Business Test 1 Pt. 3

117. If it wants to reduce the dollars flowing out of the country, the United States can limit the number of Japanese cars being imported by imposing a(n)

import quota.

94. When a country imports more than it exports, it has a(n)

unfavorable balance of trade.

169. The Organization of Petroleum Exporting Countries (OPEC)

was conceived as a collective-bargaining unit.

220. ​If the Philippines needed to borrow money to promote its economic and social progress, it would most likely go to the ___.

​Asian Development Bank.

167. Eleven republics of the former Soviet Union are members of the

Commonwealth of Independent States.

69. Which of the following scenarios would not be considered international business?

A bearing manufacturer in South Carolina sells its parts to a Toyota plant in Kentucky.

209. ____ is an internationally supported bank that provides loans to developing countries to help them grow.

A multilateral development bank

229. Allen Lee, a Chinese immigrant, would like to start a wholesale furniture business in the United States. He has contacts in the furniture production business in China and feels he can leverage these contacts to purchase inexpensive, high-quality furniture to sell in his stores in the United States. He calls one of his contacts and after extensive negotiation, makes a deal: he will buy the Chinese furniture to sell wholesale in the United States to retail furniture businesses. What is the business relationship between Allen and his Chinese contact?

Allen is an importer and the contact is an exporter.

147. When was GATT first established?

At the end of World War II

231. Terrance operates a very successful cold storage business in the United States and would like to establish a similar business in a foreign country so he is able to offer shipping between the United States and the other country with storage for the goods once shipped. He has studied several countries and has a few possibilities, but would like to work in one that will most likely result in the success of his business there. Which country has the most efficient, integrated, and dynamic economic relationship with the United States?

Canada

141. Which is the largest emerging Asian market?

China

228. Jackie has been reading about international trade and that one nation has the ability to produce a specific product more efficiently than any other nation. She and her friend, Allie, are required to create a PowerPoint presentation for their business class about international trade. Jackie can create animated PowerPoint presentations that clearly and precisely convey the message they need to make, but in a light and entertaining fashion. She is not good at public speaking. Allie is an excellent public speaker and can create equally excellent PowerPoints. Both girls have homework for other classes to do and agree to divide the work—Jackie will create the PowerPoint and Allie will do the verbal and written part of the presentation. What advantage does Allie have over Jackie in making presentations?

Comparative advantage

73. ____ is the ability to produce a specific product more efficiently than any other product.

Comparative advantage

Thomas Bernerd, Inc., manufactures and sells reclining furniture. The company currently operates in the United States but wishes to expand overseas. The company managers have been contemplating the best way to enter the foreign market. At first, the management felt it would be in the company's best interest to let a foreign company use its product and brand in exchange for a royalty. The managers recognized, however, that before the company decided on its foreign strategy it needed to think through all the steps required to enter an international market. As such, the managers believed they needed to consult with some type of agency to help their firm compete more effectively in the global marketplace. After all the research was completed, the senior managers realized that they wanted to export their product. The managers decided that the transport carrier would notify them when the merchandise was shipped. This would avoid any confusion about lost shipments and ensure better communication with the receiving parties. 64. Refer to Thomas Bernerd, Inc. Which of the following options is not one of the steps needed for entering an international market?

Contact local government to see if taxes on trade can be waived.

108. ____ is the exportation of large quantities of a product at a price lower than that of the same product in the home market.

Dumping

233. Saidee opened a textile business in 1984 that traded with GATT member nations. She thought that by choosing nations that were part of this economic trade agreement she would not encounter tariff barriers, however she has been unable to sell her product in several nations due to the high tariffs placed on textiles. What is the most likely reason for Saidee's predicament?

Elimination of tariffs on textiles was passed in the Uruguay Round.

184. A medium-sized hardware manufacturer wants to become deeply involved in exporting, but it does not yet wish to actually manufacture any of its products overseas. The company wants to maintain control over its sales while gaining experience in foreign markets. Which option would be best for this company?

Establishing its own sales offices in foreign countries

160. One example of an economic community is the organization started by France, Germany, Belgium, Italy, the Netherlands, and Luxembourg. This organization is known as the

European Union.

149. An international organization formed at the end of World War II by the United States and twenty-two other countries whose goal was to reduce or eliminate tariffs and other barriers to world trade is called the

GATT

137. Franky believes that there should be no trade restrictions for any reason. What effect would Franky say that trade restrictions have on prices?

He would say that restrictions reduce competition and therefore cause an increase in prices.

236. Gerrick has an international business but is having difficulty with currency exchanges and fluctuations in the currency exchange rates. At times the problems are so severe he has considered closing down his international operations and doing business exclusively in the United States. Where can he go for assistance with currency exchange problems?

His bank, if it is a large international bank

175. Which of the following is a potential drawback of licensing?

If quality is compromised, it may reflect poorly on the company providing the license.

232. Godfrey would like to start a business that will eventually have a potential to grow. He would like the trade partner to be an Asian country but would like it to be a democracy with great economic growth potential, and a large population of potential consumers. Which nation would most likely be his trading partner?

India

152. What types of products did GATT focus on during the Kennedy Round?

Industrial and agricultural products

237. Albania was a closed, centrally planned state but is now a developing country with an open-market economy. In recent years, the country has suffered from a significant economic slowdown. It has infrastructure problems with an uneven electricity supply, problems with corruption, poor enforcement of contracts and property issues, which make it difficult to attract foreign investment; however, the government has made strides to improve the business climate through fiscal and legislative reforms. Albania would like to continue to improve as an open-market economy. Where could its leaders go to obtain assistance with financial and technical support?

International Monetary Fund

217. Countries experiencing balance-of-payments deficits can obtain short-term loans from the

International Monetary Fund.

204. Which of the following federal governmental agencies provides domestic and overseas commercial officers, country experts, and industry experts?

International Trade Administration

206. ABC Company wants to explore commercial opportunities in India and needs to consult with a country expert. ABC Company should consider seeking assistance from the

International Trade Administration.

68. How has international trade changed since the end of World War II?

International trade has increased steadily since this period of time.

71. Although it lacks sources of timber and oil, Chablis has a plentiful supply of grapes for its many wineries. Which statement about Chablis is true?

It has a comparative advantage in wine production.

164. Which of the following statements is true about NAFTA?

It is built on the Canadian Free Trade Agreement (FTA).

214. Which of the following is false concerning the International Monetary Fund?

Its loans to developing countries are interest free.

72. If Japan were regarded as the best electronics manufacturer in the world, what would be true?

Japan would have an absolute advantage in electronics production.

170. Suppose Gillette is seeking a manufacturer in Bangladesh that will produce and market Gillette razors in that country. Gillette expects a royalty from its partner in Bangladesh. Which arrangement will be the best choice for Gillette?

Licensing

173. ____ is a contractual agreement where one firm gives another permission to produce and market its product and brand name in exchange for a fee.

Licensing

177. Which of the following best compares licensing and exporting as tools for entering foreign markets?

Licensing and exporting are both low-risk, but exporting is more complicated.

207. The World Bank is an example of a(n) ____, supported by industrialized nations, including the United States.

MDB

198. Which of the following functions is not performed by a trading company?

Manufacturing products for foreign trading

182. Meredith hires an export merchant to help expand her business internationally. After signing contracts with a foreign purchaser outlining the terms of sale and delivery, the exporter will send Meredith's merchandise when

Meredith's bank receives a letter of credit from the importer's bank.

140. Who are the top two export partners of the United States?

Mexico and Canada

145. Suppose the country of Peru wanted to join GATT and thus be treated the same as other GATT members. What GATT principle is Peru interested in receiving?

Most-favored-nation status

202. Which of the following represents the highest level of involvement in international business?

Multinational firm

146. What are the Kennedy Round, the Tokyo Round, and the Uruguay Round?

Negotiations sponsored by GATT to reduce trade restrictions

168. The four largest gold-producing countries in the world want to form a collective-bargaining unit to provide gold-producing nations with some control of gold prices. These nations will most likely model the unit after

OPEC.

Landfall Service is a lawn furniture company that has been around for many years. It is known for its ability to produce furniture more efficiently than any other company in the nation. In truth, no other companies in any other nation come close. Landfall Service has shipped many of its products internationally. In fact, 80 percent of its profits come from international sales. However, the Italian government has imposed a tax on imported furniture items to protect local companies. The Brazilian government, on the other hand, has imposed taxes on Landfall Service products due to the government wanting a piece of the pie. Landfall Service initially thought that these taxes were unfair because it was being singled out. However, after Landfall Service contacted the organization that had the power to mediate this situation, the furniture company realized that the taxation it was subjected to was legal and that there was nothing it could do about it. ​ 59. Refer to Landfall Service. What type of tax has the Italian government imposed on the company?

Protective tariff

144. Which of the following statements is correct?

Restrictions or not, international business is growing.

234. Latoya is opening a business that makes unique lamps from shells. She is considering exporting these lamps to other countries but needs more information about what to do, how to negotiate the customs process, and which nations would provide the best markets for her products. Which of the following are not resources that would help her find the information she needs?

U.S. Department of Commerce and U.S. Department of Interior

Landfall Service Landfall Service is a lawn furniture company that has been around for many years. It is known for its ability to produce furniture more efficiently than any other company in the nation. In truth, no other companies in any other nation come close. Landfall Service has shipped many of its products internationally. In fact, 80 percent of its profits come from international sales. However, the Italian government has imposed a tax on imported furniture items to protect local companies. The Brazilian government, on the other hand, has imposed taxes on Landfall Service products due to the government wanting a piece of the pie. Landfall Service initially thought that these taxes were unfair because it was being singled out. However, after Landfall Service contacted the organization that had the power to mediate this situation, the furniture company realized that the taxation it was subjected to was legal and that there was nothing it could do about it. 60. Refer to Landfall Service. What type of tax has the Brazilian government imposed on the company?

Revenue tariff

230. Ty'Jeanea works in the snack shop at the school gym. Profits from the snack shop are used to support the school teams. Because the snack shop is profitable and the teams have succeeded due to increased ability to purchase training equipment, the cheerleaders and other school clubs would like to sell items through the snack shop as well. Ty'Jeanea talks to members of the snack shop management team about the possibility of other school clubs selling items through the shop and what it may mean to the shop's profitability. After a lengthy discussion, they agree that other clubs can sell items through the shop, but cannot sell food items; in addition, every club will have to pay the snack shop 20% of its profits. Many of the organizations are discouraged from selling items through the snack shop due to the high cost of doing business there. Ty'Jeanea is sitting in her business class later and the instructor explains trade restrictions placed on imports to limit particular foreign products from entering a country. As she thinks about the lesson, she realizes that if you compared the snack shop to the government, they had not acted to keep other items from being sold through the shop, but merely to raise revenue. Which of the following best describes the kind of trade restriction that Ty'Jeanea is comparing the shop's actions to?

Revenue tariffs

176. Tony Jamerson decides his company will start exporting and he wants to start at the most basic level. What action should Tony take to meet his objectives?

Sell the company's products to an export-import merchant.

235. Maria, Jorge, and Renaldo have formed a limited liability company to make educational supply packets for Spanish-speaking elementary school students. They have discussed the lack of educational supplies in many of the schools in Mexico and would like to export these supply packets to Mexico and other Latin American nations. They have been operating in the United States for eight years but will need a $1 million short-term loan to produce goods for the Mexican and Latin American markets. Which of the following agencies would be a viable loan source?

Small Business Administration

215. Which bank was established in 1991 to encourage reconstruction and development in the Eastern and central European countries?

The European Bank for Reconstruction and Development

216. Suppose India is trying to develop its international trade in electronic components, but it lacks the money to be successful. From whom should India seek assistance?

The International Monetary Fund

218. Which bank includes main goals of promoting exchange rate stability and assisting in establishing a multilateral system of payments?

The International Monetary Fund

211. Who are the two largest contributors to the Asian Development Bank?

The United States and Japan

161. Who are the members of NAFTA?

The United States, Canada, and Mexico

74. A new country is formed in central Africa. It has no absolute advantage in crude oil, diamonds, or wool. However, it does manufacture high-quality bows and arrows for specialized safari adventures. Which of the following statements is true?

The new country has a comparative advantage in the production of bows and arrows.

87. Which of the following best defines balance of trade?

The total value of a nation's exports minus the total value of its imports over some period of time.

111. Taiwanese manufacturers are dumping toys in Germany. What will happen to German toy manufacturers if the German government allows this dumping to continue?

They will be put out of business because they cannot compete with the prices.

188. When it built production lines in the United States, BMW engaged in what type of international expansion?

Totally owned facilities

148. The ____ gave President Kennedy the authority to negotiate reciprocal trade agreements that could reduce U.S. tariffs by as much as 50 percent.

Trade Expansion Act

205. Which U.S. government agency provides U.S. companies information on federal programs and activities that support U.S. exports?

Trade Information Center

Thomas Bernerd, Inc., manufactures and sells reclining furniture. The company currently operates in the United States but wishes to expand overseas. The company managers have been contemplating the best way to enter the foreign market. At first, the management felt it would be in the company's best interest to let a foreign company use its product and brand in exchange for a royalty. The managers recognized, however, that before the company decided on its foreign strategy it needed to think through all the steps required to enter an international market. As such, the managers believed they needed to consult with some type of agency to help their firm compete more effectively in the global marketplace. After all the research was completed, the senior managers realized that they wanted to export their product. The managers decided that the transport carrier would notify them when the merchandise was shipped. This would avoid any confusion about lost shipments and ensure better communication with the receiving parties. 67. Refer to Thomas Bernerd, Inc. Which of the following alternatives could have worked as a link between the managers at Thomas Bernerd, Inc. and the buyer from a different country?

Trading company

Thomas Bernerd, Inc., manufactures and sells reclining furniture. The company currently operates in the United States but wishes to expand overseas. The company managers have been contemplating the best way to enter the foreign market. At first, the management felt it would be in the company's best interest to let a foreign company use its product and brand in exchange for a royalty. The managers recognized, however, that before the company decided on its foreign strategy it needed to think through all the steps required to enter an international market. As such, the managers believed they needed to consult with some type of agency to help their firm compete more effectively in the global marketplace. After all the research was completed, the senior managers realized that they wanted to export their product. The managers decided that the transport carrier would notify them when the merchandise was shipped. This would avoid any confusion about lost shipments and ensure better communication with the receiving parties. 65. Refer to Thomas Bernerd, Inc. Which agency should the managers at Thomas Bernerd, Inc. seek assistance from?

U.S. Export Assistance Centers

151. The World Trade Organization was created by the

Uruguay Round.

150. If a small country wants to buy aircraft from the United States and the United States wants to export its aircraft, the United States may work through ____ in removing preset trade barriers so that the small country can more easily purchase the aircraft.

WTO

Landfall Service Landfall Service is a lawn furniture company that has been around for many years. It is known for its ability to produce furniture more efficiently than any other company in the nation. In truth, no other companies in any other nation come close. Landfall Service has shipped many of its products internationally. In fact, 80 percent of its profits come from international sales. However, the Italian government has imposed a tax on imported furniture items to protect local companies. The Brazilian government, on the other hand, has imposed taxes on Landfall Service products due to the government wanting a piece of the pie. Landfall Service initially thought that these taxes were unfair because it was being singled out. However, after Landfall Service contacted the organization that had the power to mediate this situation, the furniture company realized that the taxation it was subjected to was legal and that there was nothing it could do about it. 62. Refer to Landfall Service. Landfall Service must have contacted which of these organizations to mediate regarding unfair treatment by foreign governments?

WTO

154. If the United States and Japan can't settle their trade disputes on their own, they probably should settle them through the

WTO.

210. The ___ was established in 1944 and offers low-interest loans and interest-free credit to developing countries?

World Bank

153. The United States is a member of the ____, which is the successor to GATT.

World Trade Organization

125. A reduction of the value of a nation's currency relative to the currencies of other countries is called

a currency devaluation.

Landfall Service is a lawn furniture company that has been around for many years. It is known for its ability to produce furniture more efficiently than any other company in the nation. In truth, no other companies in any other nation come close. Landfall Service has shipped many of its products internationally. In fact, 80 percent of its profits come from international sales. However, the Italian government has imposed a tax on imported furniture items to protect local companies. The Brazilian government, on the other hand, has imposed taxes on Landfall Service products due to the government wanting a piece of the pie. Landfall Service initially thought that these taxes were unfair because it was being singled out. However, after Landfall Service contacted the organization that had the power to mediate this situation, the furniture company realized that the taxation it was subjected to was legal and that there was nothing it could do about it. ​ 58. Refer to Landfall Service. Because the company is known for its ability to produce lawn furniture more efficiently than any other company in the world, the company must have a(n) ____ advantage.

absolute

77. Because it controls the world's diamond deposits, the DeBeers Consolidated Mines, Ltd., has a(n)

absolute advantage.

138. Pablo complained that it took some time to locate a distributor of an imported light bulb that he had to replace. He was further annoyed that he had to pay an artificially high price. When asked for his opinion, Pablo would probably argue

against trade restrictions.

142. Globalization represents a huge opportunity for

all countries--rich or poor.

132. In addition to political considerations, all of the following are reasons for trade restrictions except

all of the answer choices are reasons for trade restrictions.

172. All of the following are ways to export a product to a foreign market except

all of these answer choices are ways to export a product to a foreign market.

75. Because Saudi Arabia and Australia have ____, Saudi Arabia can specialize in the production of crude oil and petroleum products, and Australia can specialize in the production of wool.

an absolute advantage

143. U.S. exports to developing and newly industrialized countries

are on the rise.

101. The total flow of money into a country minus the total flow of money out of the country over some period of time is called the country's

balance of payments.

179. A ____ is issued by the transport carrier to the exporter to prove merchandise has been shipped.

bill of lading

Thomas Bernerd, Inc., manufactures and sells reclining furniture. The company currently operates in the United States but wishes to expand overseas. The company managers have been contemplating the best way to enter the foreign market. At first, the management felt it would be in the company's best interest to let a foreign company use its product and brand in exchange for a royalty. The managers recognized, however, that before the company decided on its foreign strategy it needed to think through all the steps required to enter an international market. As such, the managers believed they needed to consult with some type of agency to help their firm compete more effectively in the global marketplace. After all the research was completed, the senior managers realized that they wanted to export their product. The managers decided that the transport carrier would notify them when the merchandise was shipped. This would avoid any confusion about lost shipments and ensure better communication with the receiving parties. 66. Refer to Thomas Bernerd, Inc. When the transport carriers notify the exporter that the product has been shipped, they use a

bill of lading.

99. Balance of payments is a ____ concept than balance of trade.

broader

128. A newly formed country in the Caribbean has no high tariffs, yet other countries find it difficult to trade with the new country because of its requirements for labeling, product testing, and certifications. These restrictions can best be classified as

bureaucratic red tape.

76. By definition, every country has a(n) ____ advantage in some product.

comparative

97. When Fabiola , a U.S. citizen, flies to Scotland on a Canadian airline, stays in an Edinburgh hotel, and buys many wool sweaters from Scotland to bring home, she is

contributing to the negative balance of payments.

199. If South Africa were to trade diamonds to the United States in exchange for heavy machinery, these countries would execute a(n)

countertrade

116. A limit on the amount of a particular good that may be brought into a country during a given period of time is called a(n)

import quota.

124. A currency devaluation increases the cost of foreign goods and ____ the cost of domestic goods to foreign firms.

decreases

193. When Sony Corporation of Japan purchased Columbia Pictures Entertainment, Inc. of the United States, Sony made a(n)

direct investment in the United States.

191. Totally owned facilities overseas are an example of

direct investment.

181. A ____ is issued by the exporter's bank, ordering the importer's bank to pay for the merchandise.

draft

109. China is selling school supplies in the United States for very low prices, even lower than the prevailing prices in China, and thus making it extremely difficult for American manufacturers to compete. This is referred to as

dumping.

155. The Tokyo Round

eased import quotas and unrealistic quality standards for imports.

157. Suppose Brazil, Argentina, Columbia, Peru, and Chile decide to form the South American Union to increase trade among these nations. This would be an example of a(n)

economic community.

158. An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies is called a(n)

economic community.

162. The United States joined with Mexico and Canada to promote the movement of resources and products; it formed a(n)

economic community.

166. The United States joined with Mexico and Canada to promote the movement of resources and products; it formed a(n)

economic community.

113. The Saudi Arabian government does not allow the consumption of alcoholic beverages within its country and prohibits imports of alcoholic beverages. The Saudi Arabian government is imposing a(n)

embargo

118. When the U.S. government will not allow meat from another country to be marketed in the United States, it is imposing a(n)

embargo

115. A complete halt to trading with a particular nation or in a particular product is called a(n)

embargo.

131. Arguments for imposing trade restrictions include

equalizing a nation's balance of payments.

123. The United States wants to limit the amount of dollars that another country can obtain. The best way to accomplish this is to

establish a foreign-exchange control.

183. A(n) ____ will, for a commission or fee, arrange the sale of a company's products to foreign intermediaries.

export-import agent

82. General Motors and Ford products produced in the United States are found around the world. The United States is ____ these automobiles.

exporting

86. The United States sells industrial supplies and materials to many nations around the world. The United States thus engages in

exporting.

Landfall Service Landfall Service is a lawn furniture company that has been around for many years. It is known for its ability to produce furniture more efficiently than any other company in the nation. In truth, no other companies in any other nation come close. Landfall Service has shipped many of its products internationally. In fact, 80 percent of its profits come from international sales. However, the Italian government has imposed a tax on imported furniture items to protect local companies. The Brazilian government, on the other hand, has imposed taxes on Landfall Service products due to the government wanting a piece of the pie. Landfall Service initially thought that these taxes were unfair because it was being singled out. However, after Landfall Service contacted the organization that had the power to mediate this situation, the furniture company realized that the taxation it was subjected to was legal and that there was nothing it could do about it. 61. Refer to Landfall Service. The Landfall Service does mostly

exporting.

79. The United Kingdom sells industrial supplies and materials to many nations around the world. The United Kingdom thus engages in

exporting. (79)

80. Selling and shipping raw materials or products to other nations is called

exporting. (80)

102. The payments portion of the balance of payments--that is, payments made by the United States--does not include

exports

96. When a country exports more than it imports, it has a(n)

favorable balance of trade.

121. A restriction on the amount of a particular foreign currency that can be purchased or sold is a

foreign-exchange control.

122. When an Indian importing firm wants to import U.S.-made products, it must first secure permission and dollars from the Reserve Bank of India. This type of restriction is known as a

foreign-exchange control.

171. Foreign licensing is similar to

franchising.

201. Countertrade is an international barter transaction in which

goods and services are exchanged for different goods and services.

139. Despite trade restrictions, international business is

growing.

100. Japanese tourists come to experience the magic of Disney World and other attractions around Orlando, Florida. These tourists are

helping the United States' balance of payments.

105. The United States wishes to import no more than 100 million tons of sugar from India in any given year. The type of import restriction it should impose is a(n)

import quota.

120. American automakers are concerned about the availability of so many foreign cars to U.S. consumers and that their chances to sell their own cars are limited. To directly correct the situation, they encourage Congress to impose a(n)

import quota.

81. Buyers that purchase dresses in Europe or calculators in Taiwan and have them shipped back to the United States for resale are engaging in

importing

83. Nordstrom sells designer suits made in Italy in its stores in the United States. Nordstrom is ____ suits.

importing

78. Purchasing products or materials in other nations and bringing them into one's own country is

importing.

88. The United States buys automobiles from Japan and Germany and petroleum products from many OPEC nations. The United States thus engages in

importing.

95. An unfavorable balance of trade occurs when

imports are greater than exports.

126. When a country's currency is devalued, this ____ the cost of foreign goods and ____ the cost of domestic goods to foreign firms.

increases; decreases

129. Because it has not been around long enough to establish itself, the Russian automobile industry could be classified as a(n)

infant industry.

130. During a stormy meeting of computer software firms, several company presidents said that without tariff cushions, many of them would go broke. They represent a new industry that needs protection until their firms grow to a size that will allow them to be competitive. Their comments are based on the

infant-industry argument.

159. CAFTA, NAFTA, OECD, and OPEC are all examples of

international economic communities.

192. The best method of learning from experience in international business is to

invest directly in a foreign country.

208. The Export-Import Bank of the United States

is an independent agency of the U.S. government.

91. When Johnson & Johnson Vision Care, Inc., located in Jacksonville, Florida, sells its ACUVUE contact lenses to people in London, England, the company

is exporting the lenses.

92. When a coffee chain in Portland, Oregon purchases coffee from Colombia, South America, it

is importing the coffee.

185. Ford Motor Company, Mazda Motor Corporation, and Matsushita Electrical Industrial Company formed a ____ to make heating and cooling units in Japan for Mazda cars beginning in 1988. The new company's heating and cooling units may also be used in Ford's cars.

joint venture

186. A ____ is a partnership formed to achieve a specific goal or to operate for a specific period of time.

joint venture

187. If Procter & Gamble and Reckitt & Colman, makers of Lysol, form a partnership to develop and distribute a disinfectant line of laundry detergent, the partnership would be a(n)

joint venture.

197. Strategic alliances and ____ are very similar.

joint ventures

180. A ____ is issued by a bank upon request of an importer stating that the bank will pay an amount of money to a stated beneficiary.

letter of credit

174. Soccer to the Masses is interested in global expansion but does not want to make a large financial commitment. Therefore, it decides to allow a Japanese company to manufacture and distribute products under the Soccer to the Masses name. This is a(n) ____ agreement.

licensing

Thomas Bernerd, Inc., manufactures and sells reclining furniture. The company currently operates in the United States but wishes to expand overseas. The company managers have been contemplating the best way to enter the foreign market. At first, the management felt it would be in the company's best interest to let a foreign company use its product and brand in exchange for a royalty. The managers recognized, however, that before the company decided on its foreign strategy it needed to think through all the steps required to enter an international market. As such, the managers believed they needed to consult with some type of agency to help their firm compete more effectively in the global marketplace. After all the research was completed, the senior managers realized that they wanted to export their product. The managers decided that the transport carrier would notify them when the merchandise was shipped. This would avoid any confusion about lost shipments and ensure better communication with the receiving parties. 63. Refer to Thomas Bernerd, Inc. Initially, the managers believed that ____ would be the best option for entering the foreign market.

licensing

178. MillerCoors allows a Canadian firm to use its name, formula, and brands in return for a royalty. This is known as

licensing.

127. Suppose a set of English bone china costing £1,000 costs $3,000 in the United States. After devaluation, the set of china costs $1,000. This change

makes the china more attractive to foreign purchasers.

213. The IDB, ADB, and EBRD are all examples of

multilateral development banks.

196. When a business has plants located in several foreign countries without ties to any specific nation or region, it is called a(n)

multinational enterprise.

203. Companies such as ExxonMobil and Mitsubishi operate on a worldwide scale without ties to any single country. These are examples of

multinational enterprises.

84. If Germany exports $100,000 of sauerkraut to Jamaica and purchases $100,000 of Blue Mountain coffee beans from Jamaica, Germany has

neither a favorable nor an unfavorable balance of trade with Jamaica.

112. Any measure imposed by a government to favor domestic products over foreign products not involving taxes is a(n)

nontariff barrier.

134. The United States does not sell fighter jets, such as F-16s, to Libya. The rationale for this restriction is most likely to

protect national security.

133. Arguments for the government imposing restrictions on foreign trade include

protection of the health of its citizens.

107. Suppose France imposes a tax on agricultural products from the United States to help its own farmers. This describes a(n)

protective tariff.

89. A small country is just beginning its international trade activities. In so doing, it wants to ____ and to develop a favorable balance of trade.

provide markets for its products

200. A trading company

provides a link between buyers and sellers in different countries.

114. An import duty has the effect of all of the following except

reducing the number of units exported.

156. The primary objective of the World Trade Organization is to

remove barriers to trade worldwide.

189. Forming a joint venture with an existing foreign company offers all of the following advantages except

requiring less commitment from all parties involved in the joint venture.

135. If the Korean government charged tariffs on Japanese automobiles and in turn the Japanese government put tariffs on Korean automobiles, Japan's major rationale for imposing these tariffs would be to

retaliate for Korea's tariffs.

106. The U.S. government imposes a tax on imported automobiles from Japan, Korea, Germany, and other foreign nations to increase government funds. This is best described as a(n)

revenue tariff.

70. The land of Narnack has very infertile soil but a large supply of oil. What action should Narnack take? Narnack should

specialize in the production of crude oil and trade this for grain and other food products.

195. The New United Motor Manufacturing, Inc., formed by Toyota and General Motors to make cars, is an example of a(n)

strategic alliance.

194. The newest forms of international business structure developed to create competitive advantage on a worldwide basis are called

strategic alliances.

103. Another name for an import duty is a(n)

tariff

104. When the United States levies a tax on textiles from India, this tax is a type of

tariff.

110. When the United States levies a tax on coffee from Colombia, this type of tax is a(n)

tariff.

165. In 1967, several Asian countries banded together to reduce the trade barriers between them and encourage trading among themselves. This is known as

the Association of Southeast Asian Nations.

163. Several European countries have banded together to reduce the trade barriers between them and encourage trading among themselves. This is known as

the European Union.

212. Mexico is experiencing balance-of-payments deficits and is seeking financial support. Mexico probably should seek assistance from

the IMF.

136. All of the following are reasons against having trade restrictions except

the protection of the health of citizens.

119. At present, the United States has an embargo against North Korea because

the two countries have extremely poor political relations.

98. A favorable balance of payments means that

total receipts exceed total payments.

190. XYZ Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own production and marketing facilities in one or more ASEAN countries. The best choice for XYZ Company is

totally owned facilities.

85. If the Land of Mercury had total exports of $150 billion and total imports of $234 billion, it had a

trade deficit.

90. An unfavorable trade balance is called a(n)

trade deficit.

93. If the United States exports $100 million worth of diamonds to the Kingdom of Mocha and imports $80 million worth of bows and arrows, it has a(n)

trade surplus.

223. ​Panama is considering instituting trade restrictions in order to balance its payments, protect new businesses, and protect domestic jobs. What may be some of the reasons it would not want to institute trade restrictions?

​Higher prices for consumers, restrictions of consumers' choices, misallocation of international resources, and loss of jobs.

225. ​NAFTA member nations include those located in

​North America.

226. ​Those who criticize NAFTA say that it has not achieved its goals and all of the following except

​it advances technology.

221. ​Germany is experiencing balance-of-payment deficits and needs a short-term loan. It will most likely turn to _____ for the loan.

​the International Monetary Fund.

222. Which of the following statements is true? The Export-Import Bank of the United States

​the International Monetary Fund.

219. ​The Inter-American Development Bank is the largest and oldest regional bank, created in 1959 by 19 Latin American countries and the United States. It is headquartered in

​the United States.

227. ​When importers and exporters do not trust one another and want to ensure that the importer receives the promised merchandise and the exporter gets paid, the go-between representative they employ is (are)

​the local domestic banks involved in international business.

224. ​While the global economy continued to grow robustly until 2007, economic performance ______.

​was sluggish then stopped in 2009.