Chapter 3

A bill of lading is defined as:

A document issued by a transport carrier to an exporter to prove that merchandise has been shipped.

Which countries are the United States' best trading partners for U.S. exports?

Canada and Mexico

The United States is efficient at producing software and engineering services, but cannot produce clothes and electronics as efficiently as other nations. As such, the United States sells software and engineering services to other countries and buys clothes and electronics. This is an example of:

Competitive Advantage

Brazil has excellent resources and expertise to farm and produce coffee beans, whereas the United States is ill-suited for the production of coffee. Brazil should:

Continue to produce coffee and trade it for U.S. products Brazil needs and cannot produce.

The selling of products in a foreign country at lower prices than those charged in the producing country is called:

Dumping.

A country may attempt to protect its own domestic industries by imposing a(n) _____, a type of tax, on imported products.

Import duty (tariff)

A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation is known as:

Licensing

What is the famous principle of the General Agreement on Tariffs and Trade (GATT), which means that each member nation is to be treated equally by all contracting nations?

Most-favored-nation status (MFN)

A firm that operates on a worldwide scale without ties to any specific nation or region is known as a:

Multinational enterprise.

Sub-Saharan Africa is home to __________ of the top-ten fastest-growing economies in the world.

Seven

According to the International Monetary Fund (IMF), what are the world economic growth projections?

The IMF predicts a gradual global growth in both advanced and developing countries.

Which of the following agreements, when ratified, created a free trade area among the United States, Mexico, and Canada?

The North American Free Trade Agreement (NAFTA)

The organization established by the Uruguay Round of the GATT, whose purpose is to mediate trade disputes among nations is called:

World Trade Organization (WTO)

Which of the following is a reason for trade restrictions?

b. Protection for new or weak industries

Currency devaluation ___________ the cost of foreign goods and _______ the cost of domestic goods to foreign firms.

increases; decreases

A country with a trade surplus generally has a favorable balance of payments, which means:

the country is receiving more money from trade with foreign countries than it is paying out.