Deck 3: The World Marketplace: Business Without Borders

Question 1

A disadvantage of foreign outsourcing is higher wages.

Answer 1

False

Question 2

When the total value of a nation's exports is higher than the total value of its imports, that country has a(n)_____.

A)absolute advantage
B)trade surplus
C)trade deficit
D)comparative advantage

Answer 2

B

Question 3

Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.

Answer 3

False

Question 4

Compared to the U.S., China and India have:

A)smaller market size.
B)higher GDP growth rates.
C)higher per capita GDPs.
D)limited market potential.

Question 5

Balance of payments deficit means that:

A)foreign borrowing and lending are excluded from calculating the balance of payments.
B)more money flows in than out.
C)more money flows out than in.
D)foreign payments and receipts are excluded from calculating the balance of payments.

Question 6

Alice, the global marketing director of a multinational electronics manufacturing firm, is assigned the task of expanding her firm in growing new markets. She learns that the labor is expensive and that the technical equipment required for production is unavailable in the international market. In this case, which of the following is most likely affecting the global trade of Alice's firm?​

A)Lack of innovative ideas
B)Economic dependence in the international market
C)Limited access to factors of production
D)Absence of plentiful capital

Question 7

Balance of payments includes foreign borrowing and lending, foreign aid payments and receipts, and foreign investments.

Question 8

Identify a true statement about comparative advantage.

A)It is the tendency of a country to choose goods that have a higher opportunity cost compared to other countries.
B)It stays the same regardless of the changes in the technology or workforce in a country.
C)It is affected by major trade barriers to international trade.
D)It always remains static for developing countries.

Question 9

Sloimekia is able to produce more of a particular variety of cloth than its neighboring countries. Sloimekia and its neighboring countries have the same amount of resources for producing this particular cloth. In this case, which of the following is definitely true of Sloimekia?

A)Sloimekia has a higher trade surplus than its neighboring countries.
B)Sloimekia enjoys an absolute advantage in producing this particular cloth.
C)Sloimekia enjoys the highest balance of trade among its neighboring countries.
D)Sloimekia has a lower balance of payments and a lower trade deficit.

Question 10

International trade helps even out some of the resource imbalances among nations.

Question 11

Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.

Question 12

A balance of payments surplus means that more money flows out than in.

Question 13

In the context of international trade, countries with the highest trade barriers often have the least competition.

Question 14

Identify a true statement about balance of payments.

A)Balance of payments includes foreign borrowing and lending.
B)Balance of payments surplus indicates more money flowing out than in.
C)Balance of payments excludes overseas investments.
D)Balance of payments deficit indicates more money flowing in than out.

Question 15

As access to technology rises and barriers to trade fall, individual economies around the world have become more independent than ever before.

Question 16

Imported products carry the brand name of the importer.

Question 17

Which of the following statements is true about the markets around the world?

A)India's subscriber base for cell phones has grown explosively over the past five years.
B)China has lower gross domestic product (GDP) growth rate than the U.S.
C)China and India have a smaller opportunity to attract investments because of to their economic growth.
D)Most of the developing countries remain ahead of the United States in terms of development and prosperity.

Question 18

Identify a true statement about global trade.

A)It increases a firm's dependence on its domestic economy.
B)It offers companies an invaluable source of new ideas.
C)It increases the economic risk of multinational companies.
D)It reduces a firm's opportunity to tap into growing new markets.

Question 19

One of the major reasons India, China, and the Philippines attract multibillion-dollar investments is that:

A)they are more developed than any other developed country in the world.
B)they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers.
C)the value of Euros is lower in the Asian market than in the American market.
D)the level of prosperity in these countries is the highest in the world, ahead of the United States and Europe.

Question 20

Companies that choose to export products to a foreign country spend more to enter that market than companies that choose to build their own factories.

Question 21

Identify a true statement about the World Trade Organization (WTO).

A)It is beyond the scope of the WTO to monitor the provisions of the General Agreement on Tariffs and Trade (GATT).
B)Ministers of the WTO meet every five years to address current world trade issues.
C)The WTO promotes reduction of trade barriers and mediates disputes among members.
D)It is beyond the scope of the WTO to settle international trade disputes.

Question 22

In the context of barriers to international trade, which of the following is an example of energy infrastructure in a country?

A)Railroads
B)Cell phone coverage
C)Power plants
D)Radio

Question 23

Which of the following is a specialized type of licensing?

A)Partnership
B)Foreign franchising
C)Joint venture
D)Exporting

Question 24

Which of the following is the most costly form of foreign direct investment?

A)Offshoring
B)Franchising
C)Importing
D)Licensing

Question 25

Identify a true statement about the International Monetary Fund (IMF).

A)It is a lender of the last resort to nations in financial trouble.
B)It was created during the Uruguay round to address international trade disputes.
C)It is not accountable to the governments of the member nations for its actions.
D)It is funded by only the members of the European Union (EU).

Question 26

Pyoiunalek's, a U.S. restaurant chain, markets and endorses its business in Germany by offering buyers the rights to launch and operate the restaurant in their own country. It lends financial and marketing assistance to the buyers. Pyoiunalek's is employing the strategy of _____.

A)foreign franchising
B)personal selling
C)joint venture
D)importing

Question 27

Who among the following is most likely to benefit in a case where there is a strong dollar against a euro?

A)Hailinser, an American who exports goods to Europe
B)Fieolia Corp., a European firm that imports goods from America
C)Joinieker Inc., a European firm with American operations
D)Ron, an American who is touring Europe

Question 28

Who among the following is most likely to benefit in a case where there is a weak dollar against a euro?

A)John, an American who exports goods to Europe
B)Nierin Corp., an American firm that imports goods from Europe
C)Joinieker Inc., an American firm with European operations
D)Elise, an American who is touring Europe

Question 29

Vieorien, a Swedish company, has allowed Loineker, an American company, the rights to produce Vieorien's products and use the Vieorien trademark. However, Vieorien does not have the authority or the rights to dictate the business operations of Loineker. In this scenario, Loineker is the _____.

A)lessor
B)lessee
C)licensee
D)licensor

Question 30

Which of the following is true of a partnership?

A)It is the most expensive form of direct investment.
B)It is a formal, long-term agreement.
C)It is the most basic level of global trade.
D)It is otherwise known as domestic franchising.

Question 31

Requiring red-tape-intensive import licenses for certain categories is an example of a(n):

A)embargo.
B)nontariff barrier.
C)quota.
D)voluntary export restraint.

Question 32

Which of the following is a feature of joint ventures?

A)Sharing of resources
B)Merging of companies
C)Elimination of local partners
D)Absence of formal agreements

Question 33

Critics of the North American Free Trade Agreement (NAFTA)believe Mexico and Canada have contributed to the United States' trade deficit because:
a.the economies of these nations have grown faster than the economy of the U.S.
b.imports from Mexico and Canada have grown faster than exports to these nations.
c.import and export transactions with Mexico and Canada have remained static.
d.the U.S. imports goods from China and India rather than Mexico and Canada.

Question 34

_____ include differences among countries in language, attitudes, and values.

A)Economic differences
B)Sociocultural differences
C)Political differences
D)Legal differences

Question 35

In the late 1970s, LarceCo, a tea seller, entered the Russian marketplace. LarceCo traded tea-based products for Russian-made vodka because of the lack of a tradable currency in the Soviet Union. This is an example of _____.

A)countertrade
B)outsourcing
C)personal selling
D)licensing

Question 36

Quitor Inc, which is based in the U.S., contracts with Falconnien Suppliers, a small-scale supplier in Taiwan, to manufacture its computers and tablets across the world This strategy by Quitor Inc is an example of _____.

A)joint venture
B)franchising
C)exporting
D)foreign outsourcing

Question 37

Companies typically engage in _____ to meet the needs of customers that don't have access to hard currency or credit.

A)countertrade
B)importing
C)direct selling
D)product churning

Question 38

Which of the following is a disadvantage of foreign outsourcing?

A)The cost of shipping the goods can be very high.
B)The risk of poor quality control becomes higher.
C)The cost of production becomes irrecoverable.
D)The foreign company pays higher wages to the workers.

Question 39

Identify a true statement about exporting.

A)It is colloquially known as foreign outsourcing.
B)It is ineffective for small and mid-sized companies.
C)It is the most basic level of international market development.
D)It means producing products abroad and selling them domestically.

Question 40

Tanya Williams, the chief executive officer of Willister Computers, believes that the firm is currently best equipped to enter the Chinese market. The firm offers a small-scale producer in China to produce and market its goods based on the set of specific operating functions and requirements Willister offers to the firm. This is an example of _____.

A)foreign franchising
B)direct investment
C)a strategic alliance
D)a joint venture

Question 41

_________ are limitations on the amount of specific products that may be imported from certain countries during a given time period

A)Voluntary export restraints
B)Embargoes
C)Tariffs
D)Quotas

Question 42

The _________ expresses the value of one nation's currency in terms of another nation's currency.

A)liquidity ratio
B)exchange rate
C)countertrade ratio
D)discount rate

Question 43

_________ means buying products from overseas that have already been produced

A)Importing
B)Exporting
C)Franchising
D)Outsourcing

Question 44

Define countertrade and explain its impact on a nation's economy.

Question 45

Define absolute advantage and comparative advantage. Explain how China has an absolute advantage over the United States and how the United States has a comparative advantage over China

Question 46

_________ is an international trade that involves the barter of products for products rather than for currency.

A)Outsourcing
B)Countertrade
C)Direct selling
D)Licensing

Question 47

Describe the tools used for measuring a nation's international trade. Use these tools to describe the United States' international trade experience over the past 30 years.

Question 48

Describe foreign licensing and foreign franchising. What are the similarities and the differences between them? What are their benefits and challenges? Give an example of at least one company for each.

Question 49

_________ is the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries.

A)Absolute advantage
B)Service differentiation
C)Product differentiation
D)Comparative advantage

Question 50

The International Monetary Fund (IMF)exists to promote international economic cooperation and stable growth. Describe how the IMF accomplishes this.