A
1. ____ is a contractual agreement where one firm gives another permission to produce and market its product and brand name in exchange for a fee.
a. Licensing
b. Exporting
c. Joint venture
d. Countertrade
e. Strategic alliance
a. Licensing
6. Suppose India is trying to develop its international trade in electronic components, but it lacks the money to be successful. From whom should India seek assistance?
a. The International Monetary Fund
b. The Bank of India
c. The United States
d. The Federal Reserve
e. The Development Bank for Emerging Economies
a. The International Monetary Fund
11. Which of the following federal governmental agencies provides domestic and overseas commercial officers, country experts, and industry experts?
a. Export Legal Assistance Network
b. International Trade Administration
c. Advocacy Center
d. American Business Center
e. U.S. Department of Transportation
b. International Trade Administration
16. A ____ is a partnership formed to achieve a specific goal or to operate for a specific period of time.
a. trading company
b. strategic alliance
c. licensing company
d. countertrade agreement
e. joint venture
e. joint venture
24. Nordstrom sells designer suits made in Italy in its stores in the United States. Nordstrom is ____ suits.
a. exporting
b. importing
c. trading
d. dumping
e. taxing
b. importing
34. MillerCoors allows a Canadian firm to use its name, formula, and brands in return for a royalty. This is known as
a. exporting.
b. licensing.
c. direct investment.
d. manufacturing in foreign countries.
e. none of these answer choices.
b. licensing.
2. Several European countries have banded together to reduce the trade barriers between them and encourage trading among themselves. This is known as
a. a GATT.
b. the European Union.
c. a cartel.
d. a multinational.
e. an orderly marketing agreement.
b. the European Union.
7. The United States does not sell fighter jets, such as F-16s, to Libya. The rationale for this restriction is most likely to
a. protect national security.
b. protect domestic jobs.
c. protect the health of its citizens.
d. retaliate for Libya's trade restrictions.
e. protect domestic manufacturers.
a. protect national security.
12. Tony Jamerson decides his company will start exporting and he wants to start at the most basic level. What action should Tony take to meet his objectives?
a. License the company's brand name and products to foreign manufacturers.
b. Contact Sears World Trade to find foreign consumers.
c. Open new facilities around the world.
d. Form a joint venture with a complementary company in a foreign country.
e. Sell the company's products to an export-import merchant.
e. Sell the company's products to an export-import merchant.
17. The Export-Import Bank of the United States
a. is owned and operated by Fortune 500 companies.
b. is an independent agency of the U.S. government.
c. aids foreign nations experiencing balance-of-payments problems.
d. guarantees credit to American buyers of foreign goods.
e. closed its operations in 1991.
b. is an independent agency of the U.S. government.
25. Suppose France imposes a tax on agricultural products from the United States to help its own farmers. This describes a(n)
a. revenue tariff.
b. preservation tariff.
c. embargo.
d. nontariff barrier.
e. protective tariff.
e. protective tariff.
35. The newest forms of international business structure developed to create competitive advantage on a worldwide basis are called
a. licensees.
b. export agents.
c. strategic alliances.
d. trading companies.
e. countertraders.
c. strategic alliances.
3. Saidee opened a textile business in 1984 that traded with GATT member nations. She thought that by choosing nations that were part of this economic trade agreement she would not encounter tariff barriers, however she has been unable to sell her product in several nations due to the high tariffs placed on textiles. What is the most likely reason for Saidee’s predicament?
a. She misunderstood the purpose of GATT.
b. The Kennedy Round, which was held in 1964 was only effective for five years.
c. The Tokyo Round was completed in 1979.
d. Elimination of tariffs on textiles was passed in the Uruguay Round.
d. Elimination of tariffs on textiles was passed in the Uruguay Round.
8. Meredith hires an export merchant to help expand her business internationally. After signing contracts with a foreign purchaser outlining the terms of sale and delivery, the exporter will send Meredith's merchandise when
a. Meredith's bank receives a letter of credit from the importer's bank.
b. it receives a letter of credit from Janet's bank.
c. its bank receives a draft from the importer's bank.
d. Meredith receives a bill of lading.
e. the ultimate consumer sends a bill of lading to the exporter's bank.
a. Meredith's bank receives a letter of credit from the importer's bank.
13. Jackie has been reading about international trade and that one nation has the ability to produce a specific
product more efficiently than any other nation. She and her friend, Allie, are required to create a PowerPoint
presentation for their business class about international trade. Jackie can create animated PowerPoint
presentations that clearly and precisely convey the message they need to make, but in a light and entertaining
fashion. She is not good at public speaking. Allie is an excellent public speaker and can create equally excellent
PowerPoints. Both girls have homework for other classes to do and agree to divide the work—Jackie will
create the PowerPoint and Allie will do the verbal and written part of the presentation. What advantage does Allie have over Jackie in making presentations?
a. Cooperative advantage
b. Absolute advantage
c. Comparative advantage
d. Relative advantage
c. Comparative advantage
18. Latoya is opening a business that makes unique lamps from shells. She is considering exporting these lamps to other countries but needs more information about what to do, how to negotiate the customs process, and which nations would provide the best markets for her products. Which of the following are not resources that would help her find the information she needs?
a. International Trade Administration and U.S. Commercial Service
b. U.S. Department of Commerce and U.S. Department of Interior
c. U.S. Export Assistance Centers and U.S. and Foreign Commercial Services
d. The Advocacy Center and Trade Information Center
b. U.S. Department of Commerce and U.S. Department of Interior
26. ____ is the ability to produce a specific product more efficiently than any other product.
a. Absolute advantage
b. Specialization
c. Relative advantage
d. Dominant advantage
e. Comparative advantage
e. Comparative advantage
36. Which of the following represents the highest level of involvement in international business?
a. Strategic alliance
b. Totally owned facilities
c. Multinational firm
d. Joint ventures
e. Exporting
c. Multinational firm
4. Buyers that purchase dresses in Europe or calculators in Taiwan and have them shipped back to the United States for resale are engaging in
a. exporting.
b. shipping.
c. importing.
d. expelling.
e. dumping.
c. importing.
9. The United States joined with Mexico and Canada to promote the movement of resources and products; it formed a(n)
a. WTO.
b. economic community.
c. cartel.
d. multinational.
e. orderly marketing agreement.
b. economic community.
14. If the Philippines needed to borrow money to promote its economic and social progress, it would most likely go to the ___.
a. Asian Development Bank.
b. World Bank.
c. International Monetary Fund.
d. United Nations.
a. Asian Development Bank.
19. A trading company
a. is involved in manufacturing.
b. owns assets related to manufacturing.
c. does not take title to products.
d. provides a link between buyers and sellers in different countries.
e. does not perform activities necessary to move the products.
d. provides a link between buyers and sellers in different countries.
27. General Motors and Ford products produced in the United States are found around the world. The United States is ____ these automobiles.
a. tariffing
b. importing
c. exporting
d. releasing
e. dumping
c. exporting
37. Arguments for imposing trade restrictions include
a. the misallocation of international resources.
b. equalizing a nation's balance of payments.
c. higher prices for consumers.
d. restriction of consumers' choices.
e. none of these answer choices.
b. equalizing a nation's balance of payments.
5. When importers and exporters do not trust one another and want to ensure that the importer receives the promised merchandise and the exporter gets paid, the go-between representative they employ is (are)
a. the local domestic banks involved in international business.
b. sales agents.
c. international trade organizations.
d. the World Bank
a. the local domestic banks involved in international business.
10. An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies is called a(n)
a. economic community.
b. free trade association.
c. common market.
d. international alliance.
e. none of the answer choices.
a. economic community.
15. Who are the members of NAFTA?
a. The United States, Canada, and Mexico
b. Greenland, Iceland, and Canada
c. Guatemala, Honduras, and Mexico
d. The United States, Mexico, and Japan
e. The United States, Canada, and the United Kingdom
a. The United States, Canada, and Mexico
20. What are the Kennedy Round, the Tokyo Round, and the Uruguay Round?
a. Amendments to the General Agreement on Tariffs and Trade
b. Negotiations sponsored by GATT to reduce trade restrictions
c. A series of disagreements among the members of GATT
d. World Trade Organization meetings to encourage trade
e. Political negotiations among many of the world's nations
b. Negotiations sponsored by GATT to reduce trade restrictions
28. The United States is a member of the ____, which is the successor to GATT.
a. World Trade Organization
b. North American Free Trade Agreement
c. United Nations
d. Economic Community
e. Kennedy Round
a. World Trade Organization
38. The ____ gave President Kennedy the authority to negotiate reciprocal trade agreements that could reduce U.S. tariffs by as much as 50 percent.
a. Foreign Corrupt Practices Act
b. Trade Expansion Act
c. Securities Exchange Act
d. Federal Trade Commission Act
e. Robinson-Patman Act
b. Trade Expansion Act
29. When Johnson & Johnson Vision Care, Inc., located in Jacksonville, Florida, sells its ACUVUE contact lenses to people in London, England, the company
a. is importing the lenses.
b. is exporting the lenses.
c. has an absolute advantage.
d. is increasing the balance-of-trade deficit.
e. is making a big mistake.
b. is exporting the lenses.
30. Suppose a set of English bone china costing £1,000 costs $3,000 in the United States. After devaluation, the set of china costs $1,000. This change
a. shows that to foreigner purchasers, the price of the china is the same before and after the devaluation.
b. makes the china less attractive to foreigner purchasers.
c. makes the china more attractive to foreign purchasers.
d. is irrelevant to foreign purchasers.
e. proves that foreign purchasers would prefer devaluation of the English pound so that it would be worth $2. That way, they could get even more for their dollars.
c. makes the china more attractive to foreign purchasers.
31. XYZ Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own production and marketing facilities in one or more ASEAN countries. The best choice for XYZ Company is
a. a joint venture.
b. a licensing agreement.
c. totally owned facilities.
d. exporting.
e. sales offices.
c. totally owned facilities.
32. If Germany exports $100,000 of sauerkraut to Jamaica and purchases $100,000 of Blue Mountain coffee beans from Jamaica, Germany has
a. an overall favorable balance of trade.
b. an overall unfavorable balance of trade.
c. a favorable balance of trade with Jamaica.
d. neither a favorable nor an unfavorable balance of trade with Jamaica.
e. an unfavorable balance of trade with Jamaica.
d. neither a favorable nor an unfavorable balance of trade with Jamaica.
33. If the Korean government charged tariffs on Japanese automobiles and in turn the Japanese government put tariffs on Korean automobiles, Japan's major rationale for imposing these tariffs would be to
a. protect national security.
b. protect domestic jobs.
c. retaliate for Korea's tariffs.
d. lower prices for consumers.
e. protect an infant industry.
c. retaliate for Korea's tariffs.
39. Suppose Brazil, Argentina, Columbia, Peru, and Chile decide to form the South American Union to increase trade among these nations. This would be an example of a(n)
a. world trade organization.
b. peace agreement.
c. economic community.
d. free trade agreement.
e. global marketplace.
c. economic community.