201. Political considerations usually are involved in a country’s decision to impose a trade embargo.
a. True
b. False
202. Exportation of large quantities of a product at a price lower than that of the same product in the home market is
called dumping.
a. True
b. False
203. A restriction on the amount of a particular foreign product that can be purchased or sold is called a foreign-
exchange control.
a. True
b. False
204. A reduction of the value of a nation’s currency relative to the currencies of other countries is called a currency
devaluation.
a. True
b. False
205. Devaluation increases the cost of foreign goods, while it decreases the cost of domestic goods to foreign firms.
a. True
b. False
206. Devaluation decreases the cost of foreign goods and increases the cost of domestic goods to foreign firms.
a. True
b. False
207. Cultural barriers can impede acceptance of products in foreign countries.
a. True
b. False
208. It is appropriate for a country to impose trade restrictions on exports that might endanger its national security.
a. True
b. False
209. Trade restrictions limit choices for consumers but have no effect on the prices charged for the products.
a. True
b. False
210. One of the consequences of trade restrictions is misallocation of international resources.
a. True
b. False
211. Trade restrictions usually have no immediate or long-term economic consequences.
a. True
b. False
212. U.S. trade restrictions benefit only a few industries while harming many others.
a. True
b. False
213. Due to worldwide trade restrictions, international business is declining in volume.
a. True
b. False
214. Decreases in trade barriers create more choices for consumers and new opportunities for job seekers.
a. True
b. False
215. Least-favored-nation (LFN) status was the famous principle of GATT.
a. True
b. False
216. From 1947 to 1994, GATT was unable to sponsor any round of negotiations to reduce trade restrictions.
a. True
b. False
217. An international organization that includes the United States and several other countries and whose goal is to
reduce or eliminate tariffs and other barriers to world trade is commonly referred to as GATT.
a. True
b. False
218. The World Trade Organization (WTO) was established by GATT to oversee the provisions of the Uruguay Round.
a. True
b. False
219. The Doha Round of negotiations focuses on industrial and nontariff barriers, agriculture, services, and easing trade
rules.
a. True
b. False
220. The Doha Round of negotiations is really not worth the effort.
a. True
b. False
221. The participants in the Kennedy Round have succeeded in reducing tariffs by less than 20 percent.
a. True
b. False
222. An organization of nations formed to promote the free movement of resources and products among its members
and to create common economic policies is called an economic community.
a. True
b. False
223. OPEC is a group that was formed in 1960 in response to reductions in the prices that oil companies were willing to
pay for crude oil.
a. True
b. False
224. One of the problems with licensing as a method of achieving international business is that it is a much more difficult
procedure to implement than the other methods.
a. True
b. False
225. Licensing and exporting can be considered relatively low–risk methods of entering foreign markets.
a. True
b. False
226. An important and practical issue for domestic firms dealing with foreign customers is securing payment.
a. True
b. False
227. A letter of credit is issued in favor of the importer.
a. True
b. False
228. A letter of credit is issued by the transport carrier to the exporter to prove that merchandise has been shipped.
a. True
b. False
229. A bill of lading is issued by the transport carrier to the exporter to prove that merchandise has been shipped.
a. True
b. False
230. A draft is issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise and thus
guaranteeing payment once it is accepted by the importer’s bank.
a. True
b. False
231. Joint venture agreements generally require a very low level of commitment from all the parties involved.
a. True
b. False
232. A firm’s direct investment in international business involves building a new plant or buying an existing plant in a
foreign country to produce its own products, or it may involve buying an existing firm in a foreign country.
a. True
b. False
233. Strategic alliances are partnerships formed to create competitive advantage on a worldwide basis.
a. True
b. False
234. A trading company provides a link between buyers and sellers in different countries.
a. True
b. False
235. Most trading companies are involved in manufacturing or owning assets related to manufacturing.
a. True
b. False
236. Trading companies do not take title to products.
a. True
b. False
237. Countertrade is losing its importance in international trade.
a. True
b. False
238. A firm that has no ties to a specific nation or region and operates on a worldwide scale is called a national
enterprise.
a. True
b. False
239. The International Trade Administration (ITA) offers assistance and information to help exporters.
a. True
b. False
240. An international bank that makes short-term loans to countries experiencing balance of payment deficits is called a
multilateral development bank.
a. True
b. False
241. All five multilateral development banks are supported by the industrialized nations, including the United States.
a. True
b. False
242. The International Monetary Fund (IMF) makes short-term loans to developing countries experiencing balance-of–
payment deficits.
a. True
b. False