Chapter 3: The World Marketplace: Business without Borders

A balance of payments deficit is the shortfall that occurs when:

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

In the context of international trade restrictions, offering less-favorable exchange rates to certain importers is a(n) _____.

nontariff barrier

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?

Direct investment

Which of the following is a function of the International Monetary Fund (IMF)?

It supports stable exchange rates.

Access to factors of production due to international trade:

evens out some of the resource imbalances among nations.

_____ 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.

Foreign franchising

Which of the following is a reason for companies to engage in global trade?

It reduces dependence on one economy.

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?

Nontariff barriers

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, a 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?

Quotas

Which of the following is best known as a lender of last resort to nations in financial trouble?

The International Monetary Fund

According to various research studies, which of the following is an indicator of economic growth?

The growing number of people with cell phones

Which of the following statements is true of foreign licensing?

The licensee pays a fee to the licensor.

In the context of various strategies for reaching global markets, _____ is also referred to as contract manufacturing.

foreign outsourcing

A reason why countries eliminate international trade restrictions is to:

increase jobs from foreign companies.

As access to technology skyrockets and barriers to trade continue to fall, _____.

individual economies have become more interdependent

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 _____.

sociocultural differences

In the context of barriers to international trade, variability in the level of infrastructure across nations is a(n) _____.

economic difference

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) _____.

embargo

In the context of the various strategies for reaching global markets, _____ is producing products domestically and selling them abroad.

exporting

Which of the following statements is true of the World Trade Organization (WTO)?

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

_____ refers to the chance of giving up the second-best choice when making a decision.

Opportunity cost

_____ is the overage that occurs when the total value of a nation's exports is higher than the total value of its imports.

A trade surplus

_____ refers to international trade that involves the barter of products for products rather than for currency.

Countertrade

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?

Currency exchange rate

_____ means buying products from overseas that have already been produced, rather than contracting with overseas manufacturers to produce special orders.

Importing

Which of the following statements is a difference between foreign licensing and foreign franchising?

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 is true of the debt relief program implemented by the International Monetary Fund (IMF)?

It extended 100 percent debt forgiveness to some poor countries.

In the context of international trade restrictions, nontariff barriers tend to be fairly effective because:

complaints about them can be easy to counter.

_____ 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 geographical area.

Foreign licensing

Which of the following statements best describes the balance of trade?

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

Which of the following statements is true of countertrading?

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

Which of the following statements best describes a comparative advantage?It is the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries.

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 statements best defines foreign outsourcing?

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

In the context of the various strategies for reaching global markets, which of the following statements is true of imported products?

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

Balance of payments is a measure of the:

total flow of money into or out of a country.

In the context of international trade restrictions, an embargo is:

total halt in trade with a particular nation.

If the total value of imports is higher than the total value of exports, the country has a(n) _____.

trade deficit

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.

trading bloc

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.

absolute advantage

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?

Tariffs

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?

The European Union

Which of the following is an international cooperative of 188 member countries that aims at reducing poverty in the developing world?

The World Bank

In the context of various strategies for reaching global markets, which of the following strategies represents the deepest level of global involvement?

Direct investment

_____ measure the value of one nation's currency relative to the currency of other nations.

Exchange rates

A reason why countries create international trade restrictions is to:

protect national security interests.