Chapter Quiz
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1 INCORRECT
__________ is the performance of business activities designed to plan, plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. A)Global strategy
B) Marketing
C) Marketing concept
Regional marketing concept
D)
E) International marketing
Feedback: Difficulty Level: Medium Learning Objective: 01-2 Topic: International Marketing Defined Bloom's: Knowledge AACSB: Analytic Page: 10 Explanation: International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. 2
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2 INCORRECT
Which of the following is the most c ritical difference between domestic marketing
and international marketing?
The environment in which marketing plans must be implemented
A)
B) The different concepts of marketing
C) The change in marketing goals
The difference in technological standards
D)
E) The change in corporate objectives
Feedback: Difficulty Level: Medium Learning Objective: 01-2 Topic: International Marketing Defined Bloom's: Comprehension AACSB: Reflective Thinking Page: 10-11 Explanation: The difference lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. 3
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3 INCORRECT
Dylan is planning to take his successful fast food venture global. Which of the following is the reason why his task could be mo re complicated than that of the domestic marketer? A)The international marketer must change his marketing goals in the various countries of operation.
B)The international marketer must deal with at least two levels of
uncontrollable uncertainty instead of one. C) Technological standardization could challenge effective c ustomization in different markets. International trade regulations still do not allow free trade in most markets across the globe.
D)
E) Lack of competent skills makes effective se rvice a major challenge.
Feedback: Difficulty Level: Hard Learning Objective: 01-3 Topic: The International Marketing Task Bloom's: Application AACSB: Reflective Thinking Page: 11 Explanation: The international marketer's task is more complicated than that of the domestic marketer because the international marketer must deal with at least two levels of uncontrollable uncertainty instead of one. Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds its own unique set of uncontrollable factors. 4
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4 CORRECT Which of the following would be considered to be an uncontrollable element in the foreign environment? A)Channels of distribution
B) Research
C) Economic forces
Promotion
D) E) Product elements
Feedback: Difficulty Level: Hard Learning Objective: 01-3 Topic: The International Marketing Task Bloom's: Comprehension AACSB: Reflective Thinking Page: 11 Explanation: Refer Exhibit 1.3?The International Marketing Task 5
5
5 CORRECT Such elements as geography and infrastructure, structure of distribution, and cultural forces are part of which o f the following international marketing task environments?
A)
Foreign environment (uncontrollable)
B) Foreign environment (controllable)
C) Domestic environment (uncontrollable)
D)
Domestic environment (controllable)
E) Global environment (controllable)
Feedback: Difficulty Level: Hard Learning Objective: 01-3 Topic: The International Marketing Task
Bloom's: Comprehension AACSB: Reflective Thinking Page: 11 Explanation: Refer Exhibit 1.3?The International Marketing Task 6
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6 CORRECT Which of the following is NOT true of the impact of culture? A)The reaction to much of the environment's (cultural) impact on the marketer's activities is automatic.
B)In dealing with unfamiliar markets, frames of reference are unimportant in evaluating the potential of a market. C) Judgments are derived from experience that is the result of acculturation in the home country. An established frame of reference is an important factor in determining a marketer's reaction to situations?social and even nonsocial.
D)
E) As a result of acculturation, we react in a manner acceptable to our society without consciously thinking about it. Feedback: Difficulty Level: Medium Learning Objective: 01-3 Topic: Environmental Adaptation Needed Bloom's: Comprehension AACSB: Reflective Thinking Page: 15 Explanation: In dealing with unfamiliar markets, marketers must be aware of t he frames of reference they are using in making their decisions or evaluating the potential of a market. 7
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7 INCORRECT
When Rita Thomas' clothing company began to market its line of inexpensive cotton
shirts in Africa, it assumed that it would be able to use its television and print advertising that had worked so well in the United States and other countries. However, the company was soon to learn that literacy rates and ability to access television was not the same as in the other areas of the world. Which W hich of the following factors includes this decision-making factor in Rita's international marketing task? A)Domestic environment (controllable)
B) Domestic environment (controllable)
C) Global environment (uncontrollable)
Foreign environment (uncontrollable)
D)
E) Foreign environment (controllable)
Feedback: Difficulty Level: Hard Learning Objective: 01-3 Topic: The International Marketing Task Bloom's: Application AACSB: Reflective Thinking Page: 13 Explanation: Refer Exhibit 1.3?The International Marketing Task 8
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8 INCORRECT
The _____ and issues abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. A)structure of distribution
B) competitive forces
C) economic forces
level of technology
D)
E) political/legal forces
Feedback: Difficulty Level: Medium Learning Objective: 01-3 Topic: Aspects of the Foreign Environment Bloom's: Comprehension AACSB: Reflective Thinking Page: 14 Explanation: Political and legal issues face a business, whether it operates at home or in a foreign country. However, the issues abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. 9
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9 CORRECT The task of _____ is the most challenging and important one c onfronting international marketers.
A)
cultural adjustment
B)dealing with politics
C) international standardization
caring for the environment
D) E) international branding
Feedback: Difficulty Level: Medium Learning Objective: 01-3 Topic: Environmental Adaptation Needed Bloom's: Knowledge AACSB: Analytic Page: 15 Explanation: The task of cultural adjustment, however, is the most challenging and important one confronting international marketers; they must adjust their marketing efforts to cultures to which they are not attuned. 10
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10 INCORRECT
One of Phillipe Ortiz's difficulties in marketing his line of Philippine cabinetry in Los Angeles is that he is still tied c ulturally to business models that work in the Philippines. These models do not work in the United States. Which of the following best explains the difficulty Philippe is experiencing? A)Xenophobia
B)Self-reference criterion
C) Globalism
D)
Racism
E) Intellectual challenges
Feedback:
Difficulty Level: Hard Learning Objective: 01-4 Topic: The Self-Reference Criterion and Ethnocentrism: Major Obstacles Bloom's: Application AACSB: Reflective Thinking Page: 16 Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. 11
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11 CORRECT _____ is generally a problem when managers from affluent affluent countries work with managers and markets in less-affluent countries. A)Xenophobia
B) Racism
C) Cultural backlash
Ethnocentrism
D)
E) Global redlining
Feedback: Difficulty Level: Medium Learning Objective: 01-4 Topic: The Self-Reference Criterion and Ethnocentrism: Major Obstacles Bloom's: Knowledge AACSB: Analytic Page: 16 Explanation: Ethnocentrism is generally a problem when managers from affluent countries work with managers and markets in less affluent countries.
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12 INCORRECT
The primary obstacles to success in international marketing are a person's _____ and an associated ethnocentrism. A)regionalism
B) holism
C) self-reference criterion
segregation
D)
E) integration
Feedback: Difficulty Level: Medium Learning Objective: 01-4 Topic: The Self-Reference Criterion and Ethnocentrism: Major Obstacles Bloom's: Knowledge AACSB: Analytic Page: 16 Explanation: The primary obstacles to success in international marketing are a person's self-reference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experience s, and knowledge as a basis for decisions. 13
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13 INCORRECT
The most effective way to control the influence of ethnocentrism and the SRC is to: A)
reduce interaction with culturally diverse audience.
B) ask for feedback on every possible occasion.
C) recognize their effects on our behavior.
learn at least two foreign languages to understand the cultural differences.
D)
E) ask for second opinion in a decision-making scenario.
Feedback: Difficulty Level: Medium Learning Objective: 01-4 Topic: The Self-Reference Criterion and Ethnocentrism: Major Obstacles Bloom's: Knowledge AACSB: Analytic Page: 17 Explanation: The most effective way to control the influence of ethnocentrism and the self-reference criterion is to recognize their effects on our behavior. 14
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14 INCORRECT
The Ajax Corporation does not actively cultivate customer s outside the United States; however, this company's products do reach foreign markets through trading companies. Ajax is probably in the _____ stage of international marketing involvement. A)infrequent foreign marketing
B) pre-global marketing
C) pre-international marketing
anti-foreign marketing
D)
E) no direct foreign marketing
Feedback: Difficulty Level: Hard Learning Objective: 01-6 Topic: No Direct Foreign Marketing Bloom's: Application AACSB: Reflective Thinking Page: 20 Explanation: A company in this stage does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets. Sales may be made to trading tr ading companies as well as foreign customers who directly contact the firm. Or products may reac h foreign markets via domestic wholesalers or distributors who sell abroad without the explicit encouragement or even knowledge of the producer. 15
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15 CORRECT Randy, the marketing manager at Bryte Systems Inc. decides sell to foreign markets as goods become available, and he has little or no intention of maintaining continuous market representation. Randy's firm is at which of the following stage of international marketing involvement? A)No direct foreign marketing
B)Infrequent global marketing
C) Global marketing
D)
Regular foreign marketing
E) International marketing
Feedback: Difficulty Level: Hard Learning Objective: 01-6 Topic: Infrequent Foreign Marketing Bloom's: Application AACSB: Reflective Thinking Page: 20 Explanation: In the "infrequent foreign marketing" stage of international marketing involvement, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. As domestic demand increases and absorbs surpluses, foreign sales activity is reduced or even withdrawn.
There are four events and trends that have affected and will continue to affect global business today. Which of the following would be classed as one of those four m ajor trends?
the trend toward acceptance of English as the global language A) the trend toward affluence in all nations B) the trend toward the acceptance of the free market system among C) developing countries in Latin America, Asia, and Eastern Europe D)
the trend toward friendship in almost all sections of Africa
All of the above are considered to be among the four major trends that E) are affecting global business today. Feedback: Page: 5
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2 CORRECT The salient lesson for international marketers at t he beginning of the 21st century is: Expect the unexpected. A) B)
Beware of guests bringing gifts. There is no such thing as a free lunch.
C)
Dance with the one that brought you. D) When in Rome, do as t he Romans do. E) Feedback: Page: 4
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3 INCORRECT What is required for a firm to be successful in international marketing? Political connections A) Entrepreneurial salespeople B) C) D) E)
A thorough and complete commitment Past success in domestic marketing Monopoly control
Feedback: Page: 9
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4 INCORRECT Which of the foll owing terms would most closely match with the following description - the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit? Global Strategy A) Marketing B) Marketing Concept C) D) E)
Regional Marketing Concept International Marketing
Feedback: Page: 10
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5 INCORRECT Which of the foll owing would be considered to be an uncontrollable element in the foreign environment? channels of distribution A) B) C) D)
research economic forces promotion
product elements E) Feedback: Page: 11 Exhibit 1.3 6
5
6 CORRECT Such elements as geography and infrastructure, structure of distribution, and cultural forces are part of which of the following i nternational marketing task environments? foreign environment (uncontrollable) A) foreign environment (controllable) B) C) D)
domestic environment (uncontrollable) domestic environment (controllable) domestic environment (marketing mix variables)
E) Feedback: Page: 11 Exhibit 1.3 7
7 UNANSWERED
5
Such elements as political and l egal forces, economic climate, and competition are the t hree elements found in the ___________________ ___________________ according to the international marketing task model found in the text. foreign environment (uncontrollable) A) foreign environment (controllable) B) domestic environment (uncontrollable) C) D) E)
8
domestic environment (controllable) domestic environment (marketing mix variables) 5
8 CORRECT Serena represents an American company initiating business in China. She has been told, in China, to enter into a proper contract, the Chinese company or individual must be considered to be a "legal person." To be a legal person in China, the company or person must have registered as such with the Chinese government. Which of t he following environments would most correctly apply to the above situation? foreign environment (uncontrollable) A)
foreign environment (controllable) B) domestic environment (uncontrollable) C) domestic environment (controllable) D) domestic environment (marketing mix variables) E) Feedback: Page: 11 Exhibit 1.3 9
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9 INCORRECT When Rita Thomas' clothing company began to market it s line of inexpensive cotton shirts in Africa, it assumed that it would be able to use its television and print advertising that had worked so well in the United States and other countries. However, the company was soon to learn that literacy rates and ability to access television was not the same as in the other areas of the world. Which of the following environments would most correctly apply to the above situation? A) B) C)
domestic environment (controllable) domestic environment (marketing mix variables) domestic environment (uncontrollable) foreign environment (uncontrollable)
D) foreign environment (controllable) E) 10
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10 INCORRECT One of Phillipe Ortiz's difficulties in marketing his line of Philippine cabinetry in Los Angeles is that he is still tied culturally to business models that work in the Philippines. These models do not work in the United States. The obstacle that Mr. Ortiz is facing may be identified as being which of the following? xenophobia A) SRC (self-reference criterion) B) globalism C) racism D) E)
intellectual challenges
11 INCORRECT _____________ _____________ is generally generally a problem when when managers from affluent countries work with managers and markets in less-affluent countries. Xenophobia A) Racism B) C) D)
Cultural backlash Ethnocentrism Global redlining
Feedback: Page: 15
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12 CORRECT To avoid errors in business decisions, it i s necessary to conduct a ______________ ______________ that isolates isolates the SRC influences and to maintain a vigilance regarding ethnocentrism. cross-cultural analysis A) global research effort B) search of the Internet C) purge D) E)
parallel cultural simulation
Feedback: Page: 16
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13 INCORRECT To be globally aware, a manager must have knowledge of cultures, history, world market potential, and global economic, social, and political trends. Additionally, the manager will not succeed with respect to global awareness if he or she does not have: pronounced skill in languages. A) a tolerance of cultural differences. B) an ability to drive a hard bargain with any foreigner. C) a local counterpart to handle negotiations. D) E)
all of the above.
Feedback: Page: 17
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14 INCORRECT The Ajax Corporation has ____________________ ____________________ in that it actively does
not cultivate customers outside the United States; however, this company's products do reach foreign markets through t rading companies.
A) B)
infrequent foreign marketing pre-global marketing pre-international marketing
C) anti-foreign marketing D) no direct foreign marketing E) Feedback: Page: 18
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15 INCORRECT If a company adopts a concept wherein it views an entire set of country markets as a unit, identifying groups of prospective buyers with similar needs as global market segment and developing a marketing plan that strives for standardization wherever it is cost and culturally effective, the company has adopted what is called t he: marketing concept. A) social marketing concept. B) global marketing concept. C) D)
multidomestic marketing orientation. domestic market extension orientation.
E)
Cha 2
The correct answer for each question is indicated by a Multiple Choic e Q
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The United States' leading trading partner is ______________ ____________________. ______. the United Kingdom A) Japan B)
Mexico C) Canada D) Taiwan E) Feedback: Page: 28
2 INCORRECT
2
5
According to information presented in the text, which of the following events marred the first half of the 20th century to such an extent that it took most of the last half of the century for most of the industrialized world to recover? the nuclear arms race A) B) C)
World War I World War II the polio epidemic
D) the Great Depression E) Feedback: Page: 28-29
3
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3 CORRECT If a country sells more to other countries than it buys from them, the situation is called a favorable: A) B) C)
balance of trade. economic model. management structure. tariff management scheme.
D) marriage between government and i ndustry. E) Feedback: Page: 31
4 INCORRECT
4
5
A statement that records all fi nancial transactions between a nation's residents and those of the rest of the world during a given period of time (usually one year) is called a nation's: balance of trade. A) balance-of-payments. B) import-export statement. C)
supply-demand statement. D) none of the above. E) Feedback: Page: 33
5 INCORRECT
5
5
Within the balance-of-payments statement, the ___________ account account is a record of all exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. current A) capital B) C) D)
reserves wealth power
E) Feedback: Page: 34
6 INCORRECT
6
5
If a nation uses tariffs, quotas, and nontariff barriers to restrict trade so that domestic industries can flourish, it may be guilty of what is called: embargoes. A) B) C) D)
boycotts. protectionism. monopolistic thinking. predatory pricing.
E) Feedback: Page: 35
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7 CORRECT All of the following are arguments that favor protectionism EXCEPT: increase of business size. A) maintenance of employment and reduction of unemployment. B) conservation of natural resources. C) national defense. D) All of the above are correct arguments for protectionism.
E) Feedback: Page: 35-36
8 INCORRECT
8
5
If a government wants to tax goods entering at its borders, it will impose what is called a(n): quota. A) B) C)
voluntary export restraint. orderly market agreement. tariff.
D) standard monetary barrier. E) Feedback: Page: 37
9 INCORRECT
9
5
A(n) __________ will generally i ncrease inflationary pressures, weaken balanceof-payments positions, positions, and restrict manufacturers' supply sources. A) B)
quota voluntary export restraint orderly market agreement
C) tariff D) standard monetary barrier E) Feedback: Page: 37
10 CORRECT
10
5
If Germany limits the number of Japanese ball bearings that may enter its country to protect its domestic industry and reduce reliance of foreign supply, it is using a(n) _______ as a t rade barrier. quota A) B) C) D) E)
voluntary export restraint orderly market agreement tariff standard monetary barrier
Feedback: Page: 38
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11 INCORRECT
If the United States were to place an absolute restriction against the purchase and importation of Cuban sugar as a punishment for past actions against U.S. businesses in Cuba, the United States would have imposed which of the following against Libya? embargo A) boycott B) C) D)
standard restriction import quota export restraint
E) Feedback: Page: 39
12 INCORRECT
12
5
One of the weapons used by the United States against global terrorism is a monetary barrier called ______________ ______________ where the U.S. refuses t o allow importers to exchange its national currency for the seller's currency. differential exchange rate A) export restraint B) valuation systems C) blocked currency D) E)
fees
Feedback: Page: 39
13 INCORRECT
13
5
Different ____________ ____________ are a major source of trade difficulties between the United States and Japan. F or example, the size of knotholes in plywood shipped to Japan can determine whether or not the shipment is accepted. This becomes an issue of perceived quality. valuation systems A) export systems B) standards C) D) E)
measurements none of the above is correct
Feedback: Page: 40
14 INCORRECT
14
5
A Taiwanese chip manufacturer is intentionally selling its chips in the United States for less than the cost of production. It is doing this to undermine the U.S. competition and to take control of the U.S. chip market. Such a company would be correctly accused of __________ __________ pricing. demand-based A) B) C)
supply-based monopolistic predatory
D) competitive E) Feedback: Page: 40
15 INCORRECT
15
5
Which of the foll owing treaties paved the way for an effective worldwide tariff agreement? A) B)
WTO GATT NAFTA
C) NATO D) EC E) Feedback: Page: 42
The correct answer for each question is indicated by a Chapter Quiz
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1 CORRECT
Which of the following was the main objective o f the American efforts to improve world trade by fostering economic growth in Europe and the underdeveloped world after World War II?
Halting the growth of Nazi Germany
A)
Dissolving the colonial powers
B)
Gaining access to the European market
C)
Dampening the spread of communism
D)
Creating a trade bloc to counter the OPEC countries' clout
E)
Feedback: Difficulty Level: Medium Learning Objective: 02-1 Topic: The Twentieth to the Twenty-First Century Bloom's: Knowledge AACSB: Analytic Page: 28 Explanation: After World War II, as a means to dampen the spread of communism, the United States set out to infuse the ideal of capitalism throughout as much of the wor ld as possible. 2
5
2 CORRECT
In addition to U.S. economic assistance, _____ was a significant move toward international cooperation among trading nations.
A)
B)
C)
negotiation of the General Agreement on Tariffs and Trade
forming of the United Nations Development Programme
signing of the Treaty on Open Skies signing of the Montreal Protocol
D) establishment of the World Federation of Trade U nions
E)
Feedback: Difficulty Level: Medium Learning Objective: 02-1 Topic: The Twentieth to the Twenty-First Century Bloom's: Knowledge AACSB: Analytic Page: 29 Explanation: In addition to U.S. economic assistance, a move toward international cooperation among trading nations was manifest in the negotiation (1986-1994) of the General Agreement on Tariffs and Trade (GATT). 3
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3 CORRECT
The _____, part of the American effort to infuse the ideal of capitalism throughout as much of the world as possible, was aimed at assisting in rebuilding Europe.
A)
B)
C)
D)
E)
Eisenhower Plan
Marshall Plan
Bradley Plan
Roosevelt Plan
Truman Plan
Feedback: Difficulty Level: Easy Learning Objective: 02-1 Topic: The Twentieth to the Twenty-First Century Bloom's: Knowledge
AACSB: Analytic Page: 28 Explanation: The Marshall Plan to assist in rebuilding Europe, financial and industrial development assistance to rebuild Japan, and funds channeled through the Agency for International Development and other groups designed to foster economic growth in the underdeveloped world were used to help create a strong world economy. 4
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4 CORRECT
_____ refers to the system of accounts that records a nation's international financial transactions. Trade balance
A)
National accounts system.
B)
EX-IM (exports-imports) account
C)
Balance of payments
D)
Exchange rate
E)
Feedback: Difficulty Level: Easy Learning Objective: 02-2 Topic: Balance of Payments Bloom's: Knowledge AACSB: Analytic Page: 33 Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time?usually one year. 5
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5 CORRECT
Which of the following is true regarding balance-of-payments records? The fact that assets and liabilities balance means a nation is in particularly good financial condition.
A)
The fact that assets and liabilities balance does not mean a nation is in particularly poor financial condition.
B)
A balance of payments is not a re cord of condition.
C)
A balance of payments is a determinant of condition.
D)
A balance of payments reflects all the financial transactions that occurred in the country.
E)
Feedback: Difficulty Level: Hard Learning Objective: 02-2 Topic: Balance of Payments Bloom's: Comprehension AACSB: Reflective Thinking Page: 33 Explanation: The fact that assets and liabilities balance does not mean a nation is in particularly good or poor financial condition. A balance of payments is a record of condition, not a determinant of condition. Each of the nation's financial transactions with other countries is reflected in its balance of payments. 6
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6 CORRECT
Which of the following would be the balance-of-payments account that is a record of all merchandise exports, imports, and services plus unilateral transfers of funds?
A)
B)
current account
capital account
credit account
C)
receivables account
D)
reserves account
E)
Feedback: Difficulty Level: Easy Learning Objective: 02-2 Topic: Balance of Payments Bloom's: Knowledge AACSB: Analytic Page: 33 Explanation: The current account is a record of all merchandise exports, imports, and services plus unilateral transfers of funds. 7
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7 CORRECT
A(n) _____ is simply a tax imposed by a government on goods entering at its borders.
A)
B)
C)
D)
E)
quota
trade penalty
tariff
boycott
embargo
Feedback: Difficulty Level: Easy Learning Objective: 02-3
Topic: Trade Barriers Bloom's: Knowledge AACSB: Analytic Page: 36 Explanation: A tariff is a tax imposed by a government on goods entering at its borders. Tariffs may be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons. 8
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8 CORRECT
In general, tariffs restrict: inflationary pressures.
A)
special interests' privileges.
B)
government control in economic matters.
C)
the number of tariffs.
D)
manufacturers' supply sources.
E)
Feedback: Difficulty Level: Hard Learning Objective: 02-4 Topic: Trade Barriers Bloom's: Comprehension AACSB: Reflective Thinking Page: 37 Explanation: In general, tariffs restrict manufacturers' supply sources, choices available to consumers, and competition. 9
5
9 Which of the following types of nontariff barriers would be considered to be "specific
CORRECT
limitations on trade" by international marketers?
A)
B)
C)
D)
E)
Fees
Export subsidies
Voluntary export restraints
Embargoes
Packaging, labeling, or marking standards
Feedback: Difficulty Level: Hard Learning Objective: 02-4 Topic: Trade Barriers Bloom's: Knowledge AACSB: Analytic Page: 38 Explanation: Refer Exhibit 2.6 - Types of Nontariff Barriers 10
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10 CORRECT
Exporting countries sometimes agree to voluntary export restraints (VER) as an alternative to the threat of:
A)
B)
C)
expulsion.
disorderly marketing agreements.
stiffer quotas and tariffs. export subsidies
D)
E)
standardization disparities
Feedback: Difficulty Level: Medium Learning Objective: 02-4 Topic: Trade Barriers Bloom's: Knowledge AACSB: Analytic Page: 39 Explanation: Similar to quotas are the voluntary export restraints (VERs) or o rderly market agreements (OMAs). 11
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11 CORRECT
Which of the following trade policy tools require the importers who want to buy a foreign good to apply for an exchange permit?
A)
B)
C)
D)
E)
Tariffs
Import quota
Blocked currency
Government approval
Export levies
Feedback: Difficulty Level: Hard Learning Objective: 02-4 Topic: Trade Barriers Bloom's: Knowledge AACSB: Analytic
Page: 40 Explanation: Government approval requires that importers who want to buy a foreign good must apply for an exchange permit, that is, permission to exchange an amount of local currency for foreign currency. 12
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12 CORRECT
_____ is the practice whereby a foreign producer intentionally sells their products products in the United States for less than the cost of production to undermine the competition and take control of the market.
A)
B)
C)
D)
E)
Basing point pricing
Offensive pricing
Defensive pricing
Counterpoint pricing
Predatory pricing
Feedback: Difficulty Level: Easy Learning Objective: 02-4 Topic: Trade Barriers Bloom's: Knowledge AACSB: Analytic Page: 41 Explanation: Antidumping laws were designed to prevent foreign producers from "predatory pricing." Violators are assessed "antidumping" duties for selling below cost and/or "countervailing duties" to prevent the use of foreign government subsidies to undermine American industry. Many countries have similar laws, and they are allowed under WTO rules. 13
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13 CORRECT
Which section of the Omnibus Trade and Competitiveness Act r ecognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and, occasionally, severe financial harm?
A)
B)
C)
D)
E)
The market access section
The export expansion section
The import relief section
The foreign exchange regulation section
The trade deficit section
Feedback: Difficulty Level: Hard Learning Objective: 02-5 Topic: The Omnibus Trade and Competitiveness Act Bloom's: Knowledge AACSB: Analytic Page: 43 Explanation: Recognizing that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and, occasionally, severe financial harm, the import relief section of the Omnibus Trade and Competitiveness Act provides a menu of remedies for U.S. businesses adversely affected by imports. 14
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14 CORRECT
Which was the most notable achievement of the Uruguay Round of GATT negotiations? The signing of the Trade-Related Aspects of I ntellectual Property Rights (TRIPs) A)
B)
agreement
The formulation of the Kyoto Protocol
C)
D)
E)
The inclusion of Africa and Indonesia into its member-list
The creation of the World Trade Organization
The ratification of the Internet as a global business platform
Feedback: Difficulty Level: Medium Learning Objective: 02-6 Topic: General Agreement on Tariffs and Trade Bloom's: Knowledge AACSB: Analytic Page: 45 Explanation: Perhaps the most notable achievement of the Uruguay Round was the creation of a new institution as a successor to the GATT?the World Trade Organization. 15
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15 CORRECT
The five institutions of the World Bank Group perform all the following services EXCEPT: lending money to the governments of developing countries to finance development A)
projects in education, health, and infrastructure. providing assistance to governments for developmental projects to the poorest
B)
developing countries. helping strengthen the private sector in developing countries with long-term loans,
C)
D)
equity investments, and other financial assistance.
providing investors with investment guarantees against "commercial risk".
providing facilities for the conciliation and arbitration of disputes between E)
governments and foreign investors.
Feedback: Difficulty Level: Hard Learning Objective: 02-7
Topic: The International Monetary Fund and World Bank Group Bloom's: Knowledge AACSB: Analytic Page: 48 Explanation: The institutions provide investors with investment guarantees against "noncommercial risk," such as expropriation and war, to c reate an environment in developing countries that will attract foreign investment.
