Chapter 03: Concept Check Quiz

In the context of various strategies for reaching global markets, which of the following strategies represents the deepest level of global involvement? a. Direct investment b. Exporting c. Franchising d. Foreign licensing

a. Direct investment

_____ is a specialized type of foreign licensing in which a firm expands by offering businesses in other countries the right to produce and market its products according to specific operating requirements. a. Foreign franchising b. Foreign socialization c. Foreign bartering d. Foreign exchange

a. Foreign franchising

Which of the following is the world's largest common market, which is composed of 28 nations and more than half a billion people, and boasts a combined gross domestic product (GDP) of nearly $17 trillion? a. The European Union b. The General Agreement on Tariffs and Trade c. The International Monetary Fund d. The World Bank

a. The European Union

In the context of barriers to international trade, variability in the level of infrastructure across nations is a(n) _____. a. economic difference b. sociocultural difference c. political difference d. legal difference

a. economic difference

In the context of various strategies for reaching global markets, _____ is also referred to as contract manufacturing. a. foreign outsourcing b. foreign direct investment c. foreign franchising d. foreign licensing

a. foreign outsourcing

Balance of payments is a measure of the: a. total flow of money into or out of a country. b. value of a nation's currency relative to the currency of other nations. c. difference between debt expenses and funds obtained through assets. d. expenses related to labor and resources.

a. total flow of money into or out of a country.

_____ involves a domestic firm granting a foreign firm the rights to produce and market its product or to use its trademark/patent rights in a defined geographocal area. a. Countertrading b. Foreign licensing c. Gross private domestic investment d. Geographical-bound investment

b. Foreign licensing

_____ refers to the chance of giving up the second-best choice when making a decision. a. Prospective cost b. Opportunity cost c. A trade deficit d. A trade surplus

b. Opportunity cost

In the context of the various strategies for reaching global markets, which of the following statements is true of imported products? a. They refer to the creation of duplicates of huge profit-making products. b. They don't carry the brand name of the company buying them. c. They are grown domestically when new facilities are developed in foreign countries. d. They need foreign licensing and foreign franchising.

b. They don't carry the brand name of the company buying them.

_____ is the overage that occurs when the total value of a nation's exports is higher then the total value of its imports. a. Price elasticity of demand b. An income deficit c. A trade surplus d. Opportunity cost

c. A trade surplus

_____ measure the value of one nation's currency relative to the currency of other nations. a. Joint venture assets b. Restructured values c. Exchange rates d. Voluntary export limits

c. Exchange rates

In the context of international trade restrictions, nontariff barriers tend to be fairly effective because: a. complaints about them are always easy to prove. b. they include quotas levied against exports. c. complaints abou them can be easy to counter. d. they include taxes levied against imports.

c. complaints about them can be easy to counter.

Access to factors of production due to international trade: a. increases the dependence of international firms on a single economy. b. stops economic meltdowns from spreading across nations. c. evens out some of the resource imbalances among nations. d. inhibits the growth of innovation.

c. evens out some of the resource imbalances among nations.

As access to technology skyrockets and barriers to trade continue to fall, _____. a. global economies are marked by the absence of shifting opportunities b. the global economic competition has declined c. individual economies have become more interdependent d. the long-term potential for foreign firms has declined

c. individual economies have become more interdependent

In the context of international trade restrictions, offering less-favorable exchange rates to certain importers is a(n) _____. a. export restraint b. trading bloc c. nontariff barrier d. embargo

c. nontariff barrier

Before entering a foreign market, which of the following is a key factor that should be considered to evaluate the local economic conditions of the country? a. Inflation rate b. Government policies c. Human development index d. Currency exchange rate

d. Currency exchange rate

Which of the following statements is true of the debt relief program implemeted by the International Monetary Fund (IMF)? a. It helped some poor countries with huge debts by instructing the other member nations to invest in them. b. It provided monetary help at zero percent interest to poor countries. c. It stretched the clearance deadline for all debts held by poor countries without applying additional interest rates. d. It extended 100 percent debt forgiveness to some poor countries.

d. It extended 100 percent debt forgiveness to some poor countries

Which of the following statements is true of countertrading? a. It tends to decrease barter opportunities during economic downturns. b. It is limited to barter agreements involving the purchase of goods in exchange of currency. c. It seeks foreign customers through franchising and direct investment. d. It is a powerful tool for gaining customers and products that would not otherwise be available.

d. It is a powerful tool for gaining customers and products that would not otherwise be available.

Which of the following statements is true of the World Trade Organization (WTO)? a. During disputes, it does not bind the parties involved to comply with its decisions. b. It works toward eliminating free trade so that local businesses do not face economic failures. c. It promotes the use of nontariff barriers among the member countries of the General Agreement on Tariffs and Trade. d. It monitors the provisions of the General Agreement on Tariffs and Trade agreements.

d. It monitors the provisions of the General Agreement on Tariffs and Trade agreements.

Which of the following is a function of the International Monetary Fund (IMF)? a. It monitors provisions of the GATT agreements. b. It settles legal disputes submitted to it by member nations. c. It provides technical advice to the governments of developing countries for projects in a range of areas. d. It supports stable exchange rates.

d. It supports stable exchange rates.

The government of Ledroy Coast, an island country, has imposed restrictions on the number of cars that can be imported in one year from Randavia, leading car manufacturing country. This has helped the domestic car manufacturers of Ledroy Coast in increasing their market share. Which of the following trade restrictions has the government of Ledroy Coast imposed in this scenario? a. Tariffs b. Embargoes c. Voluntary export restraints d. Quotas

d. Quotas