True/False
Indicate whether the sentence or statement is true
or false.
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1.
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Most
business activities occur within a country’s own borders.
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2.
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A
country can have an absolute advantage in only one area.
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3.
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Without foreign trade, all of the items you buy would cost less, because they would
not need to be shipped here from other lands.
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4.
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A
nation with a trade surplus is said to have a favorable trade position.
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5.
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It is
possible for the United States to have a trade surplus with one country and a trade deficit with
another.
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6.
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Some
countries limit the amount of money their citizens can take out of the country when they
travel.
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7.
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Because of international trade, all nations of the world use the same banking
system.
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8.
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When
a country has a favorable balance of payments, the value of its currency is usually constant or
rising.
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9.
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Countries that devote most of their economies to agriculture usually provide more and
better goods and services for their citizens.
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10.
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A
joint venture is an agreement between two or more countries to remove duties and trade barriers on
products traded among them.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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11.
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The
making, buying, and selling of goods and services within a country is called a. | international
business. | b. | world trade. | c. | importing. | d. | domestic business. | | |
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12.
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The
United States conducts trade with over ____ countries.
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13.
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Which
of the following counties has an absolute advantage in coffee production? a. | the United
States | b. | Saudi Arabia | c. | Brazil | d. | Ireland | | |
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14.
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Goods
and services sold to other countries are called a. | exports. | b. | tariffs. | c. | imports. | d. | contraband. | | |
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15.
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About
how many U.S. jobs depend on international business? a. | 1 out of
2 | b. | 1 out of
4 | c. | 1 out of
6 | d. | 1 out of
10 | | |
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16.
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The
difference between a country’s total exports and total imports is called the a. | foreign
debt. | b. | balance of trade. | c. | trade
surplus. | d. | trade deficit. | | |
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17.
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The
difference between the amount of money that comes into a country and the amount that goes out of it
is called the a. | balance of
payments. | b. | balance of trade. | c. | foreign
debt. | d. | all of the above are correct. | | |
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18.
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Suppose you want to make a currency exchange for 50 British pounds. You must exchange
$87.50 U.S. dollars to get the 50 pounds. What is the value of 1 pound today, in relation to the U.S.
dollar? a. | $1.50 | b. | $1.75 | c. | $2.00 | d. | $2.25 | | |
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19.
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Which
of the following scenarios is likely to cause the value of a country’s currency to
rise? a. | prolonged
inflation | b. | sudden change in government | c. | increased demand
for the nation’s products and currency | d. | higher interest
rates | | |
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20.
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Which
of the following is NOT a cultural/social factor that affects international
business? a. | language | b. | religion | c. | values | d. | climate | | |
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21.
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The
key effects on a country’s level of economic development are a. | government
system, political stability, and trade barriers. | b. | literacy level,
technology, and agricultural dependency. | c. | religion, traditions, and customs. | d. | location,
climate, and natural resources. | | |
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22.
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A tax
that a government places on certain imported products is called a(n) a. | quota. | b. | embargo. | c. | tariff. | d. | divestiture. | | |
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23.
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A
limit that a government places on the quantity of a product that may be exported or imported during a
given period is called a a. | tariff. | b. | quota. | c. | luxury tax. | d. | trade
surplus. | | |
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24.
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What
is a free-trade zone? a. | A selected area where products can be imported duty-free and
then stored, assembled, or used in manufacturing. | b. | A selected area
where importers and exporters can trade or exchange products without money changing
hands. | c. | A specific point in the growth of a country’s economy
where trade with other nations becomes economically advantageous. | d. | A specific point
in a product’s life cycle at which the government allows the manufacturer to freely sell the
product in the global marketplace. | | |
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25.
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Common market members a. | impose high tariffs on one another’s
products. | b. | produce and sell exactly the same
products. | c. | prohibit one another’s workers from moving freely across
borders. | d. | have a common external duty on products being imported from
nonmember countries. | | |
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26.
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A
country in which an MNC places business activities is called the a. | home
country. | b. | host country. | c. | economic
community. | d. | free-trade zone. | | |
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27.
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Selling the right to use some intangible property for a fee or royalty is
called a. | a joint
venture. | b. | franchising. | c. | a free-trade
agreement. | d. | licensing. | | |
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28.
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Which
of the following is NOT a goal of the World Trade Organization? a. | lowering
tariffs | b. | strengthening import quotas | c. | helping poor
countries with economic growth | d. | enforcing free-trade agreements between
members | | |
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29.
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Licensing a. | is generally a very risky way for a company to expand into
other countries. | b. | usually involves selling a product or
service. | c. | has a low financial investment, so the potential financial
return is often low. | d. | all of the above | | |
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30.
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This
international trade organization was created in 1944 to provide loans for rebuilding after World War
II. a. | North Atlantic
Treaty Organization | b. | International Monetary Fund | c. | European
Union | d. | World Bank | | |
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Completion
Complete each sentence or
statement.
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31.
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International business is frequently referred to as world or ____________________
trade.
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32.
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The
situation in which a country specializes in the production of a good or service at which it is
relative more efficient is called ____________________ advantage.
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33.
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Items
bought from other countries are called ____________________.
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34.
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Foreign ____________________ is the amount a country owes to other
countries.
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35.
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If a
nation imports more than it exports, it has a trade ____________________.
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36.
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A
negative or ____________________ balance of payments occurs when a country sends out more money than
it brings in.
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37.
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The
____________________ rate is the value of a currency in one country compared with the value in
another.
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38.
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____________________ rates are the cost of using someone else’s
money.
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39.
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The
accepted behaviors, customs, and values of a society are referred to as
____________________.
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40.
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A
nation’s transportation, communication, and utility systems is referred to as its
____________________.
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41.
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A
trade ____________________ is a restriction to free trade.
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42.
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When
a government completely stops the import or export of a product, it is called a(n)
____________________.
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43.
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A(n)
____________________ company is an organization that does business in several
countries.
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44.
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A(n)
____________________ is the right to use a company name or business process in a specific
way.
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