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Exam 3: Doing Business in Global Markets

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Question 91

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Which of the following best describes the impact of the Internet on global market transactions?

A) The use of email has minimized the risk of expropriation of a firm's assets by a foreign government.
B) The Internet allows new competitors entering a foreign market to bypass the traditional distribution channels.
C) Legal and regulatory forces are ignored because Internet transactions are difficult to police.
D) Internet chat rooms allow for an increased use of bartering as a method of resolving international payment problems.

E) B) and C)
F) A) and B)

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Question 92

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Free trade is the movement of goods and services between nations without political or economic barriers.

A) True
B) False

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Question 93

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A more recent free trade agreement between Cost Rica,the Dominican Republic,El Salvador,Guatemala,Honduras,Nicaragua,and the U.S. ,is known as the Central American Free Trade Agreement.Its strategy is to open new markets for all member countries and to lower tariffs between participating nations. The Central American Free Trade Agreement (CAFTA)was passed in 2005,between several Central American countries.Among its goals was to lower tariffs between participating nations and to open new market opportunities for all.

Under a system of floating exchange rates,changes in the value of the U.S.dollar relative to other currencies are the result of:

A risk unique to firms with direct investment in a foreign county is the potential takeover of the firm's assets by the government of that country.This takeover is called a(n) :

The theory of _______________ states that a nation should produce and sell goods to other countries that it produces most efficiently,and buy goods from other nations that they produce more efficiently.

The United States is the largest exporter in the world.

ExxonMobil Corporation refines and markets its petroleum products in many different nations.In addition,Exxon's stockholders and managers come from many different nations.If some of the nations where it operates decided to take over the assets of the company,this act would constitute:

The introduction of standardized international laws regulating business organizations has greatly simplified global trade. Businesses are face with a myriad of laws and regulations in global markets.

Which of the following statements best describes the theory of comparative advantage?

According to current U.S.laws,American firms are prohibited from participating in joint ventures with foreign firms.

The fee paid to a firm in a licensing agreement that gives another firm the right to manufacture their product or use its trademark is called:

A form of foreign direct investment,where a domestic company purchases a company in a foreign country to produce a similar product or service is a:

Contract manufacturing is a form of outsourcing.

A major concern voiced by U.S.critics of the North American Free Trade Agreement (NAFTA) is that it would result in:

The country of Nelly exports $250 of goods and services and imports $170 of goods and services.Nelly has an unfavorable balance of trade of $80. An unfavorable balance of trade,or trade deficit,occurs when the value of imports exceeds that of exports.In this case,Nelly has a favorable balance of trade of $80.

According to the "Spotlight on Small Business" box in Chapter 3,MFG.com's owner found that when going global,it was as important to focus on ____________ as such business related details like accounting,banking,and legal regulations.

__________ is the practice of selling a product in foreign countries for a lower price than the good is sold in the producing country.

Under the floating exchange rate system,the value of a country's currency is determined by:

Many foreign students in U.S.colleges and universities have discovered profitable opportunities by importing goods from their home countries into the United States.