Chapter 3 Quiz

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Question #1

The U.S. government, responding to pressure from political lobbyists representing the U.S. steel industry, will impose a tax on steel products imported from South America. This is an example of a(n)

A revenue tariff.

B protective tariff.

C embargo.

D quota.

Question #2

With GDP of over $658 billion, the common market known as COMESCA is

A a subset of the European Union.

B composed of Southern African and Eastern African nations.

C composed of Ecuador, San Simeon, Chile, and Argentina.

D a subset of the Mercosur trading bloc.

Question #3

The U.S. and China continue to spar over sociocultural issues, such as human rights, and economic and financial issues, such as the value of the Chinese yuan against the U.S. dollar. U.S. diplomats assert that these differences continue to bolster China’s favorable balance of trade and increase the U.S. trade deficit. The trade protectionist policy exhibited by the Chinese is similar to an economic policy known as ________ that was followed during the seventeenth and eighteenth centuries. This policy resulted in a flow of money to the country that sold the most globally.

A mercantilism

B trade embargoing

C countertrading

D profiteering

Question #4

________ is lowering the value of a nation’s currency relative to other currencies.

A Revaluation

B Deflation

C Negative valuation

D Devaluation

Question #5

Mini-Case

Ever since he was five years old, Rhett Tenna has had poor eyesight and as an eyeglass wearer he suffered through all the names that went along with it. Rhett eventually switched from glasses to contacts, but he always wondered why his glasses were not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eyewear synonymous with fashion. He opened a specialty store called “The Eyes Have It.” His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett’s plan met with resounding success. Today, “The Eyes Have It” has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames.

A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of “The Eyes Have It” stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: “The Eyes Have It”!

Rhett heard predictions that the value of the U.S. dollar is likely to increase substantially over the next six months. This should

A stop overseas efforts because dollars will not be negotiable.

B help his overseas efforts since his prices will be lower.

C hurt his overseas efforts since his prices will be very high.

D force him into accepting no other currency except the dollar.

Question #6

Under the floating exchange rate system, the value of a country’s currency is determined by

A the United Nations Committee on Floating Currencies.

B the currency’s supply and demand in the global market.

C countertrading.

D the monetary authorities of that country.

Question #7

In volume of exports, the two leading nations are

A the U.S. and China.

B China and France.

C China and Germany.

D the U.S. and Canada

Question #8

________ is the selling of products to another country.

A Dumping

B Importing

C In-trading

D Exporting

Question #9

A(n) ________ refers to a complete ban on importing or exporting of products from a specific country.

A absolute tariff

B embargo

C health quarantine

D quota

Question #10

Tebeau Partners of France and Morimoto Management based in Japan recently produced a new electric car with rechargeable batteries that can be driven at high speeds for long distances. They shared the investment, each contributing important technological expertise to the effort. These firms entered into a(n) ________ to build this car.

A industrial countertrade agreement

B multinational limited partnership

C multinational cartel

D joint venture

Question #11

A highly powerful foreign government official approaches your company and requests a large sum of money. In return for this bribe, he promises your company will receive preferential treatment in all future government contracts. You quickly refuse his request, explaining that the ________ Act of the United States prohibits you from making such payments.

A Foreign Corrupt Practices

B Sherman Anti-trust

C Federal Trade Commission

D Celler-Kefauver

Question #12

A specialized organization that assists businesses in creating relationships with foreign customers and suppliers is known as a(n)

A international brokerage house.

B export trading company.

C global trade bank.

D keiretsu.

Question #13

Export trading companies

A enter into joint ventures with firms wanting to export goods and services.

B connect sellers in the U.S. with buyers in other nations, and help with customs, documentation, and payments.

C are similar to a corporation that sells franchises.

D are government-owned businesses that help companies go global.

Question #14

Oilers, Inc. refines and markets its energy products in different nations around the world. In addition, Oilers’ stockholders and managers come from many different nations. If some of the nations where it operates decided to take over the assets of the company, this act would constitute

A hostile takeover.

B illegal activity.

C expropriation.

D patent infringement.

Question #15

Which of the following is included when calculating a country’s balance of payments?

A Domestic inflation rates

B Foreign inflation rates

C Foreign aid

D Domestic unemployment

Question #16

Johnny Appleseed and Company ships all of the apples from its orchards in the Pacific Northwest to a single buyer in Japan. The firm’s entire profits are derived from this international transaction. Johnny Appleseed and Company is

A an example of a multinational corporation.

B contributing to the U.S. balance of trade deficit.

C not a multinational corporation.

D benefitting greatly from the establishment of NAFTA.

Question #17

Maria’s aunt, Juanita, is cruising in South America. Juanita told Maria she would be glad to buy her some jewelry while in one of the ports. She said she will shop in Santiago, Chile, because the exchange rate would be to her benefit. This means

A the currency in the U.S. has strength against the Chilean currency.

B the currency in the U.S. will be almost equal to the Chilean currency; otherwise it would not be a good exchange.

C the currency in the U.S. is weak against the Chilean currency.

D the currency in the U.S. is devalued.

Question #18

James’s family business, J&J Interiors, sells and installs tile in bathrooms and kitchens. More and more of J&J’s customers are asking for heater coils under bathroom floors, and James thinks there is a greater opportunity in heated tiles. In his effort to avoid domestic competition, he sets his sights on the vast Hasalot market. Much to his surprise, most of Hasalot’s citizens do not yet have indoor plumbing and are accustomed to government-run communal baths. James realizes that his global marketing effort is hampered by

A the floating exchange rate.

B physical and environmental constraints.

C cultural constraints.

D legal and regulatory constraints.

Question #19

The only deposits of a rare and sought-after mineral known as ursarite are found in Russia. Since no other nation has deposits of ursarite, Russia has a(n)________ in this mineral.

A diversified benefit

B relative internal benefit

C protected advantage

D absolute advantage

Question #20

An important principle for firms desiring to export is

A sell to countries with high standards of living.

B Getting started in global markets is often a matter of observing an unfulfilled need and researching how best to meet that need.

C if your product sells well in the U.S. it will sell well globally.

D find a need in the global market and fill it.

E keep in mind that American methods are probably always best.

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