Question 1

What does it mean for a country to have an absolute advantage? Compare that to having a comparative advantage.

Accepted Answer

When a country has an absolute advantage...

Question 2

At present, the United States has an embargo against North Korea because

Accepted Answer

A)  North Korean products are too difficult to use.
B)  products from North Korea are in higher demand than American-made products.
C)  North Korea has an embargo on American products.
D)  North Korea will not adopt a capitalist government.
E)  the two countries have extremely poor political relations.

Question 3

When a country's currency is devalued, this ____ the cost of foreign goods and ____ the cost of domestic goods to foreign firms.

Accepted Answer

A)  increases; decreases
B)  reduces; reduces
C)  decreases; increases
D)  neutralizes; raises
E)  neutralizes; decreases

Question 4

Howard believes that there should be no trade restrictions for any reason. What effect would Howard say that trade restrictions have on prices?

Accepted Answer

A)  He would argue that by encouraging competition with trade restrictions, prices are likely to decrease.
B)  He would argue that restrictions would cause greater competition and therefore lead to higher prices.
C)  He would say that trade restrictions have no impact on prices, but they do restrict consumers' choices.
D)  He would say that restrictions reduce competition and therefore cause an increase in prices.
E)  He would argue that trade restrictions increase prices because they break up domestic monopolies.

Question 5

Joint venture agreements generally require a very low level of commitment from all the parties involved.

Accepted Answer

A) True 
 B)False

Question 6

​Panama is considering instituting trade restrictions in order to balance its payments, protect new businesses, and protect domestic jobs. What may be some of the reasons it would not want to institute trade restrictions?

Accepted Answer

A)  ​Higher prices for consumers, restrictions of consumers' choices, misallocation of international resources, and loss of jobs.
B)  ​Lower prices for consumers, more consumer choices, proper allocation of international resources, and increase in employment.
C)  ​Sluggish market improvements, high retail prices, and lack of international resources.
D)  ​Loss of jobs, lack of national innovation, and high interest rates.

Question 7

Selling and shipping raw materials or products to other nations is known as exporting.

Accepted Answer

A) True 
 B)False

Question 8

What types of products did GATT focus on during the Kennedy Round?

Accepted Answer

A)  Business services and textiles
B)  Agricultural products and textiles
C)  Industrial products and business services
D)  Industrial and agricultural products
E)  Textiles and intellectual property rights

Question 9

Selling and shipping raw materials or products to other nations is called

Accepted Answer

A)  exporting.
B)  alien trading.
C)  importing.
D)  tariffing.
E)  deficit trading.

Question 10

When Serena from the United States flies to Scotland on a Canadian airline, stays in an Edinburgh hotel, and buys many wool sweaters from Scotland to bring home, she is

Accepted Answer

A)  decreasing the trade deficit.
B)  being disloyal and unpatriotic.
C)  contributing to the negative balance of payments.
D)  buying American-made goods.
E)  buying American-produced services.

Question 11

When the United States levies a tax on textiles from India, this tax is a type of

Accepted Answer

A)  export duty.
B)  barter.
C)  import.
D)  tariff.
E)  responsibility.

Question 12

A trading company

Accepted Answer

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.

Question 13

A ____ is issued by the transport carrier to the exporter to prove merchandise has been shipped.

Accepted Answer

A)  license
B)  letter of credit
C)  bill of lading
D)  draft
E)  voucher

Question 14

Which of the following is false concerning the International Monetary Fund?

Accepted Answer

A)  It has more than 150 member nations.
B)  It makes short-term loans to developing countries.
C)  Its loans are primarily to fund international trade.
D)  Its loans to developing countries are interest free.
E)  It is an international bank.

Question 15

Ben Schumpert decides his company will start exporting and he wants to start at the most basic level. What action should Ben take to meet his objectives?

Accepted Answer

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.

Question 16

Devaluation increases the cost of foreign goods, while it decreases the cost of domestic goods to foreign firms.

Accepted Answer

A) True 
 B)False

Question 17

The United States joined with Mexico and Canada to promote the movement of resources and products; it formed a(n)

Accepted Answer

A)  WTO.
B)  economic community.
C)  cartel.
D)  multinational.
E)  orderly marketing agreement.

Question 18

One of the consequences of trade restrictions is misallocation of international resources.

Accepted Answer

A) True 
 B)False

Question 19

The primary objective of the World Trade Organization is to

Accepted Answer

A)  help underdeveloped nations increase their standard of living.
B)  achieve world peace.
C)  remove barriers to trade worldwide.
D)  enforce worldwide political and trade regulations.
E)  promote the invention of new technologies.

Question 20

The World Bank is an example of a(n)  ____, supported by industrialized nations, including the United States.

Accepted Answer

A)  ADB
B)  IMF
C)  MDB
D)  EFTA
E)  LAFTA

Exam 3: Exploring Global Business

Ben Schumpert decides his company will start exporting and he wants to start at the most basic level. What action should Ben take to meet his objectives?

Correct AnswerverifiedShow Answer

The United States joined with Mexico and Canada to promote the movement of resources and products; it formed a(n)

Correct AnswerverifiedShow Answer

What does it mean for a country to have an absolute advantage? Compare that to having a comparative advantage.

Correct AnswerverifiedWhen a country has an absolute advantage...View AnswerShow Answer

Devaluation increases the cost of foreign goods, while it decreases the cost of domestic goods to foreign firms.

Correct AnswerverifiedShow Answer

Joint venture agreements generally require a very low level of commitment from all the parties involved.

Correct AnswerverifiedShow Answer

At present, the United States has an embargo against North Korea because

Correct AnswerverifiedShow Answer

A ____ is issued by the transport carrier to the exporter to prove merchandise has been shipped.

Correct AnswerverifiedShow Answer

When Serena from the United States flies to Scotland on a Canadian airline, stays in an Edinburgh hotel, and buys many wool sweaters from Scotland to bring home, she is

Correct AnswerverifiedShow Answer

A trading company

Correct AnswerverifiedShow Answer

When a country's currency is devalued, this ____ the cost of foreign goods and ____ the cost of domestic goods to foreign firms.

Correct AnswerverifiedShow Answer

When the United States levies a tax on textiles from India, this tax is a type of

Correct AnswerverifiedShow Answer

Selling and shipping raw materials or products to other nations is called

Correct AnswerverifiedShow Answer

Howard believes that there should be no trade restrictions for any reason. What effect would Howard say that trade restrictions have on prices?

Correct AnswerverifiedShow Answer

Selling and shipping raw materials or products to other nations is known as exporting.

Correct AnswerverifiedShow Answer

One of the consequences of trade restrictions is misallocation of international resources.

Correct AnswerverifiedShow Answer

The primary objective of the World Trade Organization is to

Correct AnswerverifiedShow Answer

What types of products did GATT focus on during the Kennedy Round?

Correct AnswerverifiedShow Answer

Which of the following is false concerning the International Monetary Fund?

Correct AnswerverifiedShow Answer

The World Bank is an example of a(n) ____, supported by industrialized nations, including the United States.

Correct AnswerverifiedShow Answer

​Panama is considering instituting trade restrictions in order to balance its payments, protect new businesses, and protect domestic jobs. What may be some of the reasons it would not want to institute trade restrictions?

Correct AnswerverifiedShow Answer

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When a country has an absolute advantage...
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When a country's currency is devalued, this the cost of foreign goods and the cost of domestic goods to foreign firms.

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Panama is considering instituting trade restrictions in order to balance its payments, protect new businesses, and protect domestic jobs. What may be some of the reasons it would not want to institute trade restrictions?

Correct Answer
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