If you have given another company in another country the right to produce your company's product,you are engaging in a licensing arrangement.

Question 30

A comparative advantage exists when a country can produce something more cheaply and/or of higher quality than any other country.

Question 31

The United States has large trade deficits with Japan,China,and Mexico; this means that the United States has imported more from them than what they have purchased from us.

Question 32

The single largest trading partner of the United States is China.

Question 33

Critics of protectionism charge that it drives up prices by reducing competition.

Question 34

The United States exports more to the Netherlands than it imports from the Netherlands.As such,the United States has a trade deficit with the Netherlands.

Question 35

An importer is a firm that makes products in one country and then distributes and sells them in others.

Question 36

The ultimate form of a quota is a tariff.

Question 37

Products that are successful in one country may be useless in another.

Question 38

South Africa produces diamonds more cheaply and of higher quality than any other country; this is an example of absolute advantage.

Question 39

Since the creation of NAFTA,U.S.exports to Mexico have increased,several hundred thousand new jobs have been created,and Mexico has passed Japan as the second-largest buyer of U.S.goods.

Question 40

A majority of U.S.imports come from Canada,Japan,Mexico,and China.

Question 41

Products created abroad and then transported and sold domestically are called ________.

A) subsidies
B) exports
C) imports
D) buy backs

Question 42

Developing countries are also called ________.

A) viral marketers
B) low middle-income countries
C) geographic clusters
D) low-income countries

Question 43

Products created domestically and transported for sale abroad are called ________.

A) exports
B) imports
C) returns
D) quotas

Question 44

An exchange rate ________.

A) is the rate at which the currency of one nation can be exchanged for that of another
B) has little impact on balance of trade
C) tends to be fixed between two countries
D) tends to fluctuate a great deal on a daily basis

Question 45

Which organization most likely has the greatest impact on Asian countries?

A) ASEAN
B) EU
C) NAFTA
D) ECOWAS

Question 46

A licensing arrangement is a cooperative partnership in which firms choose foreign individuals to manufacture or market their products in another country.

Question 47

When a country's imports exceed its exports,the nation has a ________.

A) balance of payments
B) trade deficit
C) competitive advantage
D) trade surplus

Question 48

Which country dominates the Pacific Asia region economically?

A) South Korea
B) China
C) Japan
D) Taiwan

Question 49

In some countries,laws make strategic alliances virtually the only way to do international business.

Question 50

If 1 euro = $1.35 on June 4 and $1.40 on June 5,the value of the dollar has risen.

Question 51

All of the following are benefits to globalization EXCEPT:

A) potential for higher standards of living
B) improved business profitability
C) decreased competition
D) obtaining cheaper resources

Question 52

The ________ is the rate at which the currency of one nation can be exchanged for that of another.

A) balance of payments
B) exchange rate
C) floating interest rate
D) trade surplus

Question 53

Fluctuations in the exchange rate have little influence on the balance of trade.

Question 54

The flow of money into or out of a country is referred to as the ________.

A) trade deficit
B) balance of payments
C) monetary policy
D) comparative advantage

Question 55

When a country's exports exceed its imports,the nation has a ________.

A) trade surplus
B) trade deficit
C) negative balance of trade
D) A and C

Question 56

The money that a nation pays for imports and receives for exports is a part of that nation's ________.

A) balance of payments
B) positive balance of trade
C) trade deficit
D) monetary policy

Question 57

A nation's ________ is the economic value of all of the products that a company exports minus the economic value of its imports.

A) standard of living
B) balance of trade
C) balance of payments
D) national debt

Question 58

The number of strategic alliances among major companies has decreased significantly over the last decade.

Question 59

Which country represents the world's most stable economy?

A) the United States
B) Canada
C) Germany
D) Japan

Question 60

When all conditions for national competitive advantage exist,a nation is less likely to do international business.

Question 61

When the value of one country's currency relative to that of another varies with market conditions,which of the following exists?

A) floating exchange rate
B) fixed exchange rate
C) negative balance of trade
D) international exchange rate

Question 62

________ is the international organization strategy of finding a partner in the country in which a business would like to conduct business.

A) Opening a branch office
B) Developing a strategic alliance
C) Forming an independent agency
D) Creating a direct investment

Question 63

ABC Company in the United States has given exclusive rights to XYZ Company in Switzerland to manufacture its products.This is an example of ________.

A) foreign direct investment
B) a licensing arrangement
C) a strategic alliance
D) an import-export relationship

Question 64

With a(n)________ exchange rate,the value of a country's currency remains constant relative to that of another country.

A) floating
B) indexed
C) fixed
D) adjusted

Question 65

Which of the following international organization strategies consists of firms giving individuals or companies in a foreign country exclusive rights to manufacture or market their products in that market?

A) licensing arrangements
B) independent agents
C) branch offices
D) strategic alliances

Question 66

Which of the following is a tax on imported goods or products?

A) quota
B) subsidy
C) local government action
D) tariff

Question 67

Which of the following buys products in foreign markets and then sells them for resale in its home country?

A) importer
B) exporter
C) international firm
D) direct investor

Question 68

Which of the following is a government payment to help a domestic business compete with foreign firms?

A) revenue tariff
B) protectionist tariff
C) embargo
D) subsidy

Question 69

A subsidy is a ________.

A) tax
B) payment
C) product
D) global competitor

Question 70

Ford purchased Volvo.What does this illustrate?

A) social responsibility
B) licensing arrangement
C) foreign direct investment
D) strategic alliance

Question 71

A company sending some of its own managers overseas to conduct business in a local office is practicing the international organization strategy of ________.

A) joint venture arrangements
B) strategic alliances
C) direct investment
D) branch offices

Question 72

Which of the following restricts the number of products of a certain type that can be imported into a country?

A) tariff
B) local governments
C) subsidy
D) quota

Question 73

Which of the following type of firm conducts a significant portion of its business abroad?

A) an importer
B) an exporter
C) an international firm
D) a domestic firm

Question 74

A government order forbidding exportation and/or importation of a particular product from a particular country is called a(n)________.

A) tariff
B) embargo
C) local content law
D) quota

Question 75

A firm that makes products in one country and then distributes and sells them in others is a(n)________.

A) importer
B) exporter
C) multinational firm
D) financier

Question 76

Many countries require that products sold in a particular country be at least partly made there.This practice is referred to as ________.

A) protectionism
B) local content laws
C) business practice laws
D) subsidizing an industry

Question 77

The ABC Paint Company in the United States has joined forces with the 1-2-3 Plastics Company in Italy to create a non-pealing,plastics-based paint.Both companies intend to share the research costs and any profits.This is an example of ________.

A) a licensing arrangement
B) viral marketing
C) a strategic alliance
D) foreign direct investment

Question 78

Restricting the number of Japanese cars imported into the United States is an example of a(n)________.

A) protectionist tariff
B) quota
C) licensing arrangement
D) embargo

Question 79

Which of the following international organizational strategies means buying or establishing tangible assets in another country?

A) independent agency
B) direct investment
C) opening branch offices
D) forming strategic alliances

Question 80

Protecting domestic business at the expense of free market competition is ________.

A) local content laws
B) imposing quotas
C) protectionism
D) adding tariffs