Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
a. barter
b. buy-back
c. compensation deals
d. counterpurchases
e. call back agreements
41. Countries that have low, or no, taxes are referred to which of the following?
a. tax-friendly regions
b. tax havens
c. tax states
d. tax-free nations
e. tax-free regions
42. Sustainability advocates increasingly push for which kind of pricing for internal financing?
a. transfer
b. shadow
c. explicit
d. implicit
e. sustained
43. When a commodity is sold by one subsidiary of a company to another in a second country,
what kind of price is set in order to by-pass taxes and tariffs by shifting funds internally?
a. market based
b. market shirk
c. internal
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
d. transfer
e. market delayed
44. Which of the following international finance factors influence pricing decisions?
a. exchange rate fluctuations, price escalations, and administered prices
b. exchange rate fluctuations, price escalations, and global regime costs
c. administered prices, global regime costs, and political risk
d. administered prices, political risk, and product risk
e. administered prices, political risk, and economic instability
45. Which term represents increases in price as a product moves from one country to another?
a. price escalations
b. price chain
c. distribution escalations
d. marketing channel costs
e. price redundancy
46. All of the following cause price escalations EXCEPT ______.
a. transportation costs
b. tariffs
c. importer margins
d. wholesaler margins
e. advertising costs
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
47. What kinds of prices are set by individual governments, often in an attempt to weaken
competition?
a. fixed
b. market based
c. tariff control
d. administered
e. free market
48. Price escalations are a particularly serious issue when attempting to reach which of the
following groups?
a. bottom-of-the-pyramid consumers
b. new market segments
c. free-trade zones
d. high-tariff regions
e. None of the above
49. The ability to change the local currency for a foreign currency is referred to as what?
a. currency acceptance
b. currency exchangeability
c. currency convertibility
d. currency transferability
e. currency transference
50. A core component of business activity, which can be drastically impacted by international
finance issues including currency movements, is which of the following?
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
a. market exchanges
b. marketing channels
c. tariffs
d. costs
e. profits
51. Many items have been used as money, including salt, rocks, seashells, and beads.
a. True
b. False
52. Five characteristics determine the acceptability of money as a means of exchange.
a. True
b. False
53. Currency represents the form of money used by a specific country or region.
a. True
b. False
54. Consumers in international markets are using physical currency less frequently.
a. True
b. False
55. Durability is one of the five characteristics of a currency.
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
a. True
b. False
56. Spendability is one of the five characteristics of a currency.
a. True
b. False
57. A hard currency cannot be exchanged for other currencies worldwide.
a. True
b. False
58. A soft currency can be exchanged for other currencies worldwide.
a. True
b. False
59. Managing the exchange of currency and gaining access to funds are necessary for all
international business.
a. True
b. False
60. A capital market must be a physical place or location.
a. True
b. False
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
61. A currency’s exchange rate is the rate at which one country’s currency can be traded for
another country’s currency.
a. True
b. False
62. Spot rates are a set rate of exchange for a delivery of currency within two days of the
agreement to exchange currencies.
a. True
b. False
63. Direct rates are calculated using the value of a foreign currency.
a. True
b. False
64. Indirect rates are calculated using the home currency price per unit against that of the foreign
currency.
a. True
b. False
65. International marketers carefully consider the percentage change in a currency’s value over
time.
a. True
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
b. False
66. In international marketing, exchange rates affect prices of goods.
a. True
b. False
67. Inflation is a nongovernmental factor that affects currency movement.
a. True
b. False
68. Understanding currency movements represents a fundamental part of international marketing.
a. True
b. False
69. Transaction demand reflects the demand for nondurable goods, such as appliances.
a. True
b. False
70. Trade consists of the exchange of goods and services across borders.
a. True
b. False
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
71. A trade deficit occurs when a country imports more than it exports.
a. True
b. False
72. A trade surplus results when a country exports more than it imports.
a. True
b. False
73. Inflation is not affected by demand for a currency.
a. True
b. False
74. Inflation is independent of interest rates and does not affect interest rates.
a. True
b. False
75. The Law of One Price states that identical products should be priced identically in different
markets, once the price is converted to the same currency in each market.
a. True
b. False
76. The Organization for Economic Cooperation and Development creates a measure of
purchasing power.
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
a. True
b. False
77. A floating exchange rate occurs when the value of a currency is allowed to respond freely to
market forces.
a. True
b. False
78. A fixed or pegged regime sets a predetermined band or par value for a currency.
a. True
b. False
79. Revaluation refers to a government increase in the par value of a currency under a fixed-rate
regime.
a. True
b. False
80. The primary responsibility of the International Monetary Fund is currency stabilization.
a. True
b. False
81. The Bretton Woods agreement established a global currency system.
a. True
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
b. False
82. Forward rates are the exchange rates for the delivery of a currency at a specific time in the
future.
a. True
b. False
83. Forward rates are the exchange rates for a previous transaction that is projected into the
future.
a. True
b. False
84. Hedging refers to any financial process that lessens financial risk.
a. True
b. False
85. Terms of trade refers to an agreed-upon payment in return for goods and services.
a. True
b. False
86. Buy-back countertrades are trade deals in which products are exchanged for cash.
a. True
b. False
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
87. Price escalations are realized as the price of a product increases as it moves from one country
to another because of transportation, middlemen, tariffs, and other expenses.
a. True
b. False
88. Administered prices are set by a government, often in an attempt to weaken foreign
competitors.
a. True
b. False
89. Administered prices can be used for sensitive, high-demand, or essential products.
a. True
b. False
90. An international marketer’s profit is only weakly impacted by international finance issues.
a. True
b. False
91. List and describe the various properties of money that are presented in the text. Use an
example of a currency to illustrate the various properties of money and how that currency
satisfies each property.
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
92. Discuss the various factors that influence currency movement, including individual and
business transactions, inflation, interest rates, and trade and investment activity. Explain why
international marketers need to monitor these developments.
93. Describe the concepts of currency regimes, floating exchange rates, fixed exchange rates,
revaluation, and devaluation, and how they apply to international marketers. Why should
international marketers pay close attention to these issues?
94. Discuss the various forms of countertrade that are presented in the text. Use examples to
illustrate each form of countertrade.
95. Discuss the various international financing factors that affect international pricing that are
discussed in the text including exchange rate fluctuations, price escalations, and administered
prices. How do these issues affect international marketing strategy?