Chapter 4

Currencies that can be easily converted into other currencies are called soft currencies.

False

Gross domestic product (GDP) growth in the United States is higher than GDP growth in any other country.

False

U.S. sugar producers welcomed the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) because relaxed trade rules with Central America drove prices higher.

False

Describe the Chinese term guanxi. What are some advantages and disadvantages of foreign business people to practice guanxi when conducting business in China?

Guanxi is the Chinese word for "connections" or "relations" and involves making business and personal connections with local companies and officials.​ The concept of guanxi is a local custom, and companies and officials may expect foreign companies to seek their advice and expertise to navigate the complicated business environment in China. Advantages: Business is never discussed during dinner, which is a time to get better acquainted, and to see how well everyone can know, like, and trust each other. Disadvantages: Some say that foreigners who do business in China and tout their "connections" are overrated—and that guanxi can take generations and years to develop.

Jason has to make a deal with a Chinese company. When he is in China, he learns that it is customary to spend money getting to know the other businessmen and building trust. If he participates in this custom, which of the following is he violating?

The Foreign Corrupt Practices Act

Discuss why the World Trade Organization (WTO) has been the object of controversy in recent years. What concerns have been expressed?

The WTO has become increasingly controversial in recent years as it issues decisions that have implications for working conditions and the environment in member nations. Concerns have been expressed that the WTO's focus on lowering trade barriers encourages businesses to keep costs down through practices that may increase pollution and human rights abuses.

A U.S. company operating in the European Union (EU) is required to adhere to European regulations, such as mandatory vacation time.

True

Countertrade is another term for international bartering.

True

The United States has an international trade deficit in the sale and purchase of goods but a trade surplus in services.

True

The WTO makes decisions that are binding on member nations involved in disputes.

True

Which of the following would result from devaluation of the U.S. dollar?

U.S. goods would sell for less abroad.

By allowing a company to purchase another existing company in the host country, a(n) _____ permits a largely domestic business to gain an international presence very quickly.

acquisition

A country's department of trade and commerce decides to regulate imports from a neighboring country in order to curb the exit of large amounts of domestic capital. This is an example of a(n)

exchange control.

Countries establish a(n) _______________ where they can trade among themselves without trade barriers.

free trade area

A(n) _______________ uses a standardized product and marketing strategy worldwide.

global business strategy

A(n) _______________ allows a company to share risks, costs, profits, and management responsibilities with another company.

joint venture

A country with a balance of payments surplus means

monetary inflow exceeds monetary outflow.

Relocation of business processes to a lower-cost location overseas is known as

offshoring.

All of the following constitute a country's infrastructure EXCEPT

political climate.

A(n) _______________ is a tax levied on imported products.

tariff