Test Bank For A Changing World 6Th Canadian Edition By O. C. Ferrell

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Test Bank For A Changing World 6Th Canadian Edition By O. C. Ferrell

Chapter 03

Business in a Borderless World

True / False Questions

1. Exporting is the purchase of products from another nation.
FALSE

Exporting is the selling of goods and services to foreign markets.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-04 Trade Between Countries

2. Falling political barriers and new technologies have made it increasingly difficult to trade with other nations.
FALSE

New technologies and the collapse of old political barriers have facilitated international trade.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-02 The Role of International Business

3. When a nation is importing more than it is exporting, it has a positive balance of trade.
FALSE

When a nation is importing more than it is exporting, it has a trade deficit, or a negative balance of trade.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-05 Balance of Trade

4. A balance of trade refers to the buying, selling, and trading of goods and services across national boundaries.
FALSE

A nation’s balance of trade is the difference in value between its exports and imports.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-05 Balance of Trade

5. Nations trade with other nations to obtain resources that would otherwise be unavailable to them.
TRUE

Nations and businesses engage in international trade to obtain raw materials and goods that are otherwise unavailable to them or are available elsewhere at a lower price than that at which they themselves can produce.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-03 Why Nations Trade

6. An absolute advantage exists when a country has a monopoly on a natural resource.
TRUE

An absolute advantage, or monopoly, exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-03 Why Nations Trade

7. De Beers Consolidated Mines, Ltd., has the largest deposits of diamonds in the world. As such, they are said to have a comparative advantage.
FALSE

De Beers has an absolute advantage over the world’s diamond trade and uses its control to maintain high prices for gem-quality diamonds.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-03 Why Nations Trade

8. Outsourcing refers to the transfer of manufacturing and other tasks to countries where labour and supplies are less expensive.
TRUE

Outsourcing has become a controversial practice because many jobs have moved overseas where those tasks can be accomplished for lower costs.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-03 Why Nations Trade

9. Canada’s top trading partner, in terms of both imports and exports, is China.
FALSE

Canada’s top trading partner, in terms of export destinations and import sources, is the United States.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-05 Balance of Trade

10. The trade deficit fluctuates according to such factors as the economic health of Canada and other countries, productivity, perceived quality, and exchange rates.
TRUE

In 2014, Canada had a $4.9 billion trade surplus with the United States and a $14.9 billion trade deficit with China.

Blooms: Understand
Difficulty: Medium
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-05 Balance of Trade

11. Trade surpluses are harmful because they can mean the failure of businesses, the loss of jobs, and a lowered standard of living.
FALSE

Trade deficits are harmful because they can mean the failure of businesses, the loss of jobs, and a lowered standard of living.

Blooms: Understand
Difficulty: Medium
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-05 Balance of Trade

12. A nation’s balance of trade is the difference in value between its exports and imports.
TRUE

A trade surplus is a positive balance of trade and a trade deficit is a negative balance of trade.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-05 Balance of Trade

13. Completely free trade always exists.
FALSE

When a company decides to do business outside its own country, it will encounter a number of barriers to international trade.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-06 International Trade Barriers

14. Protective tariffs raise the price of foreign goods to allow competition with more expensive domestic goods.
TRUE

Protective tariffs allow more expensive domestic goods to compete with foreign ones.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-08 Ethical, Legal, and Political Barriers

15. When the value of the Canadian dollar declines relative to other currencies, such as the euro, the price of imports becomes relatively less expensive for Canadian consumers.
FALSE

When the value of the Canadian dollar declines relative to other currencies, such as the euro, the price of imports becomes relatively more expensive for Canadian consumers.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-07 Economic Barriers

16. A common reason for establishing quotas or tariffs is to prohibit dumping.
TRUE

Dumping occurs when a country or business sells products at a lower price than what it costs to produce them and setting a quota or tariff will rescind this practice.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-08 Ethical, Legal, and Political Barriers

17. An embargo gives the importing country complete control over the domestic price of the good.
FALSE

An embargo prohibits trade in a particular product. They are generally directed at specific goods or countries and may be established for political, economic, health, or religious reasons.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-08 Ethical, Legal, and Political Barriers

18. Political considerations change slowly, while laws change rapidly.
FALSE

Political considerations are seldom written down and often change rapidly, unlike legal issues.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-08 Ethical, Legal, and Political Barriers

19. Differences in spoken language and body language have no impact on international business.
FALSE

Cultural differences, including body language and gestures, affect international trade.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-09 Social and Cultural Barriers

20. Many marketers view technological barriers to trade as opportunities to enter new markets.
TRUE

Countries such as India and China have been targeted because they have few private phone lines. These present tremendous opportunities for North American businesses to expand into these markets.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-10 Technological Barriers

21. Probably the most illegal cartel is OPEC, the Organization of Petroleum Exporting Countries.
FALSE

OPEC is legal. It is the most famous cartel.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.
Topic: 03-08 Ethical, Legal, and Political Barriers

22. The North American Free Trade Agreement (NAFTA), which went into effect on January 1, 1994, effectively merged Canada and the United States into one market of more than 440 million consumers.
FALSE

The NAFTA agreement includes Canada, the United States, and Mexico.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-03 Specify some of the agreements, alliances, and organizations that may encourage trade across international boundaries.
Topic: 03-13 The North American Free Trade Agreement (NAFTA)

23. The Doha Development Round collapsed in 2008 after failing to agree on farm import rules, which allow countries to protect poor farmers by imposing a tariff on certain goods in the event of a drop in prices or a surge in imports.
TRUE

There were other major issues, but the main stumbling block was farm import rules.

Blooms: Remember
Difficulty: Hard
Learning Objective: 03-03 Specify some of the agreements, alliances, and organizations that may encourage trade across international boundaries.
Topic: 03-12 General Agreement on Tariffs and Trade (GATT)

24. GATT provided a forum for tariff negotiations.
TRUE

The General Agreement on Tariffs and Trade (GATT) provides a forum for tariff negotiations and a place where international trade problems can be discussed and resolved.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-03 Specify some of the agreements, alliances, and organizations that may encourage trade across international boundaries.
Topic: 03-12 General Agreement on Tariffs and Trade (GATT)

25. The International Monetary Fund promotes trade among member nations by eliminating trade barriers and fostering financial cooperation.
TRUE

The International Monetary Fund (IMF) was established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-03 Specify some of the agreements, alliances, and organizations that may encourage trade across international boundaries.
Topic: 03-18 International Monetary Fund