question

Nations that primarily functioned under the centrally planned economic system prior to the 1980s, such as China and Russia, have embraced the market economy.

answer

False

question

Global business risk is any worldwide factor--outside the laws of supply and demand--that could impact the success or failure of any venture moving into the international arena.

answer

True

question

_____ imposes a waiting period between the determination of a product's quality and the determination of when it can actually be sold in a market

answer

Administrative delays

question

Which type of risk do managers have some control over?

answer

Operational

question

Operation risk occurs when debtors in a country are unable to ensure timely payments of foreign currency debt service because of either transfer or exchange restrictions or a general lack of foreign currency.

answer

False

question

The WTO was designed to

answer

Monitor trade around the entire world

question

The Organization for Economic Cooperation and Development (OECD), the World Trade Organization, the World Bank, and the International Monetary Fund have all indicated that unstable political systems are the greatest single barrier to economic development worldwide.

answer

False

question

Which of the following is an economic and trade sanctions against targeted foreign countries, groups, organizations, and individuals; can be motivated by political, economic, or moral reasons?

answer

Embargoes

question

Any company considering moving into a foreign economic market must consider the powerful influence of the military and religious leadership.

answer

True

question

Political issues that significantly impact global business include

answer

Government restriction of trade

question

Which of the following is NOT a way that Governments promote trade?

answer

Import Financing

question

_____ are special privileges offered by the government in order to attract businesses to a region or to provide them with the funding to operate successfully.

answer

Subsidies

question

Which of the following is designed to raise revenue for governments and provide a competitive advantage for domestic business?

answer

Tariffs

question

Cultures such as China, North Korea, and Cuba believe that an economic value system should be founded on cumulative efforts, controlled by greater entities or governments.

answer

True

question

Which of the following are designated areas in Customs Ports of Entry that allow commercial merchandise to receive the same customs treatment if would receive if it were outside the commerce of the United States.

answer

Foreign Trade Zones

question

A market economy most often refers to an economic system that is under comprehensive control and regulation by a government, in accordance with the plan of economic development.

answer

False

question

Supplier's credit is

answer

Loan in which the exporter is covered, but the value of the cover will be less than the value of the contract.

question

Quotas typically

answer

Raise the price of imports, reduce the volume of imports, and encourage demand for domestically made subsitutes

question

Which of the following is NOT a purpose behind embargoes?

answer

Increasing resources or technology

question

The three types of global business risk include ownership, operational risk, and transfer risk.

answer

True

question

Which of the following are types of risk companies are exposed to in International transactions?

answer

All of the above (Violence and Conflict, Terrorism and Kidnapping, Confiscation and expropriation)

question

In 1975, as business and policy makers' alike saw the potential growth of global business, the World Trade Organization (WTO) was created by several countries in order to monitor trade around the entire world.

answer

False

question

Which of the following places power in the hands of customs officials?

answer

Foreign Trade Zones

question

The U.S. Department of Commerce developed the International Trade Administration (ITA) in order to stimulate economic opportunities for US businesses and their employees.

answer

True

question

The United States Department of the Treasury oversees and enforces all US economic sanctions through the Office of Foreign Assets Control (OFAC)

answer

True

question

Though the World Trade Organization (WTO) has officially existed since 1975, the foundation for the rules in this trading system originates in the GATT.

answer

False

question

In order to achieve economic advantage, a nation should specialize, produce, and export only products where the nation holds an absolute advantage.

answer

Absolute Advantage Theory

question

If a nation's _____ far exceed its _____, then the balance of payments is out of control, or more simply stated, out of balance.

answer

Surpluses, deficits

question

As organizations become. More involved in the global community, they may opt to purchase land or other resources in other nations. This activity, known as foreign direct investment (FDI), is commonly used to purchase used to purchase real estate and existing properties.

answer

True

question

National can benefit from trade even when one trading partner does not have an absolute advantage on any of the products being traded.

answer

Comparative Advantage Theory

question

The General Agreement on Tariffs and Trade (GATT) was signed on January 1, 1948

answer

True

question

Keeping track of the activity surrounding international trade and investment is done by maintaining a record of all international transactions, otherwise known as the balance of payments (BOP)

answer

True

question

The activity, known as ______ is when companies opt to purchase land or other resources in other nations.

answer

Foreign Direct Investment

question

The equation represents the relationship between trade deficits and surpluses is expressed as: Exports - Investments = Savings - Imports

answer

False

question

Operations of production are moved to a less-developed nation and the cycle is complete as highly-developed nations become importers of this product.

answer

International Product Life Cycle Theory

question

Government interventions may be used to decrease global competitiveness.

answer

False

question

Which of the following NOT true regarding GATT?

answer

Representatives from twenty nations accepted what would later be considered the persecutor o the EU

question

The two ways companies can engage in FDI include

answer

Greenfield investment and acquisitions

question

Which of the following is NOT a strategic goal of FDI?

answer

Reducing capital and labor costs.

question

Socialism is the economic policy of restraining trade between nations.

answer

False

question

The Balance of Payments

answer

Includes imports, goods, land, people; and financial investments

question

All of the following are factors that can affect the international BOP and either create or reduce surpluses and deficits except

answer

Mergers and acquisitions

question

Government interventions may

answer

(All of the Above) Be used to increase global competitiveness, intervene to keep the balance of payments under control, promote protectionism.

question

When considering FDI, the most important consideration facing a corporation is the type of ______ and _____ the investing corporation will have over the foreign entity.

answer

Ownership, control

question

Equity capital is the value of the MNCs investment in shares of an enterprise in a foreign country.

answer

True

question

Governments play a major role in support of technology by crafting industry-specific measures, such as tax credits for research and development of new technologies and trade policies that support essential technology sectors.

answer

New Trade Theory

question

Ownership in foreign entities can be a complete or a controlling stake in the form of either a joint venture or through stock purchases and acquisitions of existing corporations.

answer

False

question

Attempts to explain that nations will produce and export goods that use the highest proportion of those factors of production that are most abundant to a nation

answer

Factor Proportions Theory

question

In mathematical terms the current account is expressed as

answer

Exports - Imports = Savings - Investments

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