pre-lecture quiz Chp. 3
A balance of payments surplus means that more money flows out than in. (T/F)
False
Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth (T/F)
False
Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth. (T/F)
False
Imported products carry the brand name of the importer (T/F)
False
Imported products carry the brand name of the importer.(T/F)
False
Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing. (T/F)
True
Balance of payments includes foreign borrowing and lending, foreign aid payments and receipts, and foreign investments (T/F)
True
In the context of international trade, countries with the highest trade barriers often have the least competition. (T/F)
True
International trade helps even out some of the resource imbalances among nations (T/F)
True
Identify a true statement about global trade. a. It offers companies an invaluable source of new ideas. b. It increases a firm's dependence on its domestic economy. c. It increases the economic risk of multinational companies. d. It reduces a firm's opportunity to tap into growing new markets
a. It offers companies an invaluable source of new ideas.
Which of the following is the most costly form of foreign direct investment? a. Offshoring b. Importing c. Licensing d. Franchising
a. Offshoring
Identify a true statement about the World Trade Organization (WTO). a. The WTO promotes reduction of trade barriers and mediates disputes among members. b. It is beyond the scope of the WTO to monitor the provisions of the General Agreement on Tariffs and Trade (GATT). c. Ministers of the WTO meet every five years to address current world trade issues. d. It is beyond the scope of the WTO to settle international trade disputes
a. The WTO promotes reduction of trade barriers and mediates disputes among members.
Which of the following is a disadvantage of foreign outsourcing? a. The risk of poor quality control becomes higher. b. The cost of production becomes irrecoverable. c. The cost of shipping the goods can be very high. d. The foreign company pays higher wages to the workers.
a. The risk of poor quality control becomes higher.
In the late 1970s, LarceCo, a tea seller, entered the Russian marketplace. LarceCo traded tea-based products for Russian-made vodka because of the lack of a tradable currency in the Soviet Union. This is an example of _____. a. countertrade b. personal selling c. licensing d. outsourcing
a. countertrade
Quitor Inc., which is based in the U.S., contracts with Falconnien Suppliers, a small-scale supplier in Taiwan, to manufacture its computers and tablets across the world. This strategy by Quitor Inc. is an example of _____. a. foreign outsourcing b. exporting c. joint venture d. franchising
a. foreign outsourcing
Vieorien, a Swedish company, has allowed Loineker, an American company, the rights to produce Vieorien's products and use the Vieorien trademark. However, Vieorien does not have the authority or the rights to dictate the business operations of Loineker. In this scenario, Loineker is the _____. a. licensee b. licensor c. lessee d. lessor
a. licensee
Requiring red-tape-intensive import licenses for certain categories is an example of a(n): a. nontariff barrier. b. voluntary export restraint. c. embargo. d. quota.
a. nontariff barrier.
Which of the following is a specialized type of licensing? a. Joint venture b. Partnership c. Foreign franchising d. Exporting
c. Foreign franchising
Identify a true statement about balance of payments. a. Balance of payments excludes overseas investments. b. Balance of payments includes foreign borrowing and lending. c. Balance of payments surplus indicates more money flowing out than in. d. Balance of payments deficit indicates more money flowing in than out.
b. Balance of payments includes foreign borrowing and lending.
Identify a true statement about comparative advantage. a. It is the tendency of a country to choose goods that have a higher opportunity cost compared to other countries. b. It is affected by major trade barriers to international trade. c. It stays the same regardless of the changes in the technology or workforce in a country. d. It always remains static for developing countries.
b. It is affected by major trade barriers to international trade.
Compared to the U.S., China and India have: a. higher per capita GDPs. b. higher GDP growth rates. c. smaller market size. d. limited market potential.
b. higher GDP growth rates.
One of the major reasons India, China, and the Philippines attract multibillion-dollar investments is that: a. the value of Euros is lower in the Asian market than in the American market. b. they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers. c. the level of prosperity in these countries is the highest in the world, ahead of the United States and Europe. d. they are more developed than any other developed country in the world.
b. they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers.
When the total value of a nation's exports is higher than the total value of its imports, that country has a(n) _____. a. absolute advantage b. trade surplus c. trade deficit d. comparative advantage
b. trade surplus
Which of the following statements is true about the markets around the world? a. China and India have a smaller opportunity to attract investments because of to their economic growth. b. China has lower gross domestic product (GDP) growth rate than the U.S. c. India's subscriber base for cell phones has grown explosively over the past five years. d. Most of the developing countries remain ahead of the United States in terms of development and prosperity.
c. India's subscriber base for cell phones has grown explosively over the past five years.
Which of the following is true of a partnership? a. It is otherwise known as domestic franchising. b. It is the most basic level of global trade. c. It is a formal, long-term agreement. d. It is the most expensive form of direct investment.
c. It is a formal, long-term agreement.
Identify a true statement about exporting. a. It means producing products abroad and selling them domestically. b. It is ineffective for small and mid-sized companies. c. It is the most basic level of international market development. d. It is colloquially known as foreign outsourcing
c. It is the most basic level of international market development
In the context of barriers to international trade, which of the following is an example of energy infrastructure in a country? a. Radio b. Cell phone coverage c. Power plants d. Railroads
c. Power plants
Who among the following is most likely to benefit in a case where there is a strong dollar against a euro? a. Fieolia Corp., a European firm that imports goods from America b. Hailinser, an American who exports goods to Europe c. Ron, an American who is touring Europe d. Joinieker Inc., a European firm with American operations
c. Ron, an American who is touring Europe
Sloimekia is able to produce more of a particular variety of cloth than its neighboring countries. Sloimekia and its neighboring countries have the same amount of resources for producing this particular cloth. In this case, which of the following is definitely true of Sloimekia? a. Sloimekia enjoys the highest balance of trade among its neighboring countries. b. Sloimekia has a lower balance of payments and a lower trade deficit. c. Sloimekia enjoys an absolute advantage in producing this particular cloth. d. Sloimekia has a higher trade surplus than its neighboring countries
c. Sloimekia enjoys an absolute advantage in producing this particular cloth.
Companies typically engage in _____ to meet the needs of customers that don't have access to hard currency or credit. a. product churning b. direct selling c. countertrade d. importing
c. countertrade
Companies typically engage in _____ to meet the needs of customers that don't have access to hard currency or credit. a. direct selling b. importing c. countertrade d. product churning
c. countertrade
Pyoiunalek's, a U.S. restaurant chain, markets and endorses its business in Germany by offering buyers the rights to launch and operate the restaurant in their own country. It lends financial and marketing assistance to the buyers. Pyoiunalek's is employing the strategy of _____. a. importing b. joint venture c. foreign franchising d. personal selling
c. foreign franchising
Critics of the North American Free Trade Agreement (NAFTA) believe Mexico and Canada have contributed to the United States' trade deficit because: a. the U.S. imports goods from China and India rather than Mexico and Canada. b. import and export transactions with Mexico and Canada have remained static. c. imports from Mexico and Canada have grown faster than exports to these nations. d. the economies of these nations have grown faster than the economy of the U.S.
c. imports from Mexico and Canada have grown faster than exports to these nations.
Balance of payments deficit means that: a. foreign payments and receipts are excluded from calculating the balance of payments. b. foreign borrowing and lending are excluded from calculating the balance of payments. c. more money flows out than in. d. more money flows in than out
c. more money flows out than in.
One of the major reasons India, China, and the Philippines attract multibillion-dollar investments is that: a. they are more developed than any other developed country in the world. b. the level of prosperity in these countries is the highest in the world, ahead of the United States and Europe. c. they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers. d. the value of Euros is lower in the Asian market than in the American market.
c. they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers.
Identify a true statement about the International Monetary Fund (IMF). a. It was created during the Uruguay round to address international trade disputes. b. It is not accountable to the governments of the member nations for its actions. c. It is funded by only the members of the European Union (EU). d. It is a lender of the last resort to nations in financial trouble
d. It is a lender of the last resort to nations in financial trouble
Identify a true statement about comparative advantage. a. It stays the same regardless of the changes in the technology or workforce in a country. b. It always remains static for developing countries. c. It is the tendency of a country to choose goods that have a higher opportunity cost compared to other countries. d. It is affected by major trade barriers to international trade.
d. It is affected by major trade barriers to international trade.
Identify a true statement about exporting. a. It is colloquially known as foreign outsourcing. b. It means producing products abroad and selling them domestically. c. It is ineffective for small and mid-sized companies. d. It is the most basic level of international market development.
d. It is the most basic level of international market development.
Who among the following is most likely to benefit in a case where there is a weak dollar against a euro? a. Elise, an American who is touring Europe b. Joinieker Inc., an American firm with European operations c. Nierin Corp., an American firm that imports goods from Europe d. John, an American who exports goods to Europe
d. John, an American who exports goods to Europe
Alice, the global marketing director of a multinational electronics manufacturing firm, is assigned the task of expanding her firm in growing new markets. She learns that the labor is expensive and that the technical equipment required for production is unavailable in the international market. In this case, which of the following is most likely affecting the global trade of Alice's firm? a. Absence of plentiful capital b. Lack of innovative ideas c. Economic dependence in the international market d. Limited access to factors of production
d. Limited access to factors of production
Who among the following is most likely to benefit in a case where there is a strong dollar against a euro? a. Hailinser, an American who exports goods to Europe b. Joinieker Inc., a European firm with American operations c. Fieolia Corp., a European firm that imports goods from America d. Ron, an American who is touring Europe
d. Ron, an American who is touring Europe
Which of the following is a feature of joint ventures? a. Absence of formal agreements b. Merging of companies c. Elimination of local partners d. Sharing of resources
d. Sharing of resources
Tanya Williams, the chief executive officer of Willister Computers, believes that the firm is currently best equipped to enter the Chinese market. The firm offers a small-scale producer in China to produce and market its goods based on the set of specific operating functions and requirements Willister offers to the firm. This is an example of _____. a. direct investment b. a strategic alliance c. a joint venture d. foreign franchising
d. foreign franchising