95. (p. 72–73) Effective marketing strategies focus on the product and ignore the socio-cultural differences in the
global environment.
96. (p. 72) Many U.S. companies fail to think globally.
97. (p. 72) In global markets, cultural differences affect marketing strategies but not management policies.
98. (p. 74) The Foreign Corrupt Practices Act of 1978 created an advantage for American businesspeople to
compete in global markets.
99. (p. 73) An exchange rate is the value of one nation’s currency relative to the currencies of other nations.
100. (p. 73) An increase in the exchange rate value of the dollar causes the dollar price of foreign made goods to
decrease.
101. (p. 73) Global markets rely on the U.S. dollar as the universal currency.
102. (p. 73) Under a system of floating exchange rates, the value of a country’s currency is determined by
government regulation.
103. (p. 73) Devaluation refers to a decline in the value of a nation’s currency relative to other currencies.
104. (p. 73–74) Bartering is the exchange of goods or services for other goods or services with no exchange of
money involved.
105. (p. 74) Efficient currency exchange markets have eliminated countertrade in global business transactions.
106. (p. 73) Currency fluctuations can be an advantage to firms trading in the global market.
107. (p. 74) Global trading has been significantly simplified by the introduction of standardized international laws
regulating business organizations.
108. (p. 72) John Smith, an American manager of a Peruvian manufacturing plant, believed he could increase
productivity by allowing the workers to participate in the decisions involving the plant. Soon after this
management style change, many of the workers quit saying management of the firm was incompetent. John had
neglected to consider sociocultural differences between Latin America and his native U.S. when he made the
decision to change his management style.
109. (p. 73) A devaluation of the U.S. dollar would make American goods cheaper to foreign buyers.
110. (p. 72) U.S. manufacturers have had difficulty in global markets because they have often failed to adapt their
products to the needs of various markets.
111. (p. 74) When it comes to ethics, successful American businesspeople are encouraged to follow the policy of
“when in Rome, do as the Romans do.”
112. (p. 71) American businesspersons often fail to adapt to foreign markets because they feel that American
culture is superior to other cultures in the world.
113. (p. 75) Differences in electrical systems throughout the world can impair a U.S. firm’s ability to sell its
products to other countries.
114. (p. 75) Trade protectionism is the use of government regulations to encourage the import of goods and
services.
115. (p. 75) Countries often used trade protectionism measures to protect their domestic industries from foreign
competition.
116. (p. 75) Under mercantilism, the basic economic idea was to have a favorable balance of trade.
117. (p. 75–76) Protective tariffs are designed to raise money for the government.
118. (p. 76) An import quota is a complete ban on the import or export of certain products.
119. (p. 76) A complete ban on the import or export of a specific good is called an embargo.
120. (p. 76) Restrictive standards that detail exactly how a product must be sold in a country are examples of tariff
barriers to global trade.
121. (p. 76) Nontariff barriers can be just as detrimental to free trade as tariffs.
122. (p. 76) The main goal of the General Agreement on Tariffs and Trade (GATT) was to establish a free trade
123. (p. 76) The World Trade Organization (WTO) was established to mediate trade disputes among nations.
124. (p. 76) One goal of the World Trade Organization (WTO) is to increase national subsidies on agricultural
products.
125. (p. 77) U.S. dollars used in Europe are called euros.
126. (p. 77) A common market is a group of countries that have no internal tariffs and common external tariffs.
127. (p. 78) The Mercosur is the common market arrangement of fifteen nations in Europe.
128. (p. 77) The European Union is an example of a common market.
129. (p. 78) CAFTA permits the United States, Canada, and Mexico to reduce trade barriers with one another
while maintaining independent trade agreements with other countries.
132. (p. 75) According to the theory of mercantilism, a country should develop policies that encourage a favorable
balance of trade.
133. (p. 75) The principle of mercantilism encouraged nations to keep economics separate from politics.
134. (p. 75) The main purpose of a protective tariff is to increase the tax revenue of the government.
136. (p. 76) The traditional Japanese keiretsu has increased the trade opportunities for U.S. firms.
137. (p. 76) American businesses that produce high quality goods never experience problems selling goods in
countries that set low tariffs.
138. (p. 78) The North American Free Trade Agreement (NAFTA) requires member nations to negotiate uniform
trade agreements with nonmember nations.
139. (p. 76–77) With the achievements of the General Agreement on Tariffs and Trade (GATT) and the World
Trade Organization (WTO), nearly all barriers to trade expansion have finally been removed.
140. (p. 79) Many global economists believe the movement toward free trade areas and common markets is bad
news for poorer countries that aren’t members of a trading bloc.
141. (p. 78) The objectives of the North American Free Trade Agreement (NAFTA) include allowing free
immigration between Canada, Mexico and the U.S.
142. (p. 80) China and Russia present enormous trade opportunities. However, due to political risks in those
counties, little foreign direct investment has been made.
143. (p. 80) While Asia presents an important source of U.S. imports, few export opportunities exist for U.S. firms
to sell goods and services to Asian consumers.
144. (p. 80) China is the third-largest exporter behind the U.S. and Germany.
146. (p. 79) The growth of the Internet and e-commerce enables companies to enter global markets without using
the traditional distribution channels.
147. (p. 80) India and Russia are emerging markets that present enormous business opportunities.
148. (p. 82) Profitable opportunities in global markets are diminishing for small and medium sized businesses.
149. (p. 80) The purchase of goods and services from primarily low-wage global markets is called offshore
outsourcing.
150. (p. 81) A “second wave” of offshore outsourcing involves sizable numbers of skilled, well-educated,
middle-income workers in service-sector jobs.
151. (p. 81; figure 3.9) One advantage of offshore outsourcing is that consumers benefit from lower prices.
152. (p. 81; figure 3.9) One disadvantage of offshore outsourcing is that product quality is often reduced.
153. (p. 82) Only large firms have the resources needed to successfully compete in the global environment.
154. (p. 80) As a market for U.S. exports, China represents the only major business opportunity for American
firms in Asia today.
155. (p. 80) China is a free trader’s dream.
156. (p. 81) U.S. manufacturers have shifted focus from manufacturing and assembling products to the design and
architecture of products.
157. (p. 60) ____________ is the selling of products to another country.
D. Dumping
158. (p. 60) _____________ is buying products from another country.
D. Exporting
159. (p. 60) The largest importer in the global market today is:
A. Japan.
160. (p. 60) In global trading, the United States ranks _______ in terms of the volume of exports.
D. twentieth
D. Canada.
162. (p. 60) Which of the following continents has the largest population?
D. Australia
163. (p. 60) People in how many countries make up the global market?
A. 100
164. (p. 60) What percentage of the world’s population lives in developing areas?
A. 15%
165. (p. 60; figure 3.1) Which of the following continents is home to the largest percentage of the world’s population?
A. Africa
166. (p. 61; Dealing With Change box) One key business area that would benefit from a strengthened China/India alliance
is:
A. accounting.
167. (p. 62) A nation has a ___________ in the production of a good if it can produce that good more effectively
or efficiently than it can produce other goods.
168. (p. 62) __________occurs when a country has a monopoly on producing a product or is able to produce it at a
cost below that of all other countries.
A. Comparative advantage
169. (p. 60) Countries with a low standard of living and quality of life are called:
A. industrialized nations.
170. (p. 62; figure 3.2) One advantage of free trade is:
A. jobs are shifted to low-wage global markets.
171. (p. 61) Which of the following is a reason why it makes sense to trade with other nations?
A. After producing all of the products its people want and need a nation can sell the excess products to the
172. (p. 62) Country A is an extremely efficient producer of tin. However, its climate and terrain makes it difficult
to produce corn. According to the theory of comparative advantage, Country A should:
173. (p. 62) Which theory states that a nation should produce and sell goods to other countries that it produces
most efficiently, and buy goods produced more efficiently by other countries?
D. bilateral advantage.
174. (p. 62) Free trade between nations generally results in:
A. industrialized nations gaining at the expense of developing nations.
175. (p. 62) In which of the following products does the United States enjoy a comparative advantage in global
trading?
A. videotape recorders
176. (p. 62; figure 3.2) Which of the following is a disadvantage of free trade?
D. Productivity increases in areas of comparative advantage.
177. (p. 60) Maureen, a United States resident, was surprised to see that her home computer was actually made in
Japan. Maureen did not know she had purchased a(n):
D. generic good.
178. (p. 60) Patrick’s Products has a manufacturing plant near Chicago. The plant specializes in compact washers
and dryers for countries in which consumers have less living space. Patrick’s Products participates in the global
market through:
A. importing.
179. (p. 62) Many of the toy products sold in the United States are imported from Taiwan because the Taiwanese
can produce these products more effectively and efficiently than we can in the U.S. This is an example of: