Ch3 test questions
Canada exports $2,000,000 worth of oil to the United States and the United States exports $500,000 worth of music CDs to Canada. The U.S. has a(n) import deficit. balance of payments. oil embargo. trade deficit.
trade deficit.
In order to avoid the difficulties surrounding importing and exporting, Mary's may sell its mittens to a _______ which will sell them to buyers in another country. international bartering agency trading company foreign exchange company counter trade
trading company
The purpose for forming the Organization of Petroleum Exporting Countries (OPEC) was to effectively increase the supply of oil. was to create a collective-bargaining unit. was to terminate oil supplies to the West. was to drive up the cost of oil.
was to create a collective-bargaining unit.
Thelma and Louis are discussing the U.S. trade situation and Louis correctly states that in 2008, U.S. exports as a percentage of GDP exceeded 25 percent. were at the highest levels since the early 1900s. were unstable. were at the lowest since 1900.
were at the highest levels since the early 1900s.
Dilbert has been reading about the Kennedy Round, Tokyo Round, Uruguay Round, and Doha Round. Dilbert is reading about A. negotiations sponsored by the European Union B. CAFTA negotiations C. negotiations sponsored by GATT to reduce trade restrictions D. NAFTA agreements
C. negotiations sponsored by GATT to reduce trade restrictions
The Commonwealth of Independent States is composed of 11 republics of the former United Arab Emirates. United States of America. United Kingdom. Soviet Union.
Soviet Union.
When Mary's Mittens sells and ships mittens to other nations it is called exporting. embargo. trade deficit. importing.
exporting.
A tariff is another name for a(n) import duty. limitation. devaluation tax. quota.
import duty.
John decides he wants to learn the most he possibly can about international business by experiencing it. To do this, what would be the best method of entering international business? A. Direct investment in a foreign country B. Start an export business C. Start an import business D. Create a joint venture with a business in a foreign country
A. Direct investment in a foreign country
Markley Textiles opened in 1984 and traded with GATT member nations. The CEO 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 products in several nations due to the high tariffs placed on textiles. What is the most likely reason for the predicament faced by Markley Textiles? A. Elimination of tariffs on textiles was passed in the Uruguay Round. B. The Tokyo Round was completed in 1979. C. She misunderstood the purpose of GATT. D. The Kennedy Round, which was held in 1964 was only effective for five years.
A. Elimination of tariffs on textiles was passed in the Uruguay Round.
Some of the reasons a nation may elect not to establish trade restrictions include: A. Higher prices for consumers and restriction of consumers' choices B. Misallocation of international resources and lower prices for consumers C. Trade deficits and inflation D. Loss of jobs and expansion of consumers' choices
A. Higher prices for consumers and restriction of consumers' choices
If Poland, a Central European nation, had needed a bank loan in 1993 to engage in reconstruction and development, which bank would it most likely have gone to? A. The European Bank for Reconstruction and Development B. The Federal Reserve Bank C. The Inter-American Development Bank D. The World Bank
A. The European Bank for Reconstruction and Development
Fred and Aster have a dance shoe business. They are considering exporting their shoes and wonder about how many companies in the United States export to foreign countries. Fred researches this question and discovers that A. about one-third of the companies in the United States export to foreign countries. B. exporting to foreign countries is very rare for U.S. businesses. C. although online sales have increased sales abroad, exporting is still mostly done by large corporations. D. about one-fourth of the companies in the United States export to foreign countries.
A. about one-third of the companies in the United States export to foreign countries.
If Taiwan exports $100,000 of electronics to Jamaica and purchases $100,000 worth of coffee beans from Jamaica, Taiwan has A. neither a favorable nor an unfavorable balance of trade with Jamaica. B. an unbalanced trade with Jamaica. C. a favorable balance of trade with Jamaica. D. an overall unfavorable balance of trade with Jamaica.
A. neither a favorable nor an unfavorable balance of trade with Jamaica.
Suppose amber earrings, when purchased in Poland where they were made, cost 300 zl. in Poland and cost $100 in the United States. After devaluation, the set of earrings costs $50 USD. This change A. makes the earrings undesirable to foreign purchasers. B. makes the earrings neither more nor less attractive to foreign purchasers. C. makes the earrings more attractive to foreign purchasers. D. makes the earrings less attractive to foreign purchasers.
C. makes the earrings more attractive to foreign purchasers.
Myrtle flies from her home in the United States to Ireland on a Lufthansa airline and stays in the Four-leaf Hotel. She buys many wool sweaters from Ireland to take home. In regards to the economy, she is A. creating an absolute advantage B. contributing to the negative balance of payments C. causing an imbalance in the sweater market in the United States D. a facilitator
B. contributing to the negative balance of payments
Harry and his father, Harold, were sitting on the porch discussing the difference between being in business during Harold's youth, before World War II, and today. One of the changes they noted was that A. everything that could be made has already been made and sold. B. international trade has increased steadily since World War II. C. trading internationally has become more heavily regulated and restricted by all countries. D. no restrictions are placed on trade today.
B. international trade has increased steadily since World War II.
Harry's House of Imports forms a joint venture with Sing Lu Merchandise, a Chinese company located in Hong Kong. Harry's may have entered the joint venture because it offered all of the following advantages except A. Harry's would be joining an established firm. B. it requires less commitment from all parties involved in the joint venture. C. it provides control over product attributes. D. it provides immediate marketing knowledge.
B. it requires less commitment from all parties involved in the joint venture.
If Mexico imposed an import duty on coffee beans it would have the effect of all of the following except A. protecting the Mexican coffee bean industry from competition. B. reducing the number of units exported. C. reducing the pounds of coffee beans imported into Mexico. D. raising the price of the product in Mexico.
B. reducing the number of units exported.
The go-between representatives employed by importers and exporters to ensure that the exporter is paid and the importer receives payment are A. the World Trade Federation of Importers and Exporters. B. the local domestic banks involved in international business. C. the World Court. D. international trade organizations.
B. the local domestic banks involved in international business.
Several businesspersons are discussing their businesses and all assert that they have international businesses. Which of the following is not considered an international business? A. A computer chip manufacturer in Mexico selling its processors to a computer manufacturer in Korea. B. A large amber jewelry store in Poland purchasing silver from a mining operation in Nevada in the United States. C. A tire manufacturer in Kentucky that sells its tires to a Toyota plant in South Carolina. D. A Chinese manufacturer selling toys to a large toy retailer in England.
C. A tire manufacturer in Kentucky that sells its tires to a Toyota plant in South Carolina.
Mary's Mittens wants to enter the international market. Which of the following options is not one of the steps it needs to take? A. Set export prices and payment terms, methods, and techniques B. Identify key foreign markets of Mary's Mittens products C. Contact the local government to ask it to waive taxes on trade D. Create an overseas distribution network
C. Contact the local government to ask it to waive taxes on trade
An Asian nation has no absolute advantage in oil, gas, or minerals but it does manufacture high-quality small-quantity oil tankers to access narrow, shallow river and ocean ports. Which of the following statements is true? A. The Asian nation has a relative advantage in the production of small-quantity oil tankers. B. The Asian nation has an absolute advantage in the production of small-quantity oil tankers. C. The Asian nation has a comparative advantage in the production of small-quantity oil tankers. D. The Asian nation has a disadvantage advantage in the production of small-quantity oil tankers.
C. The Asian nation has a comparative advantage in the production of small-quantity oil tankers.
A nontariff barrier is A. an import barrier requiring importers to pay a fee for the privilege of importing B. difficult to enforce C. any measure imposed by a government to favor domestic products over foreign products not involving taxes D. any measure that keeps products from other nations from entering the United States
C. any measure imposed by a government to favor domestic products over foreign products not involving taxes
The accomplishments of NAFTA include all of the following except A. resulting in increased sales, new partnerships, and new opportunities. B. creating high-paying export-related jobs. C. reducing labor standards and decreasing payroll demands. D. contributing to significant increases in trade and investment.
C. reducing labor standards and decreasing payroll demands.
To start exporting at the most basic level, a merchant should A. begin by exporting to Canada and Mexico. B. open a store in another nation. C. sell the company's products to an export-import merchant. D. license the rights to produce the product to a foreign producer.
C. sell the company's products to an export-import merchant.
Terry operates a very successful business renting out moving and storage pods. The pods are rectangular storage containers that vary in size from 25 feet long to 12 and a half feet long. They are all of the same height and width and designed to be carried easily on a flat-bed truck and lifted onto racks in a storage warehouse where they are kept until the owners ask for them. He 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 pods 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 Mexico Viet Nam China
Canada
NAFTA was built on the ______. General Agreement on Tariffs and Trade World Trade Organization Canadian Free Trade Agreement European Union agreement
Canadian Free Trade Agreement
Mary's Mittens would like to export its mittens to the largest emerging Asian market. To do this it will export to Indonesia. Korea. China. Japan.
China.
In international trade, one nation may have the ability to produce a specific product more efficiently than any other nation. Georgina and Alex, are required to create a YouTube presentation for a business class. The presentation is about international trade. Georgina can create animated YouTube videos 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. Alex is an excellent public speaker and can create equally excellent YouTube videos. Georgina and Alex agree to divide the work—Georgina will create the YouTube and Alex will prepare the speech and essay that are to accompany the presentation. What advantage does Alex have over Georgina in preparing the presentations? Relative advantage Comparative advantage Cooperative advantage Absolute advantage
Comparative advantage
Jada Chan, an immigrant from Viet Nam, would like to start a wholesale Vietnamese dry goods business in the United States. She has contacts in the fashion production business in Viet Nam and feels she can utilize these contacts to purchase dry goods to sell in her stores in the United States. She calls one of her contacts and after extensive negotiation, makes a deal: she will buy Vietnamese dry goods to sell wholesale to Vietnamese retail stores in the United States. What is the business relationship between Chan and her Vietnamese contact? A. Chan and her contact have a strategic alliance. B. Chan and her contact have a joint venture. C. Chan is the licensee and the contact is the licensor. D. Chan is an importer and the contact is an exporter.
D. Chan is an importer and the contact is an exporter.
Sherman is having difficulty with currency exchanges and fluctuations in the currency exchange rates. He has lost money in three international business transactions due to these problems. Because he is afraid of suffering greater losses, he has at times considered closing down his international operations to restrict his business to operate exclusively in the United States. Where can he go for assistance with currency exchange problems? A. A multilateral development bank B. Export-Import Bank of the United States C. International Monetary Fund D. His bank, if it is a large international bank
D. His bank, if it is a large international bank
Toy manufacturers in Japan are dumping electronic toys in France. What will happen to the French electronic toy manufacturers if the French government allows this dumping to continue? A. They will stop buying Japanese electronic toys and start buying electronic toys made in Germany. B. They will open electronic toy stores in Japan to compete. C. They will lower their prices to compete. D. They will be put out of business because they will be unable to compete with the prices.
D. They will be put out of business because they will be unable to compete with the prices.
Lucretia is opening a business that makes unique tables and chairs from tropical woods. She is considering exporting these tables and chairs 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? A. The Advocacy Center and Trade Information Center B. U.S. Export Assistance Centers and U.S. and Foreign Commercial Services C. International Trade Administration and U.S. Commercial Service D. U.S. Department of Commerce and U.S. Department of Interior
D. U.S. Department of Commerce and U.S. Department of Interior
Although it lacks sources of hops and olive oil, Hagen Road Vineyards, vintner of Hagen Road Red, has a plentiful supply of cabernet sauvignon grapes for its wineries which means it has a A. no comparative or absolute advantages. B. disadvantage in wine production. C. relative advantage in wine production. D. comparative advantage in wine production.
D. comparative advantage in wine production.
Businesses in Germany have approached its government leaders and requested trade restrictions. The leaders review the nation's trade situation and elect to impose restrictions. The leaders most likely did this to A. restrict consumers' choices. B. prevent German products from being sold abroad. C. raise prices for consumers. D. equalize the nation's balance of payments.
D. equalize the nation's balance of payments.
A producer may decide not to use licensing as a means of expanding his brand because A. it provides no compensation for the original producer. B. it is a relatively inexpensive way to enter the international market. C. licensing will give the original producer experience with a foreign market. D. if quality is compromised, it will reflect poorly on the company providing the license.
D. if quality is compromised, it will reflect poorly on the company providing the license.
The period from pre-2007 to 2009 created an interesting economic landscape for, while the global economy continued to grow robustly until 2007, economic performance was ___ and then stopped in 2009. A. continuing at a gradual pace B. advancing then stalling then advancing then stalling C. rapidly advancing D. sluggish
D. sluggish
The _____ was an economic community started by France, Germany, Belgium, Italy, the Netherlands, and Luxembourg. European Summit North Atlantic Free Trade Agreement Euro Economic Alliance European Union
European Union
With its roots in a succession of banking and currency agreements, the ___ was formed by several European countries to reduce the trade barriers between them and encourage trading among themselves. European Parliament European Union World Money Fund North Atlantic Trade Organization
European Union
Following World War II, an international organization involving 22 countries and the United States was formed to reduce or eliminate tariffs and other barriers to world trade. This organization is called the Tokyo Round. European Union. GATT. Eastern European Summit.
GATT.
The North American Free Trade Agreement includes all of the following nations except Guatemala. Canada. Mexico. United States.
Guatemala.
Amir immigrated to the United States and operates a chain of clothing shops. He would like to expand the business internationally and is considering businesses in different nations as trade partners. 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? Thailand Japan India China
India
The main purpose of the _____ is to promote exchange rate stability ad assist in establishing a multilateral system of payments. Federal Trade Commission International Monetary Fund Inter-American Development Bank World Bank
International Monetary Fund
The nation of Georgia was absorbed into the U.S.S.R. in 1921 and regained its independence when the Soviet Union dissolved in 1991. While under U.S.S.R. control, it 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 problems with corruption, poor tax collection, and labor which make it difficult to attract foreign investment; however, the government has made strides to improve the business climate through fiscal and legislative reforms. Georgia would like to continue to improve as an open-market economy and would eventually like to join the European Union. Where could its leaders go to obtain assistance with financial and technical support? European Union United Nations International Monetary Fund Bank of Europe
International Monetary Fund
If Greece experienced balance-of-payment deficits and needed a short-term loan, which bank would it most likely turn to for assistance? Bank of Europe. International Monetary Fund. Bank of America. European Bank for Reconstruction and Development.
International Monetary Fund.
If a company wants to explore commercial opportunities in a foreign nation and needs to consult a country expert, the company should consider seeking assistance from the Federal Trade Commission. European Union. International Trade Administration. International Bank.
International Trade Administration.
If Japan was regarded as the best vehicle manufacturer in the world, what would be true? Japan would have an absolute advantage in vehicle production. Japan would be sanctioned with trade embargos. Japan would sell more cars than any other nation. Japan would have a positive balance of trade.
Japan would have an absolute advantage in vehicle production.
PQR Industries would like to export to the two top export partners of the United States. To do this it will export to Hawaii and Alaska. Mexico and Canada. Russia and Korea. Cuba and Dominican Republic.
Mexico and Canada.
Alexis works at a coffee shop that permits the sports teams from the local high school to sell promotional items and toys from a booth in the corner of the shop. All profits from these sales are retained by the teams. The teams took top places in their state championships due to their increased ability to purchase training equipment. The mathletes, chess club, and other school clubs would like to sell items through the coffee shop as well. Alexis talks to her manager 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 booth in the coffee shop, but they cannot sell food items, and will have to pay the restaurant 20% of their profits. Many of the organizations are discouraged from selling items through the coffee shop due to the high percentage of profits they would have to hand over to the restaurant. Later, Alexis attended a business seminar on trade restrictions. During the seminar, the speaker spoke about trade restrictions placed on imports to limit particular foreign products from entering a country. As she thinks about the lecture, she realizes that if you compared the restaurant to the government, the coffee shop 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 Alexis is comparing the shop's actions to? Embargo Nontariff barriers Revenue tariffs Protective tariff
Revenue tariffs
Gonzalez Teaching Supplies, a limited liability company (LLC), makes educational supply packets for Spanish-speaking elementary school students in the United States. The members of the LLC would like to help educate children in Mexico and have discussed the lack of educational supplies in many of the schools there. They would like to export the educational supply packets they make to Mexico and other Latin American nations. They have been operating in the United States for eight years but will need an $800,000 short-term loan to produce goods for the Mexican and Latin American markets. Which of the following agencies would be a viable loan source? The Inter-American Development Bank World Bank Small Business Administration Ex-Im Bank
Small Business Administration
If the United States restricted the amount of Greek drachma currency that could be purchased or sold in the United States due to the instability of that currency it would be imposing a currency devaluation. foreign embassy control. foreign market control. foreign-exchange control.
foreign-exchange control.
Toyota built production lines in the United States and by doing so engaged in what type of international expansion? Export-import Totally owned facilities Wholly owned subsidiary Strategic alliance
Totally owned facilities
Mary's Mittens is having difficulty working its way through the export process. The owners could contact the ____ which provides assistance in export marketing and trade finance. U. S. Export Assistance Centers GATT Trade Information Center World Trade Organization
U. S. Export Assistance Centers
If a U.S. company has a claim for unfair treatment by a foreign government, which of the following organizations may it contact to request mediation? OPEC WTO GATT NLRB
WTO
Lichtenstein wants to buy aircraft from the United States and the United States wants to export its aircraft. To complete the sale, the two countries may work through the ___ to remove preset trade barriers to enable Lichtenstein to make the purchase. LAFTA NRA IRS WTO
WTO
The primary objective of the ____ is to remove barriers to trade worldwide. WHY WAM WTO WHO
WTO
Which of the following banks was established in 1944 and offers low-interest and interest-free credit to developing countries? Federal Reserve Bank Import-Export Bank World Bank Wells Fargo Bank
World Bank
What is the name of the international trade organization that succeeded GATT? World Trade Organization. European Union. United Nations. North American Free Trade Agreement.
World Trade Organization.
If a new nation in Africa needed a loan to help it grow, it would most likely go to ___, which is an internationally supported bank created for this purpose. the European Union Bank of America the United Nations a multilateral development bank
a multilateral development bank
Acapella Karaoke is known for its ability to produce karaoke machines more efficiently than any other company in the world. The company must have a(n) ____ advantage. absolute comparative total occasional
absolute
Thelma and Louis are discussing international trade. Thelma accurately notes that U.S. exports to developing and newly industrialized countries have levelled since 1900. are prohibited by the United States. are on the rise. have declined since World War II.
are on the rise.
Freddy's Transport issues a ____ to an exporter to prove merchandise has been shipped. draft bill of lading confirmation invoice
bill of lading
When Mary's Mittens gives its shipment of mittens to the carrier transporting the merchandise, the carrier will provide Mary's with evidence of the shipment in a document called a shipping confirmation. letter of credit. bill of lading. receipt.
bill of lading.
A newly formed country in Oceania has no high tariffs but other countries find it difficult to trade with it because of its extensive labeling, product testing, and certification requirements. These restrictions can best be classified as import quotas. trade deficit. bureaucratic red tape. trade embargos.
bureaucratic red tape.
Jerry's Auto is inefficient at producing ball bearings but it can produce valves more efficiently than any other product. Jerry's has a(n) disadvantage. absolute advantage. comparative advantage. primary advantage.
comparative advantage.
When the Greek drachma was devalued due to economic instability in the country, the cost of foreign goods increased and the cost of domestic goods to foreign firms ____. devalued. increased. decreased. remained constant.
decreased.
Mandy's Microscopes sells its products in educational supply and toy stores in the United States. In order to make the microscopes more inexpensively but still to Mandy's specifications, Mandy's opens a totally owned facility oversees. This facility is an example of importing. a joint venture. a licensing agreement. direct investment.
direct investment.
In order for an importer to pay the exporter, the exporter's bank will issue a ___ ordering the importer's bank to pay for the merchandise. credit card license draft letter of credit
draft
Chung Chu exports large quantities of cheap futon beds to the United States at a price lower than that charged for the same product made in the U.S. He is now being charged with dumping. spilling. embargoing. exporting.
dumping.
If five South American countries joined together to form the South American Union to increase trade among the five member nations, this would be an example of a(n) trade summit. peace accord. economic community. trade union.
economic community.
During the 1970s, the Middle Eastern oil-producing nations belonging to OPEC joined together to ban exports of oil to the United States. This action is called a(n) embargo. import ban. trade deficit. export embargo.
embargo.
Jose just bought a hotel in Mexico City. He would like to attract more American tourists to his hotel and has heard that he could possibly obtain a licensing agreement with Holiday Inn and put that name on his hotel. This licensing agreement is similar to franchising. establishing a new business. creating a sales office in a foreign country. wholesaling.
franchising.
If the United States limited the quantity of Russian vodka that could be brought into the country for the next five years this is called an export duty. export quota. import quota. import duty.
import quota.
If the United States wanted to reduce the dollars flowing out of the country, it could limit the number of Japanese trucks being imported by imposing an export quotient. import quota. export quota. import embargo.
import quota.
Javier, a Mexican national, buys products and materials in the United States and takes them to Mexico to sell. Javier is engaged in dumping. importing. trading. exporting.
importing.
A business that has a product that is designed in the United States, manufactured with components from Japan, Korea, and several other Asian countries, and assembled in China provides a good example of international protectionism. self-determination. independence and interconnectedness. growth.
independence and interconnectedness.
Suppose that during a meeting of the 3-D printing firms, several company presidents said that without tariff cushions, many of them would go bankrupt. The 3-D printing industry is new and the firms need time to grow to a size that will allow them to be competitive. Their comments are based on the infant-industry argument. national security argument. economic equity and protection argument. importing quota argument.
infant-industry argument.
The United States placed a very high tax on cars imported from Japan to benefit the U.S. auto industry. What type of tax has the U.S. Government imposed on Japanese vehicles? embargo nontariff barrier protective tariff export duty
protective tariff
Hilton has hotels in Germany that, while they bear the Hilton name, do not have all of the amenities or services that are standard in Hilton Hotels in the United States. A patron questioned why the services varied from the U.S. Hiltons and was told that the hotel was owned by a company in Germany. The German company most likely has a _____ with Hilton. merger joint venture exporting agreement licensing agreement
licensing agreement
Further Horizons, an international travel agency, wants to expand its reach into more nations to create a network of agencies but needs to limit its capital expenditures. Its best option for entering the foreign market is creating a joint venture. exporting. renting. licensing.
licensing.
When two firms have a contractual agreement in which one gives permission to the other to produce and market its product and brand name in exchange for a fee this is called licensing. trade balancing. exporting. price gouging.
licensing.
The United States does not sell military technology to countries with which it is at war. The rationale for this restriction is most likely to protect domestic manufacturers. protect the health of U.S. citizens. raise the price for these technologies. protect national security.
protect national security.
If China charges tariffs on Korean automobiles and in turn the Korean government put tariffs on Chinese automobiles, Korea's major rationale for imposing these tariffs would be to lower prices to consumers. protect the Korean automobile industry. retaliate for China's tariffs. raise tax dollars.
retaliate for China's tariffs.
The Brazilian government imposed a tax on software being sold in Brazil as a means of generating income for the government. This is most likely a import duty. embargo. nontariff barrier. revenue tariff.
revenue tariff.
New United Motor Manufacturing, Inc. was formed by Toyota and General Motors to make automobiles for both firms. This is the newest form of international business structure and is called a partnership. joint venture. courtship. strategic alliance.
strategic alliance.
If Indonesia needed a loan to encourage the nation's economic progress, it would most likely get a loan from China. the European Union. the World Bank. the Asian Development Bank.
the Asian Development Bank.
Jamaica is experiencing balance-of-payment deficits and is seeking financial support. Jamaica should probably seek assistance from the International Monetary Fund. the World Bank. the United Nations. the Export-Import Bank of the United States.
the International Monetary Fund.
Where is the Inter-American Development Bank headquartered? Brazil. Mexico. the United States. Honduras.
the United States.
