Deck 5: International Environment

Question 1

Canadian manufacturers sell automobiles in South Korea. To South Korea, the automobiles represent which of the following?

A) countertrades
B) exports
C) imports
D) exchanges

Answer 1

C

Question 2

Canada buys copper from Chile's Escondido copper mine. The copper is used to make wiring for the Canadian telecommunications industry and for many other purposes. For Canada, the copper is an example of which of the following?

A) tariff
B) export
C) embargo
D) import

Answer 2

D

Question 3

Developed nations account for what percentage of world trade?

A) 60%
B) 70%
C) 80%
D) 90%

Answer 3

B

Question 4

Our economy has become more sophisticated in recent decades and has developed into which of the following?

A) an information economy
B) a technological economy
C) a globalized economy
D) a knowledge-based economy

Question 5

Bombardier sells trains to European countries. To the European countries, these trains are an example of which of the following?

A) imports
B) countertrades
C) intangibles
D) exports

Question 6

Which of the following is one of the advantages associated with multinational corporations?

A) They have easy access to financial resources.
B) They have the ability to shift production from one country to another.
C) They have no need to be concerned about foreign currency regulations.
D) They have no need to worry about social and cultural issues.

Question 7

Which of the following move resources, goods, services, and skills across national boundaries without regard to the country in which they are headquartered?

A) borderless corporations
B) international monopolies
C) cartels
D) multinational corporations

Question 8

How do imports benefit the Canadian consumer?

A) better quality products
B) more selection
C) cheaper products
D) stronger dollar

Question 9

Successful multinational corporations do which of the following when conducting business internationally?

A) have good relations with government officials
B) research the market thoroughly so as not to make mistakes
C) consider the local community concerns
D) take political and cultural differences into account

Question 10

Which of the following is defined as the difference in value of a country's exports and imports over a period of time?

A) federal deficit
B) federal surplus
C) balance of trade
D) balance of exchange

Question 11

Which of the following characteristics is exhibited by a company that has a global vision?

A) being interested in nothing more complicated than exporting
B) having a very nationalistic view of the world
C) recognizing and reacting to international business opportunities
D) following its competition into foreign markets

Question 12

Which of the following are products that are bought from one country for use in another just as Canada buys coffee from Columbia?

A) tariffs
B) tangibles
C) imports
D) exports

Question 13

Which of the following are goods and services that are made in a country and sold to other countries?

A) tangibles
B) countertrades
C) exports
D) imports

Question 14

One of the reasons that the United Nations has ranked Canada as one of the best countries to live in is our ability to do which of the following?

A) do business with the outside world
B) have a good education system
C) provide one year of parental leave
D) provide free health care for all our citizens

Question 15

The United States accounts for what percentage of Canada's exports?

A) 95%
B) 85%
C) 75%
D) 65%

Question 16

Exports create which of the following for the Canadian economy?

A) foreign currency reserves
B) employment
C) good trade relations
D) a stronger currency

Question 17

The Ford Motor Company has invested $6 billion to build a "world car," the midsize Mondeo. The car was designed in the United States, Germany, and the United Kingdom to be adaptable to any market in the world. Which type of organization best describes Ford?

A) multinational
B) interpartnership
C) nationalistic
D) intercultural

Question 18

Which of the following is one of the advantages associated with multinational corporations?

A) They can take advantage of tax variations.
B) They have the ability to shift employees from one country to another.
C) They can shift their currency reserves easily.
D) They can hire employees from many different countries.

Question 19

A country that exports more goods than it imports is said to exhibit which of the following?

A) a favourable balance of payment
B) a negative trade deficit
C) a favourable balance of trade
D) an unfavourable balance of trade

Question 20

What are some of the challenges that multinational corporations face?

A) bribery offers
B) resentment from locals
C) cultural issues
D) hiring employees from many different countries

Question 21

Which of the following represents the value of one currency in terms of another?

A) the balance of payments
B) the exchange rate
C) the investment exchange
D) the balance of trade

Question 22

In 2009, Albania exported $340 million and imported products valued at $1.5 billion. Albania would exhibit which of the following?

A) a negative balance of trade
B) a negative trade deficit
C) an unfavourable balance of trade
D) a negative balance of payment

Question 23

When a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide a product, this is referred to as which of the following?

A) relative advantage
B) partial advantage
C) absolute advantage
D) comparative advantage

Question 24

Romania has imports of $16.7 billion and has an unfavourable balance of trade. This means that Romania has which of the following?

A) less than $16.7 billion in exports
B) exactly $16.7 billion in exports
C) more than $16.7 billion in exports
D) low inflation

Question 25

The balance of payments is the summary of a country's financial transactions with another country. Which of the following would you expect to see in such a summary?

A) foreign aid
B) current inflation rate
C) political focus
D) government deficit figures

Question 26

Which of the following represents the total amount of money that flows into and out of a country?

A) the balance of trade
B) the balance of payments
C) the federal deficit
D) the balance of exchange

Question 27

The balance of payments is the summary of a country's financial transactions with another country. Which of the following would you expect to see in such a summary?

A) political trade trip expenses
B) unemployment payments
C) military expenditures
D) advertising spending

Question 28

In 2009, Argentina exported $25.3 billion and imported products valued at $9 billion. Argentina exhibited which of the following?

A) a positive balance of payment
B) a negative trade deficit
C) a favourable balance of trade
D) a negative balance of trade

Question 29

The karakul is a breed of Central Asian sheep that produces curly, glossy wool for the manufacturing of warm hats and coats. Since the breed can be raised only in Central Asia, this region can be said to have which of the following?

A) absolute advantage
B) total advantage
C) advantageous distinction
D) comparative advantage

Question 30

Imagine you are trying to gather the information needed to calculate the balance of payments for an Eastern European country. To do your calculations, you would need to have information on which of the following?

A) military expenditures to train its forces at home
B) its current inflation rate
C) its corporate tax rates
D) foreign aid the country receives

Question 31

Venezuela can grow and sell cut flowers for floral bouquets more easily and more cheaply than most other countries can produce the same flowers. When it comes to flowers, Venezuela has which of the following?

A) comparative advantage
B) advantageous competency
C) absolute advantage
D) total advantage

Question 32

A country that imports more goods than it exports is said to exhibit which of the following?

A) a positive trade surplus
B) an unfavourable balance of trade
C) a favourable balance of trade
D) a positive balance of payment

Question 33

In 2009, Argentina exported $25.3 billion and imported products valued at $9 billion. What does the difference between the dollar value of its exports and imports represent?

A) a positive exchange rate
B) a trade deficit
C) a positive balance of payment
D) a trade surplus

Question 34

In 2010, Albania exported $340 million and imported products valued at $1.5 billion. What does the difference between the dollar value of its exports and imports represent?

A) its positive exchange rate
B) its positive balance of payment
C) its trade deficit
D) its trade surplus

Question 35

The difference between a country's total payments to other countries and its total receipts from other countries is represented by which of the following?

A) financial surplus
B) financial deficit
C) balance of payments
D) balance of trade

Question 36

Which of the following is the reduction of a currency's value relative to another currency?

A) deregulation
B) currency levelling
C) devaluation
D) exchange depreciation

Question 37

Which of the following terms means that prices of currencies vary based upon demand and supply of that currency?

A) variable trade
B) the international trade rate
C) the floating exchange rate
D) variable costs

Question 38

When Steve went to Mexico, he found that he could go to his bank and trade his 100 Canadian dollars for 750 Mexican pesos (the nation's currency). This is an example of 7.5 Mexican pesos representing which of the following?

A) the foreign trade rate
B) the balance of payments
C) the international trade rate
D) the exchange rate

Question 39

Which of the following terms best describes the reduction of value, if, during the past decade, the Canadian dollar's value has been reduced relative to most other world currencies?

A) deregulation
B) re-evaluation
C) comparative disadvantage
D) devaluation

Question 40

Azerbaijan has imports of $1.8 billion and has a favourable balance of trade. This means that Azerbaijan has which of the following?

A) less than $1.8 billion in exports
B) more than $1.8 billion in exports
C) low inflation
D) exactly $1.8 billion in exports

Question 41

Which of the following best describes protectionism?

A) It uses artificial barriers to protect home products.
B) It is based on the concept of absolute advantage.
C) It allows people to buy and sell where they please.
D) It prohibits tariffs, embargoes, and import quotas.

Question 42

When a country establishes artificial barriers such as quotas and tariffs, it is engaging in which of the following?

A) protectionism
B) free trade
C) managed trade
D) nationalism

Question 43

Which of the following best describes the term "preferential tariff"?

A) The tariff applies only to luxury items.
B) The tariff limits the number of products that can be imported from particular countries.
C) Tax is placed on countertrades.
D) Tariff advantages are given to one country over others.

Question 44

Which of the following activities is the least costly and least risky method for selling a product on the global market?

A) licensing
B) exporting
C) franchising
D) contract manufacturing

Question 45

A policy of permitting the people of a country to buy and sell where they please, without restrictions, is called which of the following?

A) protectionism
B) free trade
C) premium exchange
D) comparative advantage

Question 46

Which of the following represents the world's largest free-trade zone?

A) the ASEAN Free Trade Agreement
B) the North American Free Trade Agreement
C) the European Union Free Trade Agreement
D) the South Asia Free Trade Agreement

Question 47

According to the text, why are some people opposed to trade and globalization?

A) loss of national identities
B) less local businesses
C) rich countries get richer
D) damage to the environment

Question 48

If a country specializes in goods that it can produce most readily and cheaply and trades those goods for the goods that another country can produce most readily and cheaply, then both countries are exercising which of the following principles?

A) distinctive advantage
B) comparative advantage
C) absolute advantage
D) parallel competencies

Question 49

Which of the following is the best motivator for a company to enter the global market?

A) change of domestic law
B) saturated domestic market
C) competition doing it
D) potential new partners abroad

Question 50

Which of the following countries are in the Mercosur free-trade zone?

A) Panama, Brazil, Chile
B) Argentina, Brazil, Venezuela
C) Venezuela, Columbia, Ecuador
D) Argentina, Peru, Venezuela

Question 51

Since NAFTA came into effect in 1994, what has been the result?

A) job losses and higher prices
B) lower economic growth and less selection
C) job creation and economic growth
D) higher prices but more selection

Question 52

Which of the following is one of the primary objectives of the EU for all its members?

A) increase access to other trade zones
B) promote economic progress
C) ease travel between countries
D) improve the unemployment rate

Question 53

Nations sometimes form free-trade associations and establish areas where there are few, if any, export and import duties or other regulations that would act as barriers to trade among partners. Which of the following best describes the result of this behaviour?

A) preferred tariff pacts
B) free trade zones
C) interaction zones
D) customary-duty areas

Question 54

Which of the following is a benefit associated with free trade and globalization?

A) a closed economy
B) increased per capita income
C) declining productivity
D) an increase in the number of better-paying jobs

Question 55

Which of the following is a benefit of global trade?

A) Export jobs usually pay more than other jobs.
B) It creates better relations between countries.
C) It increases tourism between countries that trade.
D) Increased trade increases GDP.

Question 56

Why do many people fear trade and globalization?

A) Many fear that free trade and globalization lead to increased productivity.
B) Many fear that an open economy spurs innovations with fresh ideas from abroad.
C) Many fear that trade and globalization will lead to massive job losses.
D) Many fear that trade and globalization will increase per capita income.

Question 57

Which of the following best describes an effect of free trade?

A) It establishes artificial barriers to trade.
B) It allows companies to conduct business without licences.
C) It permits people to buy and sell where they please.
D) It contributes to protectionism.

Question 58

How many countries are in the European Union?

A) 20
B) 25
C) 28
D) 32

Question 59

What are the benefits associated with free trade and globalization?

A) higher probability that inflation will arrest economic growth
B) prevents employers from using pay cuts to threaten employees
C) decreased per capita income
D) an open economy that spurs innovation

Question 60

When South Korea reduces the tariff that Japan (but only Japan) has to pay when it imports cameras into South Korea, which of the following best describes the action?

A) a biased tariff
B) a differential duty
C) a preferential tariff
D) a nontariff

Question 61

Grand Metropolitan, a British company, purchased North American-based Pillsbury Co. in order to expand its product line and the market for its existing consumer products. Metropolitan's purchase was an example of which of the following?

A) direct foreign investment
B) an international corporation
C) an international cooperative
D) a limited partnership

Question 62

U.S. plane manufacturer McDonnell-Douglas has authorized Mitsubishi Heavy Industries, a Japanese company, to use its trademarks, patents, and other proprietary knowledge to manufacture F-15 fighter planes. Mitsubishi Heavy Industries pays McDonnell-Douglas. This is an example of which of the following activities?

A) contract manufacturing
B) licensing
C) importing
D) franchising

Question 63

Which of the following is a form of trading arrangement in which part or all of the payment for purchased goods or services is in the form of other goods and services?

A) a countertrade
B) a counteroffer
C) a nonfinancial exchange
D) a counteraction

Question 64

Pierre Cardin gives technical advice on textile manufacturing to China and in exchange receives silk and cashmere. This is an example of which of the following?

A) counteroffer
B) joint venture
C) countertrade
D) contra-deal

Question 65

The Uruguay Round of trade negotiations is best described as which of the following?

A) It was the most ambitious global trade agreement ever negotiated.
B) It created the General Agreement on Tariffs and Trades (GATT).
C) It actually increased tariffs by 10 percent worldwide.
D) It was an agreement to lower trade barriers that existed in South American countries.

Question 66

When a French company brings its patents on digital telephone switches, and Bell Canada provides the marketing know-how to a business relationship, which of the following arrangements is occurring?

A) a joint venture
B) an international partnership
C) an oligopoly
D) a joint cooperative

Question 67

Reducing trade barriers and opening markets is the role of which of the following organizations?

A) World Trade Improvement Foundation
B) World Trade Organization (WTO)
C) International Monetary Fund (IMF)
D) Global Trade Organization

Question 68

Active ownership of a foreign company, with direct investors having either a controlling or a large minority interest in the company, is best described as which of the following?

A) an international corporation
B) a limited partnership
C) an international cooperative
D) direct foreign investment

Question 69

Capital Radio PLC, the United Kingdom's biggest commercial radio company, announced in 2002 that it would cooperate with Walt Disney Co. to create a radio network for children under the age of 16. The company will broadcast to a potential audience of 25 million under the name Capital Disney. This new radio network will be created as the result of which of the following arrangements?

A) an international partnership
B) a joint venture
C) a joint cooperative
D) an oligopoly

Question 70

The BC Cherry Growers sells much of its locally grown produce to Taiwan. Which of the following would be the easiest and least expensive way for the growers' association to sell to global markets?

A) licensing
B) importing
C) exporting
D) contract manufacturing

Question 71

A domestic company may decide to sign an agreement for the production of its goods by an established foreign manufacturer. Such private-label manufacturing by a foreign company is known as which of the following?

A) duplicate labelling
B) franchising
C) international labelling
D) contract manufacturing

Question 72

Japanese automobile manufacturer Mazda began production of the Premacy SUV in Haikou, China, at a plant it built in the Chinese province and expected to make 20,000 autos in 3 years. Mazda is using which action to engage in global trading?

A) direct foreign investment
B) an international cooperative
C) a limited partnership
D) an international corporation

Question 73

When a foreign company manufactures private label goods under a domestic company's brand this is referred to as which of the following?

A) licensing
B) franchising
C) contract manufacturing
D) joint venture

Question 74

The Sara Lee Company sells the Hanes brand of hosiery in North America. The manufacturer of this hosiery brand in Great Britain sells it under the brand name of Pretty Polly. The Sara Lee Company is using which of the following activities to broaden its global marketing base without investing in overseas plants and equipment?

A) contract manufacturing
B) a cooperative agreement
C) a joint venture
D) a licensing agreement

Question 75

Which of the following statements best describes dumping?

A) Dumping is legal provided that it is government subsidized.
B) Most industrialized nations have passed laws to make dumping illegal.
C) Canada has not been a victim of dumping.
D) Dumping is a form of export quota.

Question 76

In 1997, Russia and Ukraine exported carbon steel plate into Canada at a price much lower than the countries charged for the identical steel in their home markets. Russia and Ukraine were engaged in which of the following activities?

A) add-on pricing
B) dumping
C) unloading
D) export pricing

Question 77

An enterprise in which two or more companies or investors (including governments) share ownership of a business and its property rights is known as which of the following?

A) a cooperative
B) a joint venture
C) an international partnership
D) a cartel

Question 78

By using split-run magazines (modifying the U.S. editions so they contain Canadian ads), U.S. magazine publishers can offer lower rates to advertisers and sell the magazines for less money than Canadian publishers can. According to the CMPA, the U.S. magazine publishers are engaged in which of the following?

A) unloading
B) dumping
C) export pricing
D) add-on pricing

Question 79

The World Trade Organization (WTO) is best described by which of the following?

A) It includes all of the countries that signed the Uruguay Round.
B) It is controlled by the United States.
C) It has emerged as the world's most powerful institution for reducing trade barriers and opening markets.
D) It does not yet have an effective dispute settlement procedure but will before the year 2018.

Question 80

Which of the following agreements dramatically lowered trade barriers worldwide and created the new World Trade Organization (WTO)?

A) Maastricht Treaty
B) Uruguay Round
C) North American Free Trade Agreement
D) Mercosur