Deck 3: Business in a Borderless World

Question 1

Because Colombia can produce coffee so much more efficiently than other items produced there,it has which of the following advantages?

A) Absolute
B) Positive
C) Negative
D) Marginal
E) Comparative

Answer 1

E
Explanation: A comparative advantage occurs when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.

Question 2

A favorable balance of trade exists when a country

A) imports more than it exports.
B) exports more than it imports.
C) sends out more cash than it takes in.
D) spends more than it saves.
E) saves more than it spends.

Answer 2

B
Explanation: A trade surplus exists when a country exports more than it imports;this is favorable because it is receiving more money than it is paying out.

Question 3

International business involves the buying,selling,and trading of goods and services across national boundaries.

Answer 3

True
Explanation: International business refers to the buying,selling,and trading of goods and services across national boundaries.

Question 4

The U.S.has a trade deficit because

A) U.S.companies export more goods to other countries than foreign companies sell here.
B) the U.S.imports too many products from China.
C) the U.S.imports more products than it exports.
D) American consumers stopped buying Chinese goods and services.
E) American consumers buy far more domestic goods and services than foreign goods and services.

Question 5

Protective tariffs raise the price of foreign goods to allow competition with more expensive domestic goods.

Question 6

Exporting is the purchase of products from another nation.

Question 7

Nations trade with other nations to obtain resources that would otherwise be unavailable to them.

Question 8

Because it virtually controls the world's deposits of gem-quality diamonds,DeBeers Consolidated Mines,Ltd.has a(n)

A) absolute advantage.
B) comparative advantage.
C) advantage based on efficient production.
D) trade deficit.
E) balance of payment.

Question 9

The difference between the flow of money into and out of a country is called its

A) balance of trade.
B) imbalance of trade.
C) balance of payments.
D) trade payment balance.
E) exchange rate.

Question 10

An absolute advantage exists when a country has a monopoly on a natural resource.

Question 11

A balance of trade refers to the buying,selling,and trading of goods and services across national boundaries.

Question 12

The primary problem with a trade deficit is

A) that a country is exporting more than it is importing.
B) that more cash is leaving the country than is entering.
C) that a country is spending more than saving.
D) that a country is saving more than spending.
E) the large amount of export taxes.

Question 13

When a nation imports more than it exports,it has a positive balance of trade.

Question 14

In international trade,what is the difference between an absolute advantage and a comparative advantage?

Question 15

The balance of payments includes all the following except

A) a country's balance of trade.
B) foreign investments.
C) domestic investments.
D) tourist expenditures.
E) foreign aid and military expenditures.

Question 16

When Madison flies to Italy from the United States on a British airline,stays in Italian hotels,and buys clothing in Milan to bring home after her trip,she

A) decreases the trade deficit.
B) is exporting products to Italy and Great Britain.
C) contributes to the negative balance of payments for the U.S.
D) buys American-made goods overseas.
E) contributes to the positive balance of payments for the U.S.

Question 17

The Webb-Pomerene Export Trade Act allows selected U.S.firms desiring international trade to form monopolies to compete with foreign cartels.

Question 18

When Solar Tech,Inc. ,of Taos,New Mexico,sells thin film solar panels to a firm in Tokyo,Japan,Solar Tech

A) is importing the panels.
B) is exporting the panels.
C) has an absolute advantage.
D) is increasing the trade deficit.
E) is making a big mistake.

Question 19

A trade advantage with the best chance of surviving is one based on

A) worker knowledge.
B) technology.
C) a monopoly of a resource.
D) production efficiency.
E) lack of a resource.

Question 20

Define the terms "balance of trade" and "balance of payments." What is the difference between these terms? Why are they important measures?

Question 21

Around the globe,completely free trade is common.

Question 22

Understanding that Arab businessmen tend to stand face to face when holding a conversation reveals the importance of understanding another culture's use of

A) language.
B) dialect.
C) religious practices.
D) manners.
E) body language.

Question 23

The effective translation of product names can be crucial to the success of a foreign marketing effort because of

A) political barriers.
B) cultural barriers.
C) legal barriers.
D) export quotas.
E) body language.

Question 24

What are the different international barriers to trade? Give an example of each one.

Question 25

The World Bank and other multilateral development banks are the largest sources of advice and assistance for developing nations.

Question 26

When a company decides to do business outside its own country,it must research several factors,including potential barriers to international trade.Which of the following is not a potential barrier cited in your text?

A) Legal
B) Political
C) Cultural
D) Economic
E) Scientific

Question 27

The International Monetary Fund promotes trade among member nations by eliminating trade barriers and fostering financial cooperation.

Question 28

A specific amount of money levied on each unit of a product brought into the country is a(n)

A) ad valorem tariff.
B) value-added tariff.
C) fixed tariff.
D) protective tariff.
E) duty-free tariff.

Question 29

To reduce dollars flowing out of the country,the United States can take measures to limit the number of foreign cars imported from Japan by imposing a(n)

A) quota.
B) exchange control.
C) trade deficit.
D) embargo.
E) free trade zone.

Question 30

Political considerations change slowly,while laws change rapidly.

Question 31

The Association of Southeast Asian Nations (ASEAN)effectively united Singapore,Britain,and Japan into one market.

Question 32

A group of nations or companies that band together to act as a monopoly is known as a

A) conglomerate.
B) licensor.
C) cartel.
D) multinational.
E) licensee.

Question 33

What cultural issues should a manager consider before doing business in a foreign country?

Question 34

Not all countries trading in international markets package goods in the same measurement units.Unlike the United States,most countries rely on

A) currency.
B) gold.
C) the metric system.
D) bartering.
E) color coding.

Question 35

Sociocultural differences,such as variations in spoken language and body language,have no impact on international business.

Question 36

The law that allows selected American firms desiring international trade to form monopolies to compete with foreign cartels is the

A) Webb-Pomerene Export Trade Act.
B) Bretton Woods Agreement.
C) General Agreement on Tariffs and Trade.
D) Foreign Corrupt Practices Act.
E) Sherman Antitrust Act.

Question 37

A change in administration in a foreign government that is hostile to foreign trade is an example of a(n)

A) political barrier.
B) cultural barrier.
C) exchange barrier.
D) export quota.
E) body language.

Question 38

When a country devalues its currency,this encourages the sale of its

A) imports.
B) domestic goods to foreign countries.
C) international goods.
D) international services.
E) debts.

Question 39

The General Agreement on Tariffs and Trade was a precursor to the World Trade Organization and provided a forum for tariff negotiations.

Question 40

A common reason for establishing quotas or tariffs is to prohibit dumping.

Question 41

Licensing is a way of entering the international marketplace without spending large amounts of money abroad.

Question 42

If Peru wants to purchase machine parts from a German company but does not have any euros,it will probably borrow the euros from which of the following institutions?

A) International Monetary Fund
B) World Bank
C) Citicorp Bank
D) International Bank
E) World Trade Organization

Question 43

A forum to discuss trade problems and negotiate a reduction of trade barriers was first provided by the

A) General Agreement on Tariffs and Trade.
B) North American Free Trade Agreement.
C) the World Bank.
D) the Eximbank.
E) the International Monetary Fund.

Question 44

Which of the following is formally called the International Bank for Reconstruction and Development?

A) World Bank
B) International Monetary Fund
C) European Union
D) North American Free Trade Agreement
E) World Trade Organization

Question 45

A strategic alliance is a partnership formed to create competitive advantage on a worldwide basis.

Question 46

Only small firms are mobile enough to engage in international business.

Question 47

Which of the following is not something that the International Monetary Fund does?

A) Provides short-term loans to member countries
B) Functions as a world central bank
C) Eliminates trade barriers between nations
D) Fosters international financial cooperation
E) Provides individual home and auto loans

Question 48

Which of the following countries was an original member nation of Asia-Pacific Economic Cooperation?

A) Belgium
B) Mexico
C) China
D) Japan
E) Chile

Question 49

What is the International Monetary Fund (IMF)and what does it do?

Question 50

All multinationals are U.S.firms.

Question 51

What does the WTO stand for and what does it do?

Question 52

Exporting is available only to large corporations.

Question 53

Maquiladoras are possible under the Asia-Pacific Economic Cooperation.

Question 54

To facilitate free trade among members,the European Union is working toward all of the following except

A) the standardization of business regulations.
B) the standardization of import duties.
C) the elimination of customs checks.
D) the creation of opportunities to trade with countries in South America.
E) the creation of a standardized currency.

Question 55

Direct investment is the least risky and least expensive way to participate in foreign trade.

Question 56

Which trade alliance/agreement permits businesses to participate in a wide range of its activities?

A) General Agreement on Tariffs and Trade
B) Asia-Pacific Economic Cooperation
C) North American Free Trade Agreement
D) European Union
E) Association of Southeast Asian Nations

Question 57

Which of the following makes short-term loans to member countries with trade deficits and provides foreign currencies to member nations?

A) Foreign Credit Insurance Association
B) General Agreement on Tariffs and Trade
C) World Bank
D) World Trade Organization
E) International Monetary Fund

Question 58

The World Trade Organization agreements are the optional ground rules for international commerce.

Question 59

Why was the World Bank formed?

A) Because developed nations realized that developing nations do not have any banks
B) Because national banks sometimes lack sufficient cash reserves
C) To act as a global policing service
D) To loan money to underdeveloped and developing countries
E) To help developed nations obtain money to start businesses

Question 60

Which countries were merged into one market by NAFTA?

A) Canada,the U.S. ,and Mexico
B) North America and South America
C) Mexico,the U.S. ,and Brazil
D) Canada and the U.S.
E) Canada and Mexico

Question 61

An understanding of which of the following realities is not required for businesspeople to plan in a global economy?

A) Personal
B) Economic
C) Legal
D) Political
E) Sociocultural

Question 62

When Nike has its athletic shoes produced by companies in Asia,the Nike name still appears on the shoes.This illustrates

A) contract manufacturing.
B) licensing.
C) direct investment.
D) exporting.
E) importing.

Question 63

Many businesspeople today try to "think locally,act globally."

Question 64

More companies are moving away from a _______ strategy to globalization.

A) personalization
B) customization
C) standardization
D) tailored
E) individualized

Question 65

Explain the different levels of organizational involvement in international trade.

Question 66

The purchase of overseas production and marketing facilities is

A) licensing.
B) contract manufacturing.
C) using an export agent.
D) a direct investment.
E) exporting.

Question 67

When two computer companies joined together in hopes of obtaining a competitive advantage on a worldwide basis,this exemplifies a

A) direct investment.
B) contract manufacturing deal.
C) cartel.
D) joint venture.
E) strategic alliance.

Question 68

Globalization refers only to products,not promotion or distribution.

Question 69

Even when products are standardized,advertising often has to be modified.

Question 70

An intermediary,or middleman,that markets goods in another country is acting as a(n)

A) licensing agent.
B) franchising agent.
C) export agent.
D) contract manufacturer.
E) direct investor.

Question 71

A multinational strategy involves customizing products,promotion,and distribution according to cultural,technological,regional,and national differences.

Question 72

Because many countries do not permit foreign companies to purchase and operate facilities in their countries,a company wishing to do business in such a country may share the business costs with a firm from the host country by forming a

A) direct investment.
B) contract manufacturing arrangement.
C) corporation.
D) joint venture.
E) sole proprietorship.

Question 73

Trading companies offer all of the following services except

A) consulting.
B) advertising.
C) manufacturing.
D) warehousing.
E) foreign exchange.

Question 74

Globalization involves standardizing products for the whole world as if it were a single entity.

Question 75

A major advantage of utilizing an export agent is that the company does not have to deal with

A) a middleman.
B) raising prices.
C) foreign currencies and red tape.
D) discounts.
E) increasing volume.

Question 76

Why does direct investment have a greater degree of commitment than a countertrade agreement?

Question 77

Coca-Cola allows a Mexican firm to use its name,formula,and brands in return for a royalty.This arrangement is known as

A) exporting.
B) licensing.
C) direct investment.
D) contract manufacturing.
E) a joint venture.

Question 78

Companies doing business internationally have traditionally used a globalization strategy.

Question 79

A corporation that operates in several countries but without significant ties to any of them is a(n)

A) joint venture.
B) exporter.
C) cartel.
D) multinational.
E) strategic alliance.

Question 80

The fact that the U.S.company 3M owns a film-manufacturing facility in Italy is an example of

A) contract manufacturing.
B) a direct investment.
C) a trading company.
D) licensing.
E) exporting.