118. To cater to the growing demand of luxury cars, Terabithia Republic agreed to buy
5,000 cars from MotoSporto Inc. in exchange for 5,000 gallons of oil. Due to a lack of trust,
Terabithia decided to make it a one-time-only deal. Which of the following forms of countertrade
is the country most likely to use?
119. Which of the following is true of counterpurchase?
120. _____, a type of countertrade, occurs when a firm agrees to purchase a certain amount of
materials back from a country to which a sale is made.
121. A firm sells some products to a foreign country. The foreign country pays the firm in
dollars, but in exchange, the firm agrees to spend some of the proceeds from the sale on textiles
produced by the foreign country. In which of the following types of countertrade arrangement are
the two parties engaged?
122. A(n) _____ refers to a buying agreement similar to counterpurchase, but the exporting
country can then fulfill the agreement with any firm in the country to which the sale is being
made.
123. From an exporter’s perspective, why is an offset more attractive than a straight
counterpurchase agreement?
124. The use of a specialized third-party trading house in a countertrade arrangement is
known as _____.
125. When a firm enters a(n) _____ agreement with a country, it often ends up with what are
called counterpurchase credits, which can be used to purchase goods from that country.
126. _____, a type of countertrade, occurs when a third-party trading house buys the firm’s
counterpurchase credits and sells them to another firm that can better use them.
127. A firm concludes a counterpurchase agreement with a foreign country for which it
receives some counterpurchase credits for purchasing its goods. The firm does not want any
foreign goods, however, so it sells the credits to a third-party trading house at a discount. The
trading house finds a firm that can use the credits and sells them at a profit. This is an example
of _____.
128. A(n) _____ occurs when a firm builds a plant in a country and agrees to take a certain
percentage of the plant’s output as partial payment for the contract.
129. TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would
build several ammonia plants in the foreign country and receive ammonia as partial payment over
a 20-year period. This is an example of _____.
130. Which of the following is an advantage of countertrade?
131. An advantage of _____ is that it helps in doing business in many developing nations that
find it difficult to raise the foreign exchange necessary to pay for imports.
132. A drawback of countertrade is that:
133. Identify a drawback of a countertrade agreement.
134. Which of the following is a disadvantage of a countertrade agreement?