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

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Sample Test

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.

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.

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.

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.

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

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

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.

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.

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

OPEC is legal. It is the most famous cartel.

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.

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.

26. The World Bank and other multilateral development banks are the largest source of advice and assistance for developing nations.
TRUE

The World Bank, also known as the International Bank for Reconstruction and Development, was established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries.

27. Maquiladoras are possible under the Asia-Pacific Economic Cooperation.
FALSE

Maquiladoras are U.S. production facilities in Mexico which account for half of Mexico’s exports.

Blooms: Understand
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)

28. The WTO agreements are the optional ground rules for international commerce.
FALSE

Key to the World Trade Organization are the WTO agreements, which are the legal ground rules for international commerce.

29. Under the European Union (EU), each member nation functions as a separate market.
FALSE

Until 1993, each nation functioned as a separate market, but at that time members officially unified into one of the largest single world markets.

30. The prosperity of the EU has suffered in recent years. EU members experienced a severe economic crisis in 2010 that required steep bailouts from the International Monetary Fund (IMF).
TRUE

The first country to come to the forefront was Greece, which had so much debt that it risked default.

31. The People’s Republic of China has launched a program of economic reform to stimulate its economy by privatizing many industries, restructuring its banking system, and increasing public spending on infrastructure.
TRUE

As a result, China has become a manufacturing powerhouse, with an estimated economic growth rate of 8 to 10 percent a year.

32. The World Bank is more formally known as the International Monetary Fund.
FALSE

The World Bank has the formal title of International Bank for Reconstruction and Development. It was established in 1946 to loan money to underdeveloped and developing countries.

33. Exporting is available only to large corporations.
FALSE

When a company is called upon to supply a foreign company with a particular product, this allows enterprises of all sizes to participate in international business.

Blooms: Understand
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-20 Exporting and Importing

34. Licensing is a way of entering the international marketplace without spending large amounts of money abroad.
TRUE

Licensing and franchising enable a firm to enter the international marketplace without spending large sums of money abroad or hiring or transferring personnel to handle overseas affairs.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-22 Licensing and Franchising

35. Countertrade agreements require that countries trade using the currency of the importing nation.
FALSE

Countertrade agreements are foreign trade agreements that involve bartering products for other products instead of for currency.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-20 Exporting and Importing

36. Direct investment is the least risky and least expensive way to participate in foreign trade.
FALSE

Licensing and franchising is an attractive alternative to direct investments because of the ability to enter the international marketplace without spending large sums of money abroad or hiring or transferring personnel to handle overseas affairs.

Blooms: Understand
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-22 Licensing and Franchising

37. A strategic alliance is a partnership formed to create competitive advantage on a worldwide basis.
TRUE

Strategic alliances are becoming the predominant means of competing in fierce, international markets.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-26 Joint Ventures and Alliances

38. All multinationals are Canadian firms.
FALSE

The multinational corporation (MNC) is a corporation that operates on a worldwide scale, without significant ties to any one nation or region.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-27 Direct Investment

39. Export agents produce goods and sell them in a foreign country.
FALSE

Export agents seldom produce goods themselves, instead, they usually handle international transactions for other firms. Export agents either purchase products outright or take them on consignment.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-20 Exporting and Importing

40. An advantage of trading through an agent instead of directly is that the company does not have to deal with foreign currencies or the red tape of international business.
TRUE

A major disadvantage is that, because the export agent must make a profit, either the price of the product must be increased or the domestic company must provide a larger discount than it would in a domestic transaction.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-20 Exporting and Importing

41. Offshoring and outsourcing mean the same thing.
FALSE

Offshoring is different than outsourcing: the company retains control of the process because it is not subcontracting to a different company.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-25 Offshoring

42. The oldest trading company in Canada is the Canadian Commercial Corporation (CCC).
TRUE

This is a federal Crown corporation in existence since 1946.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-21 Trading Companies

43. Canada’s top global franchise is McDonald’s.
FALSE

Canada’s top global franchise is Tim Hortons.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-22 Licensing and Franchising

44. Licensing and franchising enable a company to enter the international marketplace. However, this requires spending large sums of money abroad.
FALSE

Licensing and franchising enable a company to enter the international marketplace without spending large sums of money abroad or hiring or transferring personnel to handle overseas affairs.

Blooms: Understand
Difficulty: Medium
Learning Objective: 03-04 Summarize the different levels of organizational involvement in international trade.
Topic: 03-22 Licensing and Franchising

45. Companies doing business internationally have traditionally used a globalization strategy.
FALSE

Companies doing business internationally have traditionally used a multinational strategy.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-05 Contrast two basic strategies used in international business.
Topic: 03-29 Developing Strategies

46. Even when products are standardized, advertising often has to be modified.
TRUE

Even when products are standardized, advertising often has to be modified to adapt to language and cultural differences.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-05 Contrast two basic strategies used in international business.
Topic: 03-29 Developing Strategies

47. Many businesspeople today try to “think locally, act globally.”
FALSE

Astute businesspeople today “think globally, act locally,” which means constantly being aware of the big picture, but adjusting their firms’ strategies to conform to local tastes and needs.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-05 Contrast two basic strategies used in international business.
Topic: 03-29 Developing Strategies

48. Globalization involves standardizing products for the whole world as if it were a single entity.
TRUE

A global strategy or globalization involves standardizing products, promotion, and distribution for the whole world, as if it were a single entity.

Blooms: Remember
Difficulty: Easy
Learning Objective: 03-05 Contrast two basic strategies used in international business.
Topic: 03-29 Developing Strategies

49. Globalization refers only to products, not promotion or distribution.
FALSE

A global strategy or globalization involves standardizing products, promotion, and distribution for the whole world, as if it were a single entity.

Blooms: Remember
Difficulty: Medium
Learning Objective: 03-05 Contrast two basic strategies used in international business.
Topic: 03-29 Developing Strategies

50. More and more companies are moving from a global strategy to a customization strategy, which involves standardizing products for the whole world, as if it were a single entity.
FALSE

More and more companies are moving from a customization strategy to a global strategy. The global strategy involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity.

Blooms: Remember
Difficulty: Hard
Learning Objective: 03-05 Contrast two basic strategies used in international business.
Topic: 03-29 Developing Strategies

Multiple Choice Questions

51. When Weseeyu, Inc., of Moose Jaw, Saskatchewan sells contact lenses to a firm in Moscow, Weseeyu is:
A.importing the lenses.
B. exporting the lenses.
C. displaying their absolute advantage.
D. increasing the trade deficit.
E. considered a multi-national organization.

Exporting is the sale of goods and services (contacts) to foreign markets (from Canada to Russia).

Blooms: Understand
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

52. When a Montreal-based company buys coffee from Colombia, it:
A.is importing the coffee.
B. is exporting the coffee.
C. has an absolute advantage.
D. is decreasing the trade deficit.
E. is making a big mistake.

Importing is the purchase of goods and services (coffee) from foreign markets (to Canada from Colombia).

53. A favourable balance of trade exists when a country:
A.imports more than it exports.
B. exports more than it imports.
C. sends out more cash than it takes in.
D. spends more than it saves.
E. saves more than it spends.

A trade surplus is when a country exports more than it imports, which is favourable because it is receiving more money than it is paying out.

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

54. In 2010, Canada had a trade deficit of $10.8 billion because:
A.Canadian companies sold more goods to other countries than foreign companies sold here.
B. Japan stopped exporting goods to Canada.
C. Canada imported more products than it exported.
D. Canadian consumers stopped buying Japanese goods and services.
E. Canadian consumers bought far more domestic goods and services than foreign goods and services.

A trade deficit is when a country imports more goods and services than it exports.

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

55. The balance of payments includes all the following, except:
A. a country’s balance of trade.
B. foreign investments.
C. domestic investments.
D. tourist expenditures.
E. foreign aid and military expenditures.

A balance of payments is the difference between the flow of money into and out of a country and domestic investments do not flow out of the country.

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

56. When Kelly flies from Canada to Scotland on an American airline, stays in an Edinburgh hotel, and buys wool sweaters from Scotland to bring home, she:
A.decreases the trade deficit.
B. is disloyal and unpatriotic.
C. contributes to the negative balance of payments.
D. buys American-made goods.
E. does all of them.

A negative balance of payments is also known as a trade deficit. Therefore, Kelly is spending money outside Canada which increases the trade deficit.

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

57. The primary problem with a trade deficit is:
A.that a country is exporting more than it is importing.
B. that more cash is leaving the country than is flowing in.
C. that a country is spending more than saving.
D. that a country is saving more than spending.
E. that export taxes are minimal.

A trade deficit may be harmful to a country’s economy through failed businesses, the loss of jobs, and a lowered standard of living.

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

58. In 2014, Canada’s top trading partner was:
A.Mexico
B. Germany
C. China
D. the United States
E. the United Kingdom

See Table 3.2 | Canada’s Top 10 Principal Trading Partners (2014).
The trade balance with the U.S. was the highest among the countries at $49.3.

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

59. The difference between the flow of money into and out of a country is called its:
A.balance of trade.
B. imbalance of trade.
C. balance of payments.
D. trade payment balance.
E. exchange rate.

A balance of payments includes a country’s balance of trade, foreign investments and aid, loans, military expenditures, and money spent by tourists.

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

60. Colombia can produce coffee so much more efficiently than other items produced there. As a result, Colombia is said to have which of the following advantages?
A.Absolute
B. Positive
C. Negative
D. Marginal
E. Comparative

A comparative advantage occurs when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.

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

61. Because it has the largest deposits of gem-quality diamonds in the world, and is able to control the price of diamonds, De Beers Consolidated Mines, Ltd., has a(n):
A.absolute advantage.
B. comparative advantage.
C. advantage based on efficient production.
D. trade deficit.
E. balance of payment.

An absolute advantage is a monopoly that 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

62. A trade advantage with the best chance of surviving is one based on:
A.worker know-how.
B. technology.
C. the monopoly of a resource.
D. production efficiency.
E. the lack of a resource.

When a country has the monopoly of a resource, it has the ability to exploit this advantage, as in the case of De Beers Consolidated Mines, by maintaining high prices for the resource.

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

63. Until recently, the United States could produce oil-drilling equipment more efficiently than other countries, and, in a sense, monopolized the industry. In the market for oil-drilling equipment, the United States had a(n):
A.positive advantage.
B. comparative advantage.
C. negative advantage.
D. absolute advantage.
E. marginal advantage.

An absolute advantage is a monopoly that 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: Hard
Learning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.
Topic: 03-03 Why Nations Trade

64. In 2014, Canada had a balance of trade surplus with:
A.the United States
B. China
C. Mexico
D. South Korea
E. France

See Table 3.2 | Canada’s Top 10 Principal Trading Partners (2014).

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

65. The purchase of goods and services from foreign sources is called:
A.exporting.
B. bartering.
C. importing.
D. natural advantage.
E. comparative advantage.

Importing is the purchase of goods and services from foreign markets.

66. When a company decides to do business outside its own country, it must research several factors, including potential barriers to international trade. Which of the following is not a potential barrier cited in your text?
A.Legal
B. Political
C. Cultural
D. Economic
E. Scientific

When a company decides to do business outside its own country, it will encounter barriers such as economic, legal, political, cultural, social, and technological.

67. The United States, Canada, Great Britain, and Japan are considered to be:
A.less-developed countries.
B. industrialized nations.
C. third-world countries.
D. relatively low in terms of per capita incomes.
E. none of these answers apply to these countries.

Industrialized nations are economically advanced nations such as the United States, Great Britain, Japan, and Canada.

68. Which of the following terms best describes many countries in Africa, Asia, and Europe?
A.Less-developed countries.
B. Industrialized nations.
C. Third-world countries.
D. High income capitals.
E. None of these answers apply to these countries.

LDCs are characterized by low per-capita income (income generated by the nation’s production of goods and services divided by the population), which means that consumers are less likely to purchase non-essential products.

69. When a country devalues its currency, it encourages the sale of its:
A.imports.
B. domestic goods to foreign countries.
C. international goods.
D. international services.
E. debts.

Devaluation decreases the value of currency in relation to other currencies, which encourages tourism and exportation.

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

70. The physical facilities that support a country’s development is called its:
A.capital stock
B. resource base
C. infrastructure
D. potential growth
E. growth constraints

Examples include railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems.

71. If Canada wanted to reduce the cost of its goods in foreign markets, it could:
A.revalue its currency.
B. devalue its currency.
C. pay off its trade deficit.
D. borrow from the Exim bank.
E. sell more goods abroad.

Devaluation decreases the value of currency in relation to other currencies, which encourages tourism and exportation.

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

72. Critics of protective tariffs argue that their use inhibits:
A.free trade and competition
B. competition and demand
C. demand and supply
D. tax revenues
E. embargoes

Supporters of protective tariffs say they insulate domestic industries.

Blooms: Understand
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

73. Laws protecting copyrights and intellectual property are weak and minimally enforced in which of the following countries, resulting in a high degree of counterfeit videos, movies, CDs, computer software, furniture, and clothing?
A.Ireland and Scotland
B. Canada and the United States
C. Greece and Portugal
D. China and Vietnam
E. Denmark and Norway

Companies are angry because the counterfeits harm not only their sales but also their reputations if the knock-offs are of poor quality. Such counterfeiting is not limited to China or Vietnam.

74. A specific amount of money levied on each unit of a product brought into the country is a(n):
A.ad valorem tariff.
B. value-added tariff.
C. fixed tariff.
D. protective tariff.
E. duty-free tariff.

A fixed tariff is a specific amount of money levied on each unit of a product brought into the country.

75. To reduce dollars flowing out of the country, Canada can limit the number of Japanese cars being imported by imposing a(n):
A.quota.
B. exchange control.
C. trade deficit.
D. embargo.
E. free trade zone.

A quota limits the number of units of a particular product that can be imported into a country.

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