Future of Business Canadian 5th Edition by Althouse – Test Bank

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1. Which of the following characteristics is exhibited by a company that has a global vision?

  a. being interested in nothing more complicated than exporting
  b. having a very nationalistic view of the world
  c. recognizing and reacting to international business opportunities
  d. following its competition into foreign markets

 

ANSWER:   c

 

2. Exports create which of the following for the Canadian economy?

  a. foreign currency reserves
  b. employment
  c. good trade relations
  d. a stronger currency

 

ANSWER:   b

 

3. How do imports benefit the Canadian consumer?

  a. better quality products
  b. more selection
  c. cheaper products
  d. stronger dollar

 

ANSWER:   c

 

4. One of the reasons that the United Nations has ranked Canada as one of the best countries to live in is our ability to do which of the following?

  a. do business with the outside world
  b. have a good education system
  c. provide one year of parental leave
  d. provide free health care for all our citizens

 

ANSWER:   a

 

5. Our economy has become more sophisticated in recent decades and has developed into which of the following?

  a. an information economy
  b. a technological economy
  c. a globalized economy
  d. a knowledge-based economy

 

ANSWER:   d

 

6. Which of the following move resources, goods, services, and skills across national boundaries without regard to the country in which they are headquartered?

  a. borderless corporations
  b. international monopolies
  c. cartels
  d. multinational corporations

 

ANSWER:   d

 

7. The Ford Motor Company has invested $6 billion to build a “world car,” the midsize Mondeo. The car was designed in the United States, Germany, and the United Kingdom to be adaptable to any market in the world. Which type of organization best describes Ford?

  a. multinational
  b. interpartnership
  c. nationalistic
  d. intercultural

 

ANSWER:   a

 

8. Which of the following is one of the advantages associated with multinational corporations?

  a. They have easy access to financial resources.
  b. They have the ability to shift production from one country to another.
  c. They have no need to be concerned about foreign currency regulations.
  d. They have no need to worry about social and cultural issues.

 

ANSWER:   b

 

9. Successful multinational corporations do which of the following when conducting business internationally?

  a. have good relations with government officials
  b. research the market thoroughly so as not to make mistakes
  c. consider the local community concerns
  d. take political and cultural differences into account

 

ANSWER:   d

 

10. Which of the following is one of the advantages associated with multinational corporations?

  a. They can take advantage of tax variations.
  b. They have the ability to shift employees from one country to another.
  c. They can shift their currency reserves easily.
  d. They can hire employees from many different countries.

 

ANSWER:   a

 

11. What are some of the challenges that multinational corporations face?

  a. bribery offers
  b. resentment from locals
  c. cultural issues
  d. hiring employees from many different countries

 

ANSWER:   c

 

12. Which of the following are goods and services that are made in a country and sold to other countries?

  a. tangibles
  b. countertrades
  c. exports
  d. imports

 

ANSWER:   c

 

13. Which of the following are products that are bought from one country for use in another just as Canada buys coffee from Columbia?

  a. tariffs
  b. tangibles
  c. imports
  d. exports

 

ANSWER:   c

 

14. Canada buys copper from Chile’s Escondido copper mine. The copper is used to make wiring for the Canadian telecommunications industry and for many other purposes. For Canada, the copper is an example of which of the following?

  a. tariff
  b. export
  c. embargo
  d. import

 

ANSWER:   d

 

15. Canadian manufacturers sell automobiles in South Korea. To South Korea, the automobiles represent which of the following?

  a. countertrades
  b. exports
  c. imports
  d. exchanges

 

ANSWER:   c

 

16. Bombardier sells trains to European countries. To the European countries, these trains are an example of which of the following?

  a. imports
  b. countertrades
  c. intangibles
  d. exports

 

ANSWER:   a

 

17. Developed nations account for what percentage of world trade?

  a. 60%
  b. 70%
  c. 80%
  d. 90%

 

ANSWER:   b

 

18. The United States accounts for what percentage of Canada’s exports?

  a. 95%
  b. 85%
  c. 75%
  d. 65%

 

ANSWER:   c

 

19. Which of the following is defined as the difference in value of a country’s exports and imports over a period of time?

  a. federal deficit
  b. federal surplus
  c. balance of trade
  d. balance of exchange

 

ANSWER:   c

 

20. A country that exports more goods than it imports is said to exhibit which of the following?

  a. a favourable balance of payment
  b. a negative trade deficit
  c. a favourable balance of trade
  d. an unfavourable balance of trade

 

ANSWER:   c

 

21. A country that imports more goods than it exports is said to exhibit which of the following?

  a. a positive trade surplus
  b. an unfavourable balance of trade
  c. a favourable balance of trade
  d. a positive balance of payment

 

ANSWER:   b

 

22. In 2009, Argentina exported $25.3 billion and imported products valued at $9 billion. Argentina exhibited which of the following?

  a. a positive balance of payment
  b. a negative trade deficit
  c. a favourable balance of trade
  d. a negative balance of trade

 

ANSWER:   c

 

23. Romania has imports of $16.7 billion and has an unfavourable balance of trade. This means that Romania has which of the following?

  a. less than $16.7 billion in exports
  b. exactly $16.7 billion in exports
  c. more than $16.7 billion in exports
  d. low inflation

 

ANSWER:   a

 

24. In 2009, Albania exported $340 million and imported products valued at $1.5 billion. Albania would exhibit which of the following?

  a. a negative balance of trade
  b. a negative trade deficit
  c. an unfavourable balance of trade
  d. a negative balance of payment

 

ANSWER:   c

 

25. Azerbaijan has imports of $1.8 billion and has a favourable balance of trade. This means that Azerbaijan has which of the following?

  a. less than $1.8 billion in exports
  b. more than $1.8 billion in exports
  c. low inflation
  d. exactly $1.8 billion in exports

 

ANSWER:   b

 

26. In 2009, Argentina exported $25.3 billion and imported products valued at $9 billion. What does the difference between the dollar value of its exports and imports represent?

  a. a positive exchange rate
  b. a trade deficit
  c. a positive balance of payment
  d. a trade surplus

 

ANSWER:   d

 

27. In 2010, Albania exported $340 million and imported products valued at $1.5 billion. What does the difference between the dollar value of its exports and imports represent?

  a. its positive exchange rate
  b. its positive balance of payment
  c. its trade deficit
  d. its trade surplus

 

ANSWER:   c

 

28. The difference between a country’s total payments to other countries and its total receipts from other countries is represented by which of the following?

  a. financial surplus
  b. financial deficit
  c. balance of payments
  d. balance of trade

 

ANSWER:   c

 

29. The balance of payments is the summary of a country’s financial transactions with another country. Which of the following would you expect to see in such a summary?

  a. foreign aid
  b. current inflation rate
  c. political focus
  d. government deficit figures

 

ANSWER:   a

 

30. The balance of payments is the summary of a country’s financial transactions with another country. Which of the following would you expect to see in such a summary?

  a. political trade trip expenses
  b. unemployment payments
  c. military expenditures
  d. advertising spending

 

ANSWER:   c

 

31. Imagine you are trying to gather the information needed to calculate the balance of payments for an Eastern European country. To do your calculations, you would need to have information on which of the following?

  a. military expenditures to train its forces at home
  b. its current inflation rate
  c. its corporate tax rates
  d. foreign aid the country receives

 

ANSWER:   d

 

32. Which of the following represents the total amount of money that flows into and out of a country?

  a. the balance of trade
  b. the balance of payments
  c. the federal deficit
  d. the balance of exchange

 

ANSWER:   b

 

33. Which of the following represents the value of one currency in terms of another?

  a. the balance of payments
  b. the exchange rate
  c. the investment exchange
  d. the balance of trade

 

ANSWER:   b

 

34. When Steve went to Mexico, he found that he could go to his bank and trade his 100 Canadian dollars for 750 Mexican pesos (the nation’s currency). This is an example of 7.5 Mexican pesos representing which of the following?

  a. the foreign trade rate
  b. the balance of payments
  c. the international trade rate
  d. the exchange rate

 

ANSWER:   d

 

35. Which of the following terms means that prices of currencies vary based upon demand and supply of that currency?

  a. variable trade
  b. the international trade rate
  c. the floating exchange rate
  d. variable costs

 

ANSWER:   c

 

36. Which of the following is the reduction of a currency’s value relative to another currency?

  a. deregulation
  b. currency levelling
  c. devaluation
  d. exchange depreciation

 

ANSWER:   c

 

37. Which of the following terms best describes the reduction of value, if, during the past decade, the Canadian dollar’s value has been reduced relative to most other world currencies?

  a. deregulation
  b. re-evaluation
  c. comparative disadvantage
  d. devaluation

 

ANSWER:   d

 

38. When a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide a product, this is referred to as which of the following?

  a. relative advantage
  b. partial advantage
  c. absolute advantage
  d. comparative advantage

 

ANSWER:   c

 

39. The karakul is a breed of Central Asian sheep that produces curly, glossy wool for the manufacturing of warm hats and coats. Since the breed can be raised only in Central Asia, this region can be said to have which of the following?

  a. absolute advantage
  b. total advantage
  c. advantageous distinction
  d. comparative advantage

 

ANSWER:   a

 

40. Venezuela can grow and sell cut flowers for floral bouquets more easily and more cheaply than most other countries can produce the same flowers. When it comes to flowers, Venezuela has which of the following?

  a. comparative advantage
  b. advantageous competency
  c. absolute advantage
  d. total advantage

 

ANSWER:   a

 

41. If a country specializes in goods that it can produce most readily and cheaply and trades those goods for the goods that another country can produce most readily and cheaply, then both countries are exercising which of the following principles?

  a. distinctive advantage
  b. comparative advantage
  c. absolute advantage
  d. parallel competencies

 

ANSWER:   b

 

42. A policy of permitting the people of a country to buy and sell where they please, without restrictions, is called which of the following?

  a. protectionism
  b. free trade
  c. premium exchange
  d. comparative advantage

 

ANSWER:   b

 

43. Which of the following best describes an effect of free trade?

  a. It establishes artificial barriers to trade.
  b. It allows companies to conduct business without licences.
  c. It permits people to buy and sell where they please.
  d. It contributes to protectionism.

 

ANSWER:   c

 

44. Which of the following best describes protectionism?

  a. It uses artificial barriers to protect home products.
  b. It is based on the concept of absolute advantage.
  c. It allows people to buy and sell where they please.
  d. It prohibits tariffs, embargoes, and import quotas.

 

ANSWER:   a

 

45. Why do many people fear trade and globalization?

  a. Many fear that free trade and globalization lead to increased productivity.
  b. Many fear that an open economy spurs innovations with fresh ideas from abroad.
  c. Many fear that trade and globalization will lead to massive job losses.
  d. Many fear that trade and globalization will increase per capita income.

 

ANSWER:   c

 

46. According to the text, why are some people opposed to trade and globalization?

  a. loss of national identities
  b. less local businesses
  c. rich countries get richer
  d. damage to the environment

 

ANSWER:   d

 

47. When a country establishes artificial barriers such as quotas and tariffs, it is engaging in which of the following?

  a. protectionism
  b. free trade
  c. managed trade
  d. nationalism

 

ANSWER:   a

 

48. Which of the following is a benefit associated with free trade and globalization?

  a. a closed economy
  b. increased per capita income
  c. declining productivity
  d. an increase in the number of better-paying jobs

 

ANSWER:   b

 

49. What are the benefits associated with free trade and globalization?

  a. higher probability that inflation will arrest economic growth
  b. prevents employers from using pay cuts to threaten employees
  c. decreased per capita income
  d. an open economy that spurs innovation

 

ANSWER:   d

 

50. Which of the following is a benefit of global trade?

  a. Export jobs usually pay more than other jobs.
  b. It creates better relations between countries.
  c. It increases tourism between countries that trade.
  d. Increased trade increases GDP.

 

ANSWER:   a

 

51. Which of the following best describes the term “preferential tariff”?

  a. The tariff applies only to luxury items.
  b. The tariff limits the number of products that can be imported from particular countries.
  c. Tax is placed on countertrades.
  d. Tariff advantages are given to one country over others.

 

ANSWER:   d

 

52. When South Korea reduces the tariff that Japan (but only Japan) has to pay when it imports cameras into South Korea, which of the following best describes the action?

  a. a biased tariff
  b. a differential duty
  c. a preferential tariff
  d. a nontariff

 

ANSWER:   c

 

53. Nations sometimes form free-trade associations and establish areas where there are few, if any, export and import duties or other regulations that would act as barriers to trade among partners. Which of the following best describes the result of this behaviour?

  a. preferred tariff pacts
  b. free trade zones
  c. interaction zones
  d. customary-duty areas

 

ANSWER:   b

 

54. Which of the following represents the world’s largest free-trade zone?

  a. the ASEAN Free Trade Agreement
  b. the North American Free Trade Agreement
  c. the European Union Free Trade Agreement
  d. the South Asia Free Trade Agreement

 

ANSWER:   b

 

55. Since NAFTA came into effect in 1994, what has been the result?

  a. job losses and higher prices
  b. lower economic growth and less selection
  c. job creation and economic growth
  d. higher prices but more selection

 

ANSWER:   c

 

56. Which of the following countries are in the Mercosur free-trade zone?

  a. Panama, Brazil, Chile
  b. Argentina, Brazil, Venezuela
  c. Venezuela, Columbia, Ecuador
  d. Argentina, Peru, Venezuela

 

ANSWER:   b

 

57. How many countries are in the European Union?

  a. 20
  b. 25
  c. 28
  d. 32

 

ANSWER:   c

 

58. Which of the following is one of the primary objectives of the EU for all its members?

  a. increase access to other trade zones
  b. promote economic progress
  c. ease travel between countries
  d. improve the unemployment rate

 

ANSWER:   b

 

59. Which of the following is the best motivator for a company to enter the global market?

  a. change of domestic law
  b. saturated domestic market
  c. competition doing it
  d. potential new partners abroad

 

ANSWER:   b

 

60. Which of the following activities is the least costly and least risky method for selling a product on the global market?

  a. licensing
  b. exporting
  c. franchising
  d. contract manufacturing

 

ANSWER:   b

 

61. The BC Cherry Growers sells much of its locally grown produce to Taiwan. Which of the following would be the easiest and least expensive way for the growers’ association to sell to global markets?

  a. licensing
  b. importing
  c. exporting
  d. contract manufacturing

 

ANSWER:   c

 

62. U.S. plane manufacturer McDonnell-Douglas has authorized Mitsubishi Heavy Industries, a Japanese company, to use its trademarks, patents, and other proprietary knowledge to manufacture F-15 fighter planes. Mitsubishi Heavy Industries pays McDonnell-Douglas. This is an example of which of the following activities?

  a. contract manufacturing
  b. licensing
  c. importing
  d. franchising

 

ANSWER:   b

 

63. The Sara Lee Company sells the Hanes brand of hosiery in North America. The manufacturer of this hosiery brand in Great Britain sells it under the brand name of Pretty Polly. The Sara Lee Company is using which of the following activities to broaden its global marketing base without investing in overseas plants and equipment?

  a. contract manufacturing
  b. a cooperative agreement
  c. a joint venture
  d. a licensing agreement

 

ANSWER:   a

 

64. When a foreign company manufactures private label goods under a domestic company’s brand this is referred to as which of the following?

  a. licensing
  b. franchising
  c. contract manufacturing
  d. joint venture

 

ANSWER:   d

 

65. A domestic company may decide to sign an agreement for the production of its goods by an established foreign manufacturer. Such private-label manufacturing by a foreign company is known as which of the following?

  a. duplicate labelling
  b. franchising
  c. international labelling
  d. contract manufacturing

 

ANSWER:   d

 

66. Capital Radio PLC, the United Kingdom’s biggest commercial radio company, announced in 2002 that it would cooperate with Walt Disney Co. to create a radio network for children under the age of 16. The company will broadcast to a potential audience of 25 million under the name Capital Disney. This new radio network will be created as the result of which of the following arrangements?

  a. an international partnership
  b. a joint venture
  c. a joint cooperative
  d. an oligopoly

 

ANSWER:   b

 

67. An enterprise in which two or more companies or investors (including governments) share ownership of a business and its property rights is known as which of the following?

  a. a cooperative
  b. a joint venture
  c. an international partnership
  d. a cartel

 

ANSWER:   b

 

68. When a French company brings its patents on digital telephone switches, and Bell Canada provides the marketing know-how to a business relationship, which of the following arrangements is occurring?

  a. a joint venture
  b. an international partnership
  c. an oligopoly
  d. a joint cooperative

 

ANSWER:   a

 

69. Active ownership of a foreign company, with direct investors having either a controlling or a large minority interest in the company, is best described as which of the following?

  a. an international corporation
  b. a limited partnership
  c. an international cooperative
  d. direct foreign investment

 

ANSWER:   d

 

70. Grand Metropolitan, a British company, purchased North American–based Pillsbury Co. in order to expand its product line and the market for its existing consumer products. Metropolitan’s purchase was an example of which of the following?

  a. direct foreign investment
  b. an international corporation
  c. an international cooperative
  d. a limited partnership

 

ANSWER:   a

 

71. Japanese automobile manufacturer Mazda began production of the Premacy SUV in Haikou, China, at a plant it built in the Chinese province and expected to make 20,000 autos in 3 years. Mazda is using which action to engage in global trading?

  a. direct foreign investment
  b. an international cooperative
  c. a limited partnership
  d. an international corporation

 

ANSWER:   a

 

72. Which of the following is a form of trading arrangement in which part or all of the payment for purchased goods or services is in the form of other goods and services?

  a. a countertrade
  b. a counteroffer
  c. a nonfinancial exchange
  d. a counteraction

 

ANSWER:   a

 

73. Pierre Cardin gives technical advice on textile manufacturing to China and in exchange receives silk and cashmere. This is an example of which of the following?

  a. counteroffer
  b. joint venture
  c. countertrade
  d. contra-deal

 

ANSWER:   c

 

74. Which of the following statements best describes dumping?

  a. Dumping is legal provided that it is government subsidized.
  b. Most industrialized nations have passed laws to make dumping illegal.
  c. Canada has not been a victim of dumping.
  d. Dumping is a form of export quota.

 

ANSWER:   b

 

75. In 1997, Russia and Ukraine exported carbon steel plate into Canada at a price much lower than the countries charged for the identical steel in their home markets. Russia and Ukraine were engaged in which of the following activities?

  a. add-on pricing
  b. dumping
  c. unloading
  d. export pricing

 

ANSWER:   b

 

76. By using split-run magazines (modifying the U.S. editions so they contain Canadian ads), U.S. magazine publishers can offer lower rates to advertisers and sell the magazines for less money than Canadian publishers can. According to the CMPA, the U.S. magazine publishers are engaged in which of the following?

  a. unloading
  b. dumping
  c. export pricing
  d. add-on pricing

 

ANSWER:   b

 

77. Reducing trade barriers and opening markets is the role of which of the following organizations?

  a. World Trade Improvement Foundation
  b. World Trade Organization (WTO)
  c. International Monetary Fund (IMF)
  d. Global Trade Organization

 

ANSWER:   b

 

78. The Uruguay Round of trade negotiations is best described as which of the following?

  a. It was the most ambitious global trade agreement ever negotiated.
  b. It created the General Agreement on Tariffs and Trades (GATT).
  c. It actually increased tariffs by 10 percent worldwide.
  d. It was an agreement to lower trade barriers that existed in South American countries.

 

ANSWER:   a

 

79. Which of the following agreements dramatically lowered trade barriers worldwide and created the new World Trade Organization (WTO)?

  a. Maastricht Treaty
  b. Uruguay Round
  c. North American Free Trade Agreement
  d. Mercosur

 

ANSWER:   b

 

80. The World Trade Organization (WTO) is best described by which of the following?

  a. It includes all of the countries that signed the Uruguay Round.
  b. It is controlled by the United States.
  c. It has emerged as the world’s most powerful institution for reducing trade barriers and opening markets.
  d. It does not yet have an effective dispute settlement procedure but will before the year 2018.

 

ANSWER:   c

 

81. Which of the following organizations was formed with the original purpose of helping build infrastructure in developing countries and helping relieve the debt burden of these countries?

  a. the International Funding Bank
  b. the Central Bank
  c. the World Bank
  d. the Bank of Canada

 

ANSWER:   c

 

82. The World Bank’s emphasis has recently shifted from helping to build the infrastructure of developing countries to which of the following goals?

  a. developing new agricultural techniques for developing countries
  b. purchasing food for the population of developing countries
  c. building highways, schools, and hospitals for developing countries
  d. offering loans to help to relieve the debt burden of developing countries

 

ANSWER:   d

 

83. Which of the following is an international bank that normally provides short-term loans to countries that are unable to meet their budgetary expenses?

  a. the Financial Investment Fund
  b. the North Atlantic Trade Bank
  c. the International Monetary Fund
  d. the World International Federation

 

ANSWER:   c

 

84. To promote trade through financial cooperation is the role of which of the following organizations?

  a. World Bank
  b. World Trade Organization (WTO)
  c. International Monetary Fund (IMF)
  d. United Nations

 

ANSWER:   b

 

85. Which of the following is the sense of national consciousness that boosts the culture and interests of one country over those of all other countries?

  a. multinationalism
  b. unionism
  c. federalism
  d. nationalism

 

ANSWER:   d

 

86. One of the difficulties in doing business in France is that often the business must be conducted in French. Therefore, which of the following attitudes appears to be extremely important in France?

  a. unionism
  b. nationalism
  c. federalism
  d. multinationalism

 

ANSWER:   b

 

87. Which of the following concepts best represents a country’s set of beliefs, values, and social norms shared by members of society that determines what is socially acceptable?

  a. traditions
  b. regulations
  c. laws
  d. culture

 

ANSWER:   d

 

88. Bribery translates to kuroi kiri (black mist) in Japan, schmiergeld (grease money) in Germany, and baksheesh (tip or gratuity) in the Middle East. This differing way of looking at bribes is descriptive of differences in which of the following?

  a. trade regulations
  b. nationalistic standards
  c. local laws
  d. culture

 

ANSWER:   d

 

89. Spanish customers view toothpaste as a cosmetic while consumers in the Netherlands view it as a necessary part of daily hygiene and use three times as much as their Spanish counterparts. This example illustrates the importance of which of the following when marketing this product?

  a. cultural differences
  b. nationalistic standards
  c. local content laws
  d. expropriation laws

 

ANSWER:   a

 

90. Which of the following is part of a nation’s infrastructure?

  a. its railroads
  b. its lakes
  c. its rivers
  d. its mountain ranges

 

ANSWER:   a

 

91. Which of the following is described by the fact that Algeria includes 3,973 km of railroads, 104,000 km of roads, and 54 paved airports?

  a. infrastructure
  b. natural advantage
  c. ethnocentrism
  d. cultural environment

 

ANSWER:   a

 

92. Which of the following is an example of a natural trade barrier?

  a. price
  b. exchange controls
  c. product characteristic
  d. distance

 

ANSWER:   d

 

93. What is a natural barrier that faces Argentina when it sells beef to Siberia?

  a. exchange controls
  b. custom regulations
  c. distance
  d. government controls

 

ANSWER:   c

 

94. The Caucasus Mountains along the northeastern border of Georgia make it difficult for the nation to trade with other former Soviet republics that are to its north and east. The mountain range acts as which type of barrier or deterrent?

  a. a natural blockage
  b. a natural embargo
  c. a natural trade barrier
  d. an infrastructure deterrent

 

ANSWER:   c

 

95. Which of the following is a tax levied by a nation on imported goods?

  a. an embargo
  b. a boycott
  c. a premium
  d. a tariff

 

ANSWER:   d

 

96. China imposes a 45 percent tax on the market value of all chickens that are imported from other countries into China. What would be another name for this type of tax?

  a. a tariff
  b. a quota system
  c. a subsidy
  d. an embargo

 

ANSWER:   a

 

97. An argument in favour of protective tariffs is the “infant-industry argument.” Which of the following statements would best reflect that argument?

  a. Infant industries should be protected from established foreign competition.
  b. Infant industries should be exempt from antitrust laws.
  c. Any industry dealing with products for infants should be protected.
  d. Infant industries need government loans.

 

ANSWER:   a

 

98. Which of the following is a protectionist argument that says Canada should use tariffs to keep foreign labour from taking away Canadian jobs?

  a. job-equity principle
  b. statement of job security
  c. minimum-job employment agreement
  d. job-protection argument

 

ANSWER:   d

 

99. Which of the following is an argument for tariffs that protect domestic businesses and workers?

  a. the protection of industries and technology vital to defence preparedness
  b. the maintenance of improved quality of products to protect consumers
  c. the quota system argument
  d. the protection of large, established businesses

 

ANSWER:   a

 

100. Besides tariffs, a government can use a number of other tools to restrict trade. Which of the following is a tool aimed at restricting trade?

  a. an embargo
  b. a subsidy
  c. an export quota
  d. a currency exchange control

 

ANSWER:   a

 

101. Which of the following are limitations on the quantity of certain types of goods that can be imported over a period of time?

  a. subsidies
  b. embargo levels
  c. export quotas
  d. import quotas

 

ANSWER:   d

 

102. Which of the following terms refers to a total prohibition against importing certain products?

  a. a boycott
  b. a restrictive limit
  c. an embargo
  d. a tariff

 

ANSWER:   c

 

103. In 1914, the United States prohibited the importation of Mexican avocados even though Mexico is the world’s largest producer of the fruit. This prohibition remained in effect until 1996. The ban on importing Mexican avocados is an example of which type of restriction?

  a. boycott
  b. import quota
  c. embargo
  d. tariff

 

ANSWER:   c

 

104. Which of the following are laws that require a company earning foreign currency from its exports to sell the foreign currency to a control agency, usually a central bank?

  a. currency policies
  b. laws of balanced exchange
  c. favourable exchange regulations
  d. exchange controls

 

ANSWER:   d

 

105. Which of the following sectors does Canada have an important global role in?

  a. manufacturing
  b. space
  c. biotechnology
  d. clean technology

 

ANSWER:   d

 

106. Which countries does BRIC stand for?

  a. Brazil, Romania, Indonesia, China
  b. Brazil, Russia, India and China
  c. Bolivia, Russia, India and Congo
  d. Bulgaria, Romania, Indonesia, Canada

 

ANSWER:   b

 

107. The most fundamental reason for the growth in world trade is probably due to which of the following?

  a. cultural differences
  b. the creation of free-trade areas
  c. fluctuating exchange rates
  d. the need for businesses to expand their markets

 

ANSWER:   d

 

108. Which of the following is an accelerating trend in the economies of India and China?

  a. importance of technical and managerial skills
  b. dominance in mass production
  c. cheap assembly labour
  d. movement toward political stability

 

ANSWER:   a

 

109. Having a global vision simply means having a willingness to sell outside one’s national borders if, and when, the opportunity arises.

  a. True
  b. False

 

ANSWER:   False

 

110. Some multinational corporations are so large that they resemble small countries.

  a. True
  b. False

 

ANSWER:   True

 

111. Regardless of its size, a multinational corporation has only one corporate headquarters.

  a. True
  b. False

 

ANSWER:   False

 

112. Mines in South Africa produce diamonds and sell them to retailers in the United States. To South African miners, diamonds are an export.

  a. True
  b. False

 

ANSWER:   True

 

113. Farmers in the United States sell peanuts to Canada. To Canadians, the peanuts are an export.

  a. True
  b. False

 

ANSWER:   False

 

114. The difference in value between a country’s imports and exports is called its balance of payments.

  a. True
  b. False

 

ANSWER:   False

 

115. A trade deficit is when a country imports more than it exports.

  a. True
  b. False

 

ANSWER:   True

 

116. Latvia had a favourable balance of trade last year when it exported $2.3 billion and imported $3.9 billion.

  a. True
  b. False

 

ANSWER:   False

 

117. The difference in value between a country’s total payments and total receipts is called its balance of payments.

  a. True
  b. False

 

ANSWER:   True

 

118. The exchange rate is the interest rate that foreign banks receive when borrowing money from Canada.

  a. True
  b. False

 

ANSWER:   False

 

119. According to the principle of comparative advantage, each country should specialize in the products that it can produce most readily and cheaply and trade those products for products that foreign countries can produce most readily and cheaply.

  a. True
  b. False

 

ANSWER:   True

 

120. The opposite of free trade is nationalism.

  a. True
  b. False

 

ANSWER:   False

 

121. One of the benefits of globalization is that it spurs innovation with fresh ideas from abroad.

  a. True
  b. False

 

ANSWER:   True

 

122. Mercosur is a free trade zone for countries in South East Asia.

  a. True
  b. False

 

ANSWER:   False

 

123. The European Union has 35 member countries.

  a. True
  b. False

 

ANSWER:   False

 

124. The least complicated and risky way for a company to enter a foreign market is through licensing.

  a. True
  b. False

 

ANSWER:   False

 

125. The method for a company to enter a foreign market with the greatest financial rewards is foreign direct investment.

  a. True
  b. False

 

ANSWER:   True

 

126. When a country sells its products in a foreign country at a cheaper price than usual, and sometimes even at a loss, it is dumping products.

  a. True
  b. False

 

ANSWER:   True

 

127. The Uruguay Round of trade negotiation is an agreement that affects trade among only Latin American countries.

  a. True
  b. False

 

ANSWER:   False

 

128. The International Monetary Fund (IMF) was created to promote trade through financial cooperation by working to eliminate trade barriers.

  a. True
  b. False

 

ANSWER:   True

 

129. A good product transcends cultural barriers. It does not need to be changed to suit different countries or cultures.

  a. True
  b. False

 

ANSWER:   False

 

130. The tax that Canada imposes on imported carbon steel products is called a tariff.

  a. True
  b. False

 

ANSWER:   True

 

131. Limitations on the quantity of certain types of goods that can be imported over a period of time are called import quotas.

  a. True
  b. False

 

ANSWER:   True

 

132. A complete ban on trading with another country is called an entreaty.

  a. True
  b. False

 

ANSWER:   False

 

133. The need for businesses to expand their markets is one of the most fundamental reasons for the growth in world trade.

  a. True
  b. False

 

ANSWER:   True

 

134. BRIC stands for Brazil, Russia, India, and Canada.

  a. True
  b. False

 

ANSWER:   False

 

135. What do you call companies that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located?

ANSWER:   multinational corporations

 

136. How would you describe the balance of trade in a country that exports more than it imports?

ANSWER:   as having a favourable balance of trade or a trade surplus

 

137. What happens when a country lowers the value of its currency relative to other countries?

ANSWER:   devaluation

 

138. There are certain types of wood that are available only from trees grown in the Brazilian rain forest. What kind of advantage does this give Brazil over all other nations that might want to import these exotic woods?

ANSWER:   absolute

 

139. What term has the opposite meaning from “protectionism”?

ANSWER:   free trade

 

140. What three countries were the initial signers of the North American Free Trade Agreement?

ANSWER:   Canada, United States, and Mexico

 

141. Companies can use several methods to participate in the global marketplace. To which of the methods is franchising most closely related?

ANSWER:   licensing

 

142. Briefly explain how an exchange of merchandise can occur without involving cash or any other form of financial consideration.

ANSWER:   by using countertrades or bartering

 

143. What new trade organization was created by the Uruguay Round to replace the old General Agreement on Tariffs and Trade (GATT)?

ANSWER:   the World Trade Organization

 

144. List the two international financial organizations that are instrumental in fostering global trade.

ANSWER:   the World Bank and the International Monetary Fund (IMF)

 

145. In order to show a commercial on South Korean television, a company like Gillette must film the commercial using South Korean actors. What political consideration is most likely responsible for this legal requirement?

ANSWER:   nationalism

 

146. How does an infrastructure influence a country’s economic development?

ANSWER:   An infrastructure is the basic institutions and public facilities on which an economy’s development depends.

 

147. There are arguments for and against the use of tariffs. What are the most likely reasons that a cattle-producing country like Argentina might have a tariff on the importation of beef?

ANSWER:   to protect domestic business and workers

 

148. What is the most fundamental reason for the growth in world trade?

ANSWER:   the need for businesses to expand their market

 

 

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