Chapter 03: Assignment

_____ means buying products from overseas that have already been produced, rather than contracting with overseas manufacturers to produce special orders. a. Outsourcing b. Importing c. Franchising d. Licensing

b. Importing

A reason why countries create international trade restrictions is to: a. increase jobs from foreign companies. b. protect national security interests. c. reduce prices and increase choices for consumers. d. use resources more efficiently on a worldwide basis.

b. protect national security interests.

In some western countries, eye contact during face-to-face communication is considered a sign of honesty. On the other hand, eye contact while talking is considered rude in some countries of Africa and Asia. In the context of international trading, this scenario illustrates _____. a. sociocultural differences b. economic differences c. political differences d. legal differences

a. sociocultural differences

If the total value of imports is higher than the total value of exports, the country has a(n) _____. a. trade deficit b. countertrade deficit c. exchange rate deficit d. investment deficit

a. trade deficit

According to various research studies, which of the following is an indicator of economic growth? a. Individual economies around the world turning independent b. Reduced competition in the global economy c. The decreasing population in countries d. The growing number of people with cell phones

d. The growing number of people with cell phones

Which of the following is a reason for companies to engage in global trade? a. It measures the difference between companies' exports and imports. b. It reduces the inflow of innovation. c. It reduces dependence on one economy. d. It increases resource imbalances among nations.

c. It reduces dependence on one economy.

A(n) _____ is the benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources. a. contingent advantage b. foreign direct investment c. absolute advantage d. trade surplus

c. absolute advantage

A balance of payments deficit is the shortfall that occurs when: a. the manufacturing costs of a product exceed its buying cost. b. a foreign currency obtains a greater value then a nation's own currency. c. the total debt of a country exceeds its income. d. more money flows out of a nation than into the nation.

d. more money flows out of a nation than into the nation.

The government of Sporadia learns that low-priced electronic goods from Arcadia are negatively affecting the sales of the domestic companies dealing with the same products. The Sporadian government decides to impose taxes on goods imported from Arcadia. In this scenario, which of the following trade restrictions has the Sporadian government imposed? a. Tariffs b. Voluntary export restraints c. Quotas d. Embargoes

a. Tariffs

Which of the following statements is true of foreign licensing? a. The licensee pays a fee to the licensor. b. Ownership of the firm is transferred from the licensor to the licensee. c. Licensors do not run the risk of unethical licensees becoming their competitors. d. The licensee assumes the identity of the licensor.

a. The licensee pays a fee to the licensor.

_____ refers to international trade that involves the barter of products for products rather than for currency. a. Countertrade b. Absolute trade c. Comparative trade d. Outtrade

a. Countertrade

In the context of the various strategies for reaching global markets, _____ is producing products domestically and selling them abroad. a. exporting b. outsourcing c. franchising d. licensing

a. exporting

Which of the following statements best describes a comparative advantage? a. It is the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries. b. It is the benefit a country has in a given industry when the amount of tax levied on its products is lower than the tax levied on the same products in other countries. c. It is the benefit a country has in a given industry when the amount of the products it exports exceeds the number of alternate products it imports. d. It is the benefit a country has in a given industry if it can produce more of a product than other nations using lesser amount of resources.

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

Which of the following is best known as a lender of last resort to nations in financial trouble? a. The International Monetary Fund b. The World Trade Organization c. The World Bank d. The Free Trade Committee

a. The International Monetary Fund

Which of the following statements is a difference between foreign licensing and foreign franchising? a. In foreign licensing, the licensee pays a start-up fee to the licensor, whereas in foreign franchising, the franchisee does not pay anything to the franchisor. b. In foreign licensing, the licensee does not assume the identity of the licensor, whereas in foreign franchising, the franchisee assumes the identity of the franchisor. c. In foreign licensing, the licensee assumes the identity of the licensor, whereas in foreign franchising, the franchisee does not assume the identity of the franchisor. d. In foreign licensing, the licensee does not pay anything to the licensor, whereas in foreign franchising, the franchisee pays a start-up fee to the franchisor.

b. In foreign licensing, the licensee does not assume the identity of the licensor, whereas in foreign franchising, the franchisee assumes the identity of the franchisor.

Which of the following statements best defines foreign outsourcing? a. It involves a domestic firm that grants a foreign firm the rights to use its trademark/patent in a defined geographical area. b. It means contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production. c. It is a specialized type of foreign licensing in which a firm can hire labor on a temporary basis from other country. d. It occurs when firms either acquire foreign firms or develop new facilities from the ground up in foreign countries.

b. It means contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production.

Tafensoma, a developing country, adopts a law according to which its imports require red-tape-intensive licenses. In this scenario, which of the following types of trade restrictions has the country adopted? a. Embargoes b. Nontariff barriers c. Quotas d. Trading blocs

b. Nontariff barriers

Which of the following is an international cooperative of 188 member countries that aims at reducing poverty in the developing world? a. The Estimates Committee b. The World Bank c. The Domestic Union d. Office of Treaty Settlements

b. The World Bank

Halposa, a developed country, has had armed conflicts with its neighboring country, Lemponga, for a few years. Hence, the newly elected Halposan government has decided to completely stop exporting consumer durables and electronic goods to Lemponga. In this scenario, the Halposan government wants to impose a(n) _____. a. tariff b. embargo c. quota d. octroi

b. embargo

In the context of international trade restrictions, an embargo is: a. a total halt in trade with a particular nation. b. a limitation on the amount of a specific product that may be imported from certain countries during a given time period. c. a tax levied on internationally traded products. d. a limitation on the amount of specific products that one nation exports to another nation.

a. a total halt in trade with a particular nation.

A reason why countries eliminate international trade restrictions is to: a. protect domestic industries. b. increase jobs from foreign companies. c. protect national security interests. d. retaliate against countries who engage in unfair trade practices.

b. increase jobs from foreign companies.

Hetlix Corp., a computer manufacturing firm, had its first manufacturing plant in Detroit. It built another manufacturing plant in Paris, despite the high costs involved. Which of the following strategies for reaching global markets has Hetlix Corp. adopted in this scenario? a. Exporting b. Foreign franchising c. Direct investment d. Countertrading

c. Direct investment

Which of the following statements best describes the balance of trade? a. It is a measurement of the shortfall that occurs when more money flows out of a nation than into the nation. b. It is a measurement of the value of one nation's currency relative to the currency of other nations. c. It is a basic measure of the difference between a nation's exports and imports. d. It is a basic measure of the total revenue of a nation compared to competing nations.

c. It is a basic measure of the difference between a nation's exports and imports.

A _____ refers to a group of countries that have reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations. a. strategic alliance b. foreign franchise c. trading bloc d. continental union

c. trading bloc