UNIT 3 Principle of Business, Finance, & Marketing – Business in the Global Economy
REVIEW
Matching
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Comparative advantage
Exports
Free-trade agreement
Host country
Embargo
Multinational company (MNC)
Trade deficit
Absolute advantage
Infrastructure
Free-trade zone
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
Joint venture
Balance of trade
Negative or unfavorable balance of payments
Quota
Culture
Trade surplus
Licensing
Tariff
Exchange rate
Common market
C
1. an agreement between member countries to remove duties and trade barriers on products traded among them
Q
2. selling the right to use some intangible property (production process, trademark, or brand name) for a fee or
royalty
S
3. the value of a currency in one country compared with the value in another
A
4. a situation in which a country specializes in the production of a good or service at which it is relatively more
efficient
F
5. an organization that does business in several countries
P
6. a situation in which a country exports (sells) more than it imports (buys)
L
7. the difference between a country’s total exports and total imports
D
8. the country in which the multination company (MNC) places business activities
N
9. a government-set limit on the quantity of a product that may be imported or exported within a given period
B 10. goods and services sold to other countries
H 11. a situation where a country can produce a good or service at a lower cost than other countries
E 12. an action imposed by the government to stop the export or import of a product completely
I
13. a factor that supports international trade in industrialized countries, including a nation’s transportation,
communication, and utility systems
R 14. a tax that a government places on certain imported products
J
15. a selected area where products can be imported duty-free and then stored, assembled, and/or used in
manufacturing
K 16. a unique business organized by two or more other businesses to operate for a limited time and for a
specific project
G 17. a situation in which a country imports (buys) more than it exports (sells)
T 18. a market in which members do away with duties and other trade barriers
M 19. the result of a country sending more money out than it brings in
O
20. the accepted behaviors, customs, and values of a society
True/False
Indicate whether the sentence or statement is true or false.
T
21. A trade deficit occurs when a country imports more than it exports.
F
22. Typically, the more dependent a country is on agriculture, the stronger their economy is.
T
23. Currently the US dollar is stronger than the Yen.
F
24. The US currently has trade embargos with over 50 countries.
T
25. The US currently is in a trade deficit.
F
26. The North American Free Trade Agreement was created in 1964.
F
27. The Home country is the country in which an MNC places business activities.
T
28. The United States is the #1 Importer in the world.
F
29. A multinational strategy uses the same product and marketing strategy worldwide.
T
30. Member countries of NAFTA are the US’s #1 and #3 trading partners in the world.
F
31. Japanese and U.S. automobile manufacturers are an example of licensing.
F
32. Currently, the US dollar is stronger than the Euro.
F
33. McDonald’s is the most recognized brand in the world.
F
34. A country has a negative balance of trade when more money is coming in to it than going out.
F
35. The current US trade balance is approximately $500 Billion.
T
36. The IMF was established in 1946 to help promote economic cooperation.
F
37. The top 3 MNCs in the world in 2009 where all US based.
T
38. High levels of literacy lead to more and better products and services produced in a country.
F 39. The United States is the #1 Exporter in the world.
T 40. In 2010, the US collected over $25 Trillion in import tariffs.
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
A 41. What is it called when a country has an advantage at producing both computers and clothing but computers are
more profitable so it chooses to produce them and buy clothing elsewhere?
a. Comparative advantage
c. Trade deficit
b. Absolute advantage
d. Trade balance
D 42. Which factor does NOT influence international business?
a. culture
c. economy
b. geography
d. sporting events
C 43. Which of the following is NOT a reason for the government to implement a quota?
a. Protects domestic producers from interna- c. To generate tax revenue
tional competition
b. To keep supply low and prices the same
d. To express displeasure at the policies of
the importing country
B 44. Which factor does NOT affect currency rates?
a. Balance of payment
b. Winter Olympics
c. Economic conditions
d. Political disability
D 45. Where would you typically find a free-trade zone?
a. High school
c. Beach
b. Graveyard
d. Airport
C 46. An absolute advantage occurs when
a. a country specializes in the production of a good or service at which it is relatively more
efficient
b. a country imports all of their goods
c. a country can produce goods at a lower cost than any other country
d. a country exports all of their goods
B 47. What is it called when Members do away with duties and other trade barriers?
a. Free-trade zone
c. NAFTA
b. Common Market
d. Free-trade agreement
A 48. Which of the following is a drawback of an MNC?
a. Worker dependence on MNC
c. Friendly international relations
b. Large amounts of goods available
d. Career opportunities
B 49. Which international trade barrier is a tax that a government places on certain imported products?
a. Quota
b. Tariff
c. Embargo
d. Free trade zone
D 50. Which of the following is NOT true about the World Bank?
a. Created in 1944 to provide loans for
c. makes loans to help developing countries
rebuilding after WW II
b. has more than 180 member countries
d. Maintains an orderly system of world trade
and exchange rates