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International Business
Q:
If assembly or manufacturing is done in an FTZ using imported components, no duties need to be paid when the finished product is imported.
Q:
The advent of containerization has:
A. made the economies of the worlds nation-states less intertwined.
B. made moving goods from one mode of transport to another extremely labor-intensive.
C. significantly lowered the costs of shipping goods over long distances.
D. slowed down the globalization of markets and production.
E. increased costs of coordinating and controlling a global organization.
Q:
Firms that include imported parts in their finished products must pay duty on the imports, but this duty is returned when the product is exported (customs drawback).
Q:
Which of the following statements is true about the Internet and World Wide Web?
A. It has increased the real costs of information processing and communication.
B. It increases the costs of coordinating and controlling a global organization.
C. It makes it easier for buyers and sellers to find each other, wherever they may be located.
D. It is only accessible to large businesses considered as multinational giants.
E. It increases some of the business constraints of location, scale, and time zones.
Q:
Free trade zones are areas designated by the government of a country for duty-free entry of any nonprohibited good.
Q:
Richard has recently purchased a computer for $600. Compared to the $900 computer which he had purchased way back in 2010, the new one seems to be more efficient in terms of the price he has paid and the power of the microprocessor technology. This phenomenon is best explained by:
A. the law of demand.
B. Campbell's law.
C. Moore's law.
D. the law of diminishing returns.
E. Bowley's law.
Q:
The L/C sets up the bank as an intermediary between the seller and the buyer and reduces risk of nonpayment.
Q:
_____ predicts that the power of microprocessor technology doubles and the cost of production falls every 18 months.
A. Bell's law
B. Murphy's law
C. Moore's law
D. Ohm's law
E. Engel's law
Q:
Factoring allows the exporter to be more competitive by selling on open account rather than by means of the more costly letter-of-credit method.
Q:
Development of the microprocessor is most likely to be considered the single most important innovation in technology because:
A. it has made the economies of the worlds nation-states less intertwined.
B. it has enabled the explosive growth of low-cost computing.
C. it has increased the national differences in the cost and quality of factors of production.
D. it has helped in increasing barriers to international trade and investment.
E. it has isolated nations from each other by distance, time zones, and language.
Q:
By accepting a time draft, the buyer assumes the responsibility for making payment at maturity of the draft.
Q:
Gerald gifted his son, David, a computer two years ago. Recently, he decided to gift his daughter, Julian, a computer of her own. In the context of the two year gap between the purchase of both the computers and Moore's law, it is most likely that:
A. Gerald paid a higher price for Julian's computer.
B. David's computer will have a microprocessor with better power than that of Julian's.
C. both David's and Julian's computers would cost Gerald the same price.
D. the microprocessor in Julian's computer will be more advanced in terms of power than that of David's.
E. the power of the microprocessors, in both David and Julian's computers, would be the same.
Q:
Exporters should consider both private and public export financing.
Q:
While the lowering of trade barriers made globalization of markets and production a theoretical possibility, which of the following has made it a tangible reality?
A. Major advances in communication, information processing, and transportation technologies
B. The rise of communism and the need for independent economies on a global scale
C. The increasing diversity in consumer tastes and preferences worldwide
D. The increasing differences in the material culture the world over
E. The decreasing significance of the World Trade Organization
Q:
A confirmed letter of credit guarantees payment to the seller.
Q:
Which of the following has been declining in the developing nations of the world such as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil ?
A. Economic opportunities for international trade
B. Industrialization
C. Contribution toward the share of world output
D. The stock of foreign direct investment
E. Barriers to the free flow of goods, services, and capital
Q:
Export drafts must be paid before the buyer receives shipping documents.
Q:
Which of the following is a benefit of lowering the barriers to international trade?
A. Domestic industries are better protected from foreign competition.
B. Firms can view the world, rather than a single country, as their market.
C. The lowering of barriers promotes communism across the globe.
D. The lowering of barriers puts a brake on globalization of both markets and production.
E. The economies of the members of the WTO become self-contained entities.
Q:
When engaging in international business, banks are concerned with the merchandise, not the documents.
Q:
A disadvantage for companies that insist on less risky transactions, such as a letter of credit, is that they may be losing business to competitors that sell on open accounts.
Q:
The lowering of trade and investment barriers:
A. protects domestic industries from foreign competition.
B. was not an agenda of the Uruguay Round.
C. allows firms to base production at optimal locations outside their home country.
D. creates an unfavorable environment for FDI.
E. caused the Great depression of the 1930s.
Q:
Which of the following would be the biggest gain for the world's poor nations from the 2001 Doha WTO talks?
A. Gain from increasing barriers to cross-border investment
B. Gain from reduced agricultural tariffs and subsidies
C. Gain from expanding the use of antidumping laws
D. Gain from the promotion of communism across the globe
E. Gain from increased protectionism in the markets of the developed world
Q:
On an open account, payment can be made once the exports have been sold.
Q:
On an open account, the buyer assumes all of the payment risk.
Q:
Which of the following is a part of the agenda of the Doha Round of talks launched by the WTO?
A. Limiting the use of antidumping laws
B. Abolishing the International Monetary Fund
C. Increasing tariffs on industrial goods, services, and agricultural products
D. Persuading member governments to cut defense spending
E. Establishing GATT as a replacement for the WTO
Q:
The 1993 Uruguay Round: A. increased the trade and investment barriers.B. excluded the trade of services from international trade.C. transformed the World Trade Organization into the GATT.D. provided enhanced protection for patents, trademarks, and copyrights.E. promoted the worldwide rise of communism.
Q:
Some nations, especially in Asia, follow the Carlos Calvo doctrine, which protects them against fraud.
Q:
Which of the following organizations was established at the 1993 Uruguay Round?
A. World Trade Organization
B. International Court of Justice
C. International Trade Enforcement Agency
D. United Nations
E. World Bank
Q:
The sales agreement should not address where disputes will be resolved and by what legal system. That belongs in a side document.
Q:
Which of the following reasons contributed to the Great Depression of the 1930s?
A. Inability to meet the increasing world demand for products
B. Several countries accepting General Agreement on Tariffs and Trade
C. Increasing attack from foreign competitors on domestic industries
D. Privatization of state-owned organizations
E. Countries progressively raising trade barriers against each other
Q:
The sales agreement should specify as simply as possible the duties of the representative and the firm.
Q:
The advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. This goal was enshrined in the:
A. Inter-American Treaty of Reciprocal Assistance.
B. Comprehensive Economic Partnership Agreement.
C. General Agreement on Tariffs and Trade.
D. North American Free Trade Agreement.
E. United Nations charter.
Q:
Out of all the pricing methods mentioned, the preferred one for sellers is Ex-Works/factory door.
Q:
CIF and CFR terms are more convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.
Q:
The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World War II, was to:
A. deter any possible attempts to promote communism.
B. protect domestic industries from foreign competition.
C. prevent the occurrence of the Great Depression.
E. promote the trade of services over the trade of manufactured goods.
During the 1920s and 30s many of the world's nation-states erected formidable barriers to international trade and foreign direct investment. Many of the barriers to international trade took the form of high tariffs on imports of manufactured goods. The typical aim of such tariffs was to protect domestic industries from foreign competition.
Q:
When a firm invests resources in business activities outside its home country, it is referred to as:
A. foreign exchange.
B. foreign divestiture.
C. speculative investment.
D. foreign direct investment.
E. cross-border cartel.
Q:
In a DAP (delivered at named place), the seller assumes risk when the goods leave the seller's factory or warehouse.
Q:
Gem Globe, an American company, has invested substantial capital in precious stones mining activities outside the United States. This practice is referred to as:
A. unrelated diversification.
B. foreign direct investment.
C. cross-border bartering.
D. organizational divestment.
E. international cartel.
Q:
In a DAP (delivered at named place), the buyer is responsible for paying for all transportation costs from the seller's location, including customs clearing, to the buyer's location.
Q:
For foreign direct investment (FDI) to occur, a firm should primarily:
A. conduct cross-border bartering with neighboring countries.
B. invest resources in business activities outside its home country.
C. export goods or services to consumers in another country.
D. import goods or services from producers in another country.
E. erect formidable barriers to international trade.
Q:
CFR (cost and freight, foreign port) is similar to CIF except that the buyer purchases the insurance because it can obtain it at lower cost or because its government, to save foreign exchange, insists that it use a local insurance company.
Q:
If in the present time, an International company decides to do business with the former Communist nations of Europe and Asia it would most likely benefit from the:
A. host of export and investment opportunities presented by these countries.
B. low business risks involved in doing business with these countries.
C. authoritarian governments of these nations.
D. highly developed economies of these countries.
E. highly stable political and economic conditions in these countries.
Q:
In CIF (cost, insurance, freight, foreign port) the buyer quotes a price that includes the cost of the goods, insurance, and all transportation and miscellaneous charges to the named foreign port in the country of final destination.
Q:
In FAS (free alongside ship, loading port) the buyer pays all the transportation and delivery expenses up to the ship's side and clears the goods for export. Risk passes at the ship's rail.
Q:
Michelle, an Italian fashion designer, sells her merchandise by exporting them to the U.S., UK, and Brazil. According to this information, Michelle is most likely involved in:
A. foreign direct investment.
B. foreign institutional investment.
C. international trade.
D. cross-border bartering.
E. outsourcing.
Q:
Incoterms were created by the New York Chamber of Commerce and are revised every year.
Q:
Which of the following best exemplifies foreign direct investment (FDI)?
A. Pure Pearls, a jewelry store in the U.S., imports harvested pearls from Indonesia, Philippines, and Australia.
B. Chivalry, a U.S. based phone manufacturing company, has set up its own assembly plant in Japan to cater to the needs of the Asian market.
C. Delicate Love, a reputed florist company in Holland, exports tulips and roses throughout the globe.
D. Samantha started an Italian restaurant in her home country, the United States, after she took cooking lessons from a reputed chef in Italy.
E. Yin and Yang Inc., a Chinese firm, supplies buttons and zips to major denim brands in the UK.
Q:
Which of the following is a macro factor underlying the trend toward greater globalization?
A. Rise of communism across the globe
B. Increasing nationalization of private organization
C. Increasing diversity in the tastes and preferences of consumers in different nations
D. Increasing trade regulations across the globe
E. Dramatic developments in recent years in information processing and other technologies
Q:
Incoterms are 11 trade terms that describe the responsibilities of the buyer and seller in international trade.
Q:
Export pricing and sales agreements for foreign representatives are part of the marketing mix.
Q:
In 2008-09, the G20 primarily worked to:
A. address the concerns for human rights in sweatshops.
B. formulate policies to counter hunger and poverty in underdeveloped nations of the world.
C. provide a forum to launch a coordinated policy response to the global financial crisis.
D. help create a unified action plan to counter the threat of global terrorism.
E. render judgments on patent disputes submitted to it by member-states.
Q:
Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules, and cash flow projections are all part of the export marketing plan.
Q:
The _____ was originally established in 1999 to formulate a coordinated policy response to financial crises in developing nations.
A. United Nations
B. G-20
C. World Trade Organization
D. International Court of Justice
E. World Bank
Q:
The export marketing plan does not include product characteristics, promotional plans, and details on arrangements with foreign representatives.
Q:
The G20 comprises the _____ of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.
A. finance ministers and central bank governors
B. presidents and defense ministers
C. prime ministers and army chiefs
D. international trade ministers
E. ministers of foreign affairs
Q:
The export marketing plan is essentially the same as the domestic marketing plan.
Q:
According to the UN Charter, one of the four purposes of the UN is to:
A. be a center for harmonizing the actions of nations.
B. encourage member-nations to increase trade barriers.
C. provide interest-free loans to poor countries to implement infrastructure projects.
D. promote the creation of regional free trade agreements.
E. spread communism worldwide.
Q:
Licensing and joint venture agreements cannot be useful business forms for new exporters.
Q:
Often small exporters don't consider the use of an export management company when they should.
Q:
The _____ is the less controversial sister institution of the IMF which was created along with the IMF in 1944.
A. G-20
B. International Court of Justice
C. League of Nations
D. World Trade Organization
E. World Bank
Q:
New exporters often fail to provide local language translation of service, sales, and warrantee information.
Q:
The _____ was established in 1945 by 51 countries committed to preserving peace through international cooperation and collective security.
A. Greenpeace organization
B. Amnesty International
C. League of Nations
D. United Nations
E. G-20
Q:
Often new exporters think that they won't have to localize their approach, that a marketing technique or distribution system that works in one country will work in another.
Q:
Which of the following is an argument put forth by critics of the IMF?
A. It increases barriers to the free flow of goods and investment across national borders.
B. It only provides assistance to developing nations and completely ignores the developed nations.
C. It is not powerful enough to ensure that the nation-states adhere to the rules laid down in trade treaties.
D. It promotes the rise of communism across the globe.
E. It usurps the sovereignty of nation-states by telling governments what economic policies they must adopt.
Q:
Once in export markets, new exporters tend to maintain their focus on them, despite what is happening in the home market.
Q:
In 1944, the IMF was established to:
A. maintain order in the international monetary system.
B. preserve peace through international cooperation and collective security.
C. promote respect for human rights.
D. control the fossil-fuel emissions of the member states by imposing monetary fines.
E. formulate a coordinated policy response to financial crises in developing nations.
Q:
Responding to any demand rather than executing a planned growth strategy is not a mistake new exporters tend to make.
Q:
The World Bank was primarily created in 1944 to:
A. preserve peace through international cooperation and collective security.
B. promote economic development.
C. render judgments on disputes submitted to it by member states.
D. furnish advisory opinions on questions referred to it by authorized bodies.
E. promote respect for human rights.
Q:
Mistakes in selecting foreign distributors and sales representatives are not an issue new exporters face.
Q:
The globalization of production mainly occurs due to the:
A. growing cultural homogeneity across markets.
B. increasing differences in the tastes and preferences of consumers in different nations.
C. national differences in the cost and quality of factors such as labor, energy, land, and capital.
D. rise in communism the world over.
E. increasing worldwide demand for unskilled workers.
Q:
Lack of top management commitment to export is often a problem with new exporters.
Q:
_____ is an international treaty that committed signatories to lowering barriers to the free flow of goods across national borders and is the predecessor to the World Trade Organization.
A. North American Free Trade Agreement
B. Commonwealth of Independent States Free Trade Agreement
C. Kyoto protocol
D. General Agreement on Tariffs and Trade
E. Agreement on Trade-Related Aspects of Intellectual Property Rights
Q:
New exporters always come to the process with a carefully developed marketing strategy.
Q:
Which of the following reasons has made outsourcing of service activities to low-cost producers in other nations possible?
A. Increasing diversity in material culture among national markets
B. Government regulations limiting certain service activities in the home country
C. Increasing foreign competition in manufacturing industries
D. Rise in communism globally
E. Use of modern communications technology
Q:
Generally, trade missions consist of 5 to 12 business professors.
Q:
Early outsourcing efforts were primarily confined to _____.
A. accounting activities
B. manufacturing activities
C. healthcare services
D. educational activities
E. consulting services
Q:
If a firm decides to set up its own export operation rather than do indirect exporting, the firm must obtain overseas distribution.
Q:
A software company uses engineers in India to perform maintenance functions on software designed in the United States, and it also uses Indian accountants to compile tax returns. According to this information, the U.S. based company is most likely using:
A. outsourcing.
B. job sharing.
C. job rotation.
D. franchising.
E. apprenticeship.
Q:
U.S. pavilions are located in every country around the world and provide background information and displays on foreign companies.
Q:
Which of the following statements is most likely to be true of outsourcing?
A. Dispersing value-creation activities through outsourcing tends to increase the costs requires to develop a product offering.
B. In today's world, outsourcing efforts are primarily confined to manufacturing activities, and do not include service activities.
C. Outsourcing production to foreign countries increases the chance for companies to gain significant orders for their products from those countries.
D. Outsourcing always increases the time required to develop a product, and allows no manufacturing flexibility.
E. A multinational company cannot customize its products for local markets of different countries if it outsources its production activities.