Ch.3 The Global Environment (Test Prep)

Which is a function of the World Trade Organization? A. It is the only international organization dealing with the rules of trade between nations. B. It guarantees the free trade of finances and goods between member nations. C. It ensures that currency exchange rates maintain stability. D. It sets currency exchange rates. E. It provides monetary assistance to countries that are in debt.

A. It is the only international organization dealing with the rules of trade between nations. (The World Trade Organization (WTO) regulates trade among participating countries and helps importers and exporters conduct their business.)

Smith Brothers, a furniture manufacturer based in North Carolina, has tie-ups with raw material suppliers and shipping companies who provide Smith Brothers a uniform pricing option across the United States. Despite the cost of production and distribution being the same across the United States, Smith Brothers charges more for its products on the West Coast than in other parts of the United States. Which of the following acts prohibits this practice? A. Robinson-Patman Act B. Credit Card Accountability, Responsibility, and Disclosure Act C. Sherman Antitrust Act D. Wheeler-Lea Amendment E. Telephone Consumer Protection Act

A. Robinson-Patman Act

If the economy of a country contracts and people lose jobs A. consumer confidence decreases. B. the GDP per capita in the country remains constant. C. the purchasing power of the population increases. D. consumers tend to spend more money. E. inflation rises.

A. consumer confidence decreases. (Consumers purchase more when consumer confidence is high because they feel more secure in their jobs. If the economy contracts and people lose jobs, consumer confidence decreases, leading to more saving and less spending.)

Indirect competition occurs when A. products provide alternative solutions to the same market. B. customers do not prefer one product over another. C. competition is not established between two companies in the same industry. D. multiple products compete for the same market. E. a pioneer faces competition from late entrants to an industry.

A. products provide alternative solutions to the same market.

The _____ authorizes the Federal Trade Commission to restrict unfair or deceptive acts. A. Sherman Antitrust Act B. Wheeler-Lea Amendment C. Telephone Consumer Protection Act D. Credit Card Accountability, Responsibility, and Disclosure Act E. Robinson-Patman Act

B. Wheeler-Lea Amendment

How the value of one country's currency changes in relation to the value of other currencies is the premise behind A. value fluctuation. B. currency fluctuation. C. currency expectation. D. value exchange. E. currency exchange.

B. currency fluctuation. (Currency fluctuation refers to how the value of one country's currency changes in relation to the value of other currencies. Currency fluctuation can impact how firms market products internationally.)

The higher percentage of U.S. exports to Canada and Mexico rather than to other individual countries can be attributed to the A. Dominican Republic-Central America Free Trade Agreement. B. International Monetary Fund. C. North American Free Trade Agreement. D. World Trade Organization. E. European Union.

C. North American Free Trade Agreement. (The North American Free Trade Agreement (NAFTA) established a free trade zone among the United States, Canada, and Mexico. Its goal was to eliminate barriers to trade and investment among the three countries.)

Assuming that a kilo of corn sold for $1 in 2010 and $3 in 2018, which of the following can be inferred? A. The economy of the country is currently in recession. B. The inflation has decreased over the years. C. The purchasing power of the consumers has decreased. D. The GDP has increased over the years. E. The level of consumer confidence in the country has decreased.

C. The purchasing power of the consumers has decreased. (From the given scenario, we can infer that the purchasing power of the consumers has decreased. Purchasing power is the amount of goods and services that can be purchased for a specific amount of money. For example, if the price of gasoline goes up 10 percent this year, the amount of gasoline you can purchase for $20 decreases by that same 10 percent. Three decades ago, $10 might have filled up your tank as average gas prices in the late 1980s were below $1 per gallon.)

Why do marketers tend to target educated consumers? A. They have very low levels of disposable income. B. Their earnings are similar to those who are not educated. C. They are more likely to comprehend an advertising message. D. They are hard to please and cannot be convinced easily.

C. They are more likely to comprehend an advertising message. (Educated consumers are likely to earn significantly more money throughout the course of their lifetime and comprehend an advertiser's message more readily, making them prime targets for marketing strategies.)

Which pair of products can be regarded as substitute products? A. television and books B. lamp and chair C. butter and margarine D. toothpaste and toothbrush E. hot dog and ketchup

C. butter and margarine (Substitute products are goods and services that perform very similar functions and can be used in place of one another.)

What is the most common gauge of the overall expansion or contraction of an economy? A. consumer confidence B. recession C. gross domestic product D. inflation E. income distribution

C. gross domestic product

One of the functions of the International Monetary Fund is to A. ensure that member nations adhere to WTO agreements. B. ensure that member countries adhere to trade agreements. C. help member countries manage their debt by providing resources to them. D. reduce barriers to the free trade of goods and services between countries. E. help importers and exporters conduct their business in member countries.

C. help member countries manage their debt by providing resources to them. (The International Monetary Fund (IMF) works to foster international monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It was formed to promote international economic cooperation, trade, employment, and currency exchange rate stability, including making resources available to member countries to help them manage their debts.)

What is the major difference between a nonprofit organization and a for-profit organization? A. Nonprofits do not have to worry about external factors such as political or technological factors. B. Funding is not an issue with nonprofits because of continuous support from benefactors. C. Nonprofit organizations find it relatively easier to secure funds during an economic slowdown. D. The benefactors of nonprofit organizations do not receive any direct benefit, unlike customers. E. Nonprofits are not subject to government regulations, unlike for-profit organizations.

D. The benefactors of nonprofit organizations do not receive any direct benefit, unlike customers.

A recession occurs when a nation's GDP A. of the current year is less than that of the previous year. B. per capita is less than that of neighboring countries. C. increases in one quarter and decreases in the next. D. declines for two or more consecutive quarters.

D. declines for two or more consecutive quarters.

Which strategy caters to the sociocultural factor of busier families in America? A. the creation of products that cater to a particular ethic group B. the creation of advertisements that engage users on an intellectual level C. the distribution of advertisements in multiple languages D. the launch of online ticket-booking options E. the increase in cosmetics targeted at women

D. the launch of online ticket-booking options

Metro FM and Star are radio stations in direct competition with each other. The target audience for both radio stations is the same, with most of the stations' income coming from commercials. Which of the following strategies can Star use to differentiate its services from Metro FM? A. It can partner with Metro FM to create a new radio station. B. It can offer its services via a different medium. C. It can forgo commercials. D. It can hire talent from Metro FM to gain competitive advantage. E. It can offer content that is not available on Metro FM.

E. It can offer content that is not available on Metro FM. (In this scenario, for Star to succeed, it should differentiate its services from substitutes in ways that add value to the customer's listening experience.)

What is the relationship between purchasing power and inflation? A. Purchasing power and inflation rise and fall together. B. Purchasing power and inflation are independent of each other. C. Purchasing power increases with rising inflation. D. Purchasing power decreases with decreasing inflation. E. Purchasing power decreases with rising inflation.

E. Purchasing power decreases with rising inflation.

Which statement is true about various demographics in the United States? A. Male control over the majority of consumer spending makes men a target for marketers. B. Seniors have the greatest familiarity with and most use for digital communication. C. Younger people have more free time and disposable income to shop for products. D. Male consumers now account for 85 percent of all consumer purchases in the United States. E. Seniors are more likely to complain and require more attention than their younger counterparts.

E. Seniors are more likely to complain and require more attention than their younger counterparts.

Marketers are attracted to countries with a growing middle class because a nation's A. rise in GDP is directly proportional to the rise in income of the middle class in the country. B. middle class has higher disposable income than the rest of the population. C. middle class is the least affected when there is inflation. D. middle class will continue to splurge on products even during a recession. E. purchasing capability tends to increase as the proportion of middle-income households increases.

E. purchasing capability tends to increase as the proportion of middle-income households increases.

A country has a GDP of $23 million during the first quarter of 2019. During the next two quarters, it records a GDP of $21 million and $20.5 million, respectively. This trend can be classified as a(n) A. inflation. B. reduction in income distribution. C. rise in consumer confidence. D. increase in purchasing power. E. recession.

E. recession. (A recession occurs when GDP declines for two or more consecutive quarters.)