International Business: Trade, Currency, and Global Strategies

1. Chapter 3 review

2. One goal of the World Trade Organization is to eliminate import quotas. • True

3. An agreement between two or more companies to share a business project is called • A) licensing • B) franchising • C) a proprietorship • D) a joint venture • D

4. Domestic business refers to business activities needed for creating, shipping, and selling goods across national borders. • False

5. Which of the following would likely cause the value of the dollar to RISE? • A) an increased U.S. trade deficit • B) higher U.S. interest rates • C) loser U.S. inflation • D) Saudi Arabia doubles the price of the oil it sells the U.S. • C

6. Franchising is selling the right to use a trademark or brand name for a fee or royalty. • False

7. Which of the following situations represents an absolute advantage? • A) Saudi Arabia in fresh fish production • B) Honduras in banana production • C) Canada in rice production • D) Norway in orange and grapefruit production • B

8. With a free-trade zone, member countries agree to remove duties and trade barriers on products traded among them. • False

9. With foreign trade, many things you buy would cost more or not be available. • True

10. Which of the following tends to discourage international trade? • A) an embargo • B) a free-trade zone • C) a common market • A

11. MNC’s sometimes control a country’s political power. • True

12. The amount a country owes to other countries is called • A) national debt • B) foreign debt • C) trade deficit • D) balance of payments • B

13. If a country exports more than it imports, it has a trade surplus. • True

14. Danielle’s company is expanding into Korea and has asked her to research the language, customs, and values of the Korean people. Which aspect of the international business environment is Danielle investigating? • A) geography • B) economic development • C) political and legal concerns • D) cultural influences • D

15. A country’s culture, traditions, and religion can sometimes act as informal trade barriers. • True

16. An economy that is largely involved in agriculture is generally unable to provide its citizens with a large number of high-quality products. • True

17. Which of the following products is NOT imported to the United States in any great quantity? • A) Milk • B) oil • C) coffee • D) silk • A

18. The value of currency in one country compared with the value in another is called the interest rate. • False

19. Infrastructure refers to a country’s • A) educational system • B) system of local government • C) transportation, communication and utility systems • D) legal system • C

20. This group helps maintain an orderly system of world exchange rates. • A) international monetary fund • B) world trade organization • C) world bank • D) European union • A

21. Which of the following is an example of global strategy? • A) pizza hut restaurants in Japan sell pizzas with squid toppings because squid is a popular Japanese food • B) the formula for Coca-Cola is the same no matter where in the world it is sold • C) advertising for women’s underwear does not feature live models in many Muslim countries to avoid offending religious sensibilities • D) all of the above are global strategies • C

22. The difference between a country’s total imports is called a balance of _______, • The three key effects on a country’s level of economic development are _____ _____, technology, and agricultural dependency. • A(n) _____ company is an organization that does business in several countries. • The difference between the amount of money that comes into a country and the amount that goes out of it is called balance of _____. • The three main factors that affect currency exchange rates among countries are the country’s balance of payments, economic conditions, and _____ _____.