Chapter 3: Competing In Global Markets

10 Questions  I  By Nksandoval
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  • 1. 
    Which theory states that a nation should produce and sell goods to other countries that it produces most efficiently, and buy goods produced more efficiently by other countries?
    • A. 

      Comparative advantage

    • B. 

      Absolute advantage

    • C. 

      Mercantilism

    • D. 

      Bilateral advantage


  • 2. 
    The president of the American Auto Parts Corporation recently testified before members of Congress, urging them to limit the flow of imported automobile parts into the United States. She contended that these imports were priced lower than the foreign producers were charging in their own countries. She believes these foreigh producers are guilty of:
    • A. 

      Dumping

    • B. 

      Reverse exporting

    • C. 

      Free trade

    • D. 

      Bilateral trade surplus


  • 3. 
    When foreign firms build production facilities in the United States, they are engaging in:
    • A. 

      Exporting

    • B. 

      Importing

    • C. 

      Foreign direct investment

    • D. 

      Countertrading


  • 4. 
    Pepsi Cola has entered into a long-term contract with a South African beverage business. The contract calls for the South African firm to produce and market Pepsi Cola in South Africa. Pepsi will receive a royalty on each case of soda sold. This is an example of:
    • A. 

      Licensing

    • B. 

      A joint venture

    • C. 

      A foreign subsidiary

    • D. 

      Foreign direct investment


  • 5. 
    Mo's Hardware, a U.S. retailer, buys much of its inventory from Asian countries. Mo's Hardware would benefit if the value of the dollar ______ relative to the currencies of the countries from which Mo's imports.
    • A. 

      Rose

    • B. 

      Fell

    • C. 

      Remain constant

    • D. 

      Floated unpredictably


  • 6. 
    Ted is typical of many U.S. businesspersons. Ted feels the U.S. culture should be the model for the rest of the world, and that the "American way" of doing things is almost always the best. Ted is guily of:
    • A. 

      Xenoculturalism

    • B. 

      Ethnocentricity

    • C. 

      Culture shock

    • D. 

      Counter valuation


  • 7. 
    Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies usually result from:
    • A. 

      Negotiated rate adjustments between the U.S. government and the World Trade Organization

    • B. 

      Decisions by the Federal Reserve Board of Governors to declare a new value for the exchange rate

    • C. 

      Fluctuations in the world price of gold

    • D. 

      Changes in the supply of and/or demand for dollars in the market for the U.S. currency


  • 8. 
    Many countries use _______ to protect their domestic industries against dumping and unfair foreign competition.
    • A. 

      Export limitations

    • B. 

      Global marketing

    • C. 

      Trade protectionism

    • D. 

      Import enhancements


  • 9. 
    The U.S. government has announced a 5 million-pound annual limit on beef imported from the country of Argentina. This type of trade restriction is called a(n):
    • A. 

      Embargo

    • B. 

      Revenue tariff

    • C. 

      Import quota

    • D. 

      Export cap


  • 10. 
    Many economists and business experts predict that _______ will potentially be the growth market of the future.
    • A. 

      Asia

    • B. 

      Africa

    • C. 

      South America

    • D. 

      The Middle East


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