MGMT Ch.3

two forms of direct investment

1. the firm builds/purchases manufacturing and other facilities in the foreign country (WORLDWIDE MANU) 2. the pruchase of an existing firm in a foreign country under an arrangement that allows it to operate indep of the parent company (SONY)

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

7

While international trade is as logical as interstate trade, some nations restrict imports of certain goods for a variety of reasons. The United States recently restricted the import of fresh tomatoes from Mexico. Why did the United States restrict the imports of tomatoes?

The Mexican fresh tomatoes were undercutting price levels of domestic fresh tomatoes.

The exporting trade in the United States has had a significant impact on the U.S. economy. In 2016, exports accounted for 11 million jobs—an increase of 3.3 million jobs since the 2009 recession. Which of the following is true about the impact of U.S. exports on the global economy?

The increase in trade volume over the past 65 years has been one of the most important factors in the rise of the living standards around the world.

Which government agency could possibly provide a loan of up to $5 million to a small U.S. business that needed a short-term loan to start an export business?

U.S. Small Business Administration

The economies of ____ and ____ are the most dynamic, efficient, and most integrated in the world.

US and Canada

Temporary trade restrictions may be used to give a new business

a chance to grow and become self-sufficient

gov-imposed nontariff barrier: embargo

a complete halt to trading with a particular nation or of a particular product used as a political weapon

licensing

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

multinational enterprise

a firm that operates on a worldwide scale without ties to any specific nation/region

gov-imposed nontariff barrier: import quota

a limit on the amnt of a particular good that may be imported into a country during a given period of time on quantity/value

nontariff barrier

a nontax measure imposed by a gov to favor domestic over foreign suppliers

joint venture def

a partnership formed to achieve a specific goal or to operate for a specific period of time provides: market knowledge and access, reduced risk, and control over product attributes but very complex and requires much commitment

wholesaler

a person or company that sells goods in large quantities at low prices, typically to retailers.

gov-imposed nontariff barrier: foreign-exchange control

a restriction on the amnt of a particular foreign currency that can be purchased or sold

import duty (tariff)

a tax levied on a particular foreign product entering a country

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? a. Most-favored-nation status (MFN) b. Negotiation rounds c. Brexit d. Economic community e. The Trans-Pacific Partnership (TPP)

a. Most-favored-nation status (MFN)

Which of the following is a reason for trade restrictions? a. Protection for new or weak industries b. Higher prices for consumers c. Cutbacks in jobs d. Restriction of consumers' choices

a. Protection for new or weak industries

Taobao has been placed on the U.S. Trade Representative office's blacklist of "notorious marketplaces" due to the website's sale of counterfeit products and violations of intellectual property rights. If this led the U.S. to enact trade restrictions on the import of specific products from China, which of the following would they likely site as a reason? a. To protect domestic jobs b. To protect national security c. To protect the health of citizens d. To equalize the nation's balance of payments

a. To protect domestic jobs

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: a. comparative advantage. b. supply and demand. c. monopolistic advantage. d. economic profit. e. absolute advantage.

a. comparative 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: a. continue to produce coffee and trade it for U.S. products Brazil needs and cannot produce. b. abandon coffee and produce a product Brazil's residents strongly demand. c. stop trading coffee with the U.S. and only trade coffee with its neighboring countries. d. increase coffee advertising to create a greater demand for coffee in Brazil. e. slow production of coffee and allocate Brazilian resources elsewhere.

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

A country with a trade surplus generally has a favorable balance of payments, which means: a. the country is receiving more money from trade with foreign countries than it is paying out. b. other nations will probably lose confidence in the country's economy. c. the country may experience declining production and higher unemployment. d. a continual surplus may indicate that the country encourages imports by not imposing trade restrictions. e. more money flows out of the country than into it.

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

comparative advantage

ability to produce a specific product more efficiently than any other PRODUCT

Which U.S. government export assistance program facilitates advocacy to assist U.S. firms competing for major projects and procurements worldwide?

advocacy center

export-import bank of the US

an indep agency of the US gov whose function is to assist in financing the exports of american firms

International Monetary Fund (IMF)

an international bank with 189 member nations that make short-term loans to developing countries experiencing balance-of-payment deficits

countertrade

an international barter transaction in which goods and services are exchanged for diff goods and services

The general agrrement on tariffs and trade (GATT)

an international org. of 164 nations dedicated to reducing or eliminating tariffs and other barriers to world trade

multilateral development bank (MDB)

an internationally supported bank that provides loans to developing countries to help them grow

economic community

an org of nations formed to promote free movement of resources and products among its members and to create common economic policies

Which countries are the United States' best trading partners for U.S. exports? a. China and the United Kingdom b. Canada and Mexico c. Canada and China d. Japan and India e. Canada and Brazil

b. Canada and Mexico

There are several methods for entering international trade. Which of the following is not a method for entering international trade? a. Importing or exporting b. Creation of a business that is organized outside of any nation and operates on a multinational level "at home" in most countries of the world c. Totally owned facilities d. Licensing

b. Creation of a business that is organized outside of any nation and operates on a multinational level "at home" in most countries of the world

The United States is a party to many trade agreements and international trade organizations. Which of the following trade organizations does not have the United States as a member? a. WTO b. MFN c. NAFTA d. GATT

b. MFN

What is the name of one of the United States federal agencies created to assist U.S. firms in developing export-promotion programs? a. Alcohol, Tobacco and Firearms Administration b. Department of Foreign Affairs c. International Trade Administration d. Food and Drug Administration

c. International Trade Administration

Products sold on Alibaba's website to foreign countries may be subject to taxes, or _____. a. currency devaluation. b. bills of lading. c. tariffs. d. trade deficits.

c. tariffs.

cultural barriers

can impede acceptance of products in foreign countries

The United States has the largest economy. Which nation has the second largest economy and represents the largest annual bilateral trade relationship with the United States? a. China b. Russia c. Mexico d. Japan

china

Which of the following is incorrect about the General Agreement on Tariffs and Trade (GATT)? a. The most fruitful negotiations were known as the Kennedy Round, the Tokyo Round, and the Uruguay Round. b. It ensures that any tariff reduction or other concession will be extended automatically to all GATT members. c. The body had several rounds of negotiations to impact trade restrictions. d. It is an international organization of 164 nations dedicated to creating and maintaining tariffs and other barriers to world trade.

d. It is an international organization of 164 nations dedicated to creating and maintaining tariffs and other barriers to world trade.

here are many reasons for imposing trade restrictions, however ____ is not one of them.

decreasing job avail within a nation

bill of lading

doc issued by a transport carrier to an exporter to prove that merchandise has been shipped

Nations may impose barriers to trade. Which of the following is not a barrier to trade? a. Embargos b. Revenue tariffs c. Dumping d. Protective tariffs

dumping

The selling of products in a foreign country at lower prices than those charged in the producing country is called: a. foreign-exchange control. b. dumping. c. an import quota. d. an import duty. e. an embargo.

dumping

According to the International Monetary Fund (IMF), what are the world economic growth projections? a. The IMF predicts negative growth in both advanced and developing countries. b. The IMF predicts a rapid global growth in developing countries, but no global growth in advanced countries. c. The IMF predicts little to no global growth in either advanced or developing countries. d. The IMF predicts gradual global growth in advanced countries, but negative growth in developing countries. e. The IMF predicts a gradual global growth in both advanced and developing countries.

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

Which of the following banks specifically makes short-term loans to developing countries experiencing balance-of-payment deficits? a. The African Development Bank (AFDB) b. The European Bank for Reconstruction and Development c. The Inter-American Development Bank (IDB) d. The Asian Development Bank (ADB) e. The International Monetary Fund (IMF)

e. The International Monetary Fund (IMF)

Currency devaluation ___________ the cost of foreign goods and _______ the cost of domestic goods to foreign firms. a. does not change; decreases b. decreases; increases c. decreases; does not change d. does not change; increases e. increases; decreases

e. increases; decreases

international business

encompasses all business activities that involve exchanges across national boundaries

barter

exchange (goods or services) for other goods or services without using money.

alternatively, the exporting firm may ship its products to an?

export-import agent, which arranges the sale of the products to foreign intermediaries for a commission or fee

Licensing is perhaps the easiest method of entering into international trade. Another method of entering international trade, which can be relatively low risk, is ____which opens several levels of involvement to company

exporting

Taobao, an Alibaba company, is a Chinese online shopping website similar to Amazon or eBay. When Alibaba goes public, Taobao shop owners will be able to sell their goods to customers in the U.S. and other countries. Taobao shop owners will be _________ their goods to other countries. a. exporting b. countertrading c. importing d. licensing

exporting

exporting firm can also establish?

iits own sales offices, or branches, in foreign countries

revenue tariffs

imposed solely to generate income for the gov

protective tariffs

imposed to protect a domestic industry from comp by keeping the price of competing imports level with or higher than the price of similar domestic products

Since World War II international trade has .

increased almost steadily

letter of credit

is issued "in favor of the exporter" aka , the funds are tied specifically to the trade contract involved

Alibaba formed a partnership with Indian mobile wallet company, Paytm, to set up an online gaming company. This _________ is Alibaba's first significant international expansion. a. totally owned facility b. joint venture c. trading company d. direct investment

joint venture

As trade has expanded internationally, many ____ have also become international in scope and have established branches in major cities around the world. This gives them the ability to provide their financial services where and when they are needed.

large banks

export-import merchant

merchant wholesaler merchant: assumes all the risks of product ownership, distribution and sale

trade deficit

negative balance of trade

draft

orders the importers bank to pay for the merchandise

strategic alliance

partnership formed to create competitive advantage on a worldwide basis

trading companies

provides a link between buyers and sellers in diff countries not involved with manufacturing/ owning assets related to manu it buys products in one country at the lowest price consistent with quality and sells to buyers in another

importing

purchasing raw materials or products in other nations and bringing them into one's own country

exporting

selling and shipping raw materials or products to other nations

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)

absolute advantage

the ability to produce a specific product more efficiently than any other NATION

dumping

the exportation of large quantities of a product at a price lower than that of the same product in the home market

WTO (World Trade Organization)

the only international body dealing with the rules of trade between nations

currency devaluation

the reduction of the value of a nation's currency relative to the currencies of other countries

balance of payments

the total flow of money into a country minus the total flow of money out of that country over some period of time

balance of trade

the total value of a nation's exports minus the total value of its imports over some period of time

The primary function of international economic organizations such as the World Trade Organization (WTO) is

to remove barriers to trade on a worldwide basis.

is international business growing?

yes, international trade now accounts for over 1/4 of GDP

Who supports multilateral development banks (MDB)?

Industrialized nations

The ____a federal agency, helps U.S. firms develop export promotion programs and gives assistance in competing in foreign markets by coordinating trade missions in foreign countries.

International Trade Administration

Which of the following U.S. government export assistance programs offers assistance and information to exporters through its domestic and overseas commercial officers?

International Trade Administration

According to the International Monetary Fund (IMF), ____ exports are growing annually. This region is home to 11 Free Trade Area countries.

Latin American

totally owned facilities

Production and marketing facilities in one or more foreign nations complete control but more risk

Which organization or U.S. government export program publishes guides that offer assistance and exporting information to small and medium-sized companies?

Small Business Administration

A country may attempt to protect its own domestic industries by imposing a(n) _____, a type of tax, on imported products. a. embargo b. foreign-exchange control c. import quota d. currency devaluation e. import duty (tariff)

E. import duty/tariff

The ____ , also known as the Common Market, is now an economic force to be recognized by even the most advanced economies such as of the United States and Japan.

European union