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60) _____ is viewed as the most restrictive countertrade arrangement.
A) Barter
B) Offset
C) Buyback
D) Switch trading
61) _____ is primarily used for one time–only deals in transactions with trading partners who
are not creditworthy or trustworthy.
A) Counterpurchase
B) Barter
C) Offset
D) Buyback
62) _____ occurs when a firm agrees to purchase a certain amount of materials back from a
country to which a sale is made.
A) Barter
B) Offset
C) Counterpurchase
D) Buyback
63) _____ occurs when a firm supplies technology, equipment, training, or other services in a
country and agrees to take a certain percentage of the resultant output as partial payment for the
contract.
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A) A counterpurchase
B) An offset
C) A barter
D) A buyback
64) The main attraction of _____ is that it can give a firm a way to finance an export deal
when there are no other means available.
A) a countertrade
B) a buyback
C) a counterpurchase
D) an offset
65) _____ is an alternative means of structuring an international sale when conventional
means of payment are difficult, costly, or nonexistent.
A) Floating exchange system
B) Countertrade
C) Letter of credit trade
D) Fixed exchange system
66) _____ denotes a range of barter-like agreements and its principle is to trade goods and
services for other goods and services when they cannot be traded for money.
A) Countertrade
B) Cross-selling
C) Matchmaking
D) Letter of credit
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67) Which of the following statements is true of countertrade?
A) Countertrade reduces the profitability of competing firms and is considered an
unethical practice.
B) Countertrade is a conventional means to pay exporters.
C) Smaller organizations commonly use countertrade in international transactions.
D) Countertrade occurs when goods and services are traded for other goods and
services.
68) _____ is the direct exchange of goods and/or services between two parties without a cash
transaction and is the simplest arrangement.
A) Counterpurchase
B) Barter
C) Offset
D) Switch trading
69) _____ is viewed as the most restrictive countertrade arrangement and is primarily used
for onetime-only deals in transactions with trading partners who are not creditworthy or
trustworthy.
A) Switch trading
B) Offset
C) Barter
D) Buyback
70) _____ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain
amount of materials back from a country to which a sale is made.
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A) Counterpurchase
B) Barter
C) Offset
D) Switch trading
71) In ____, one party agrees to purchase goods and services with a specified percentage of
the proceeds from the original sale, and this party can fulfill the obligation with any firm in the
country to which the sale is being made.
A) a switch trade
B) an offset
C) a barter
D) a buyback
72) Which of the following terms refers to the use of a specialized third-party trading house
in a countertrade arrangement?
A) counterpurchase
B) barter
C) offset
D) switch trading
73) _____ 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.
A) A buyback
B) A barter
C) An offset
D) A switch trade
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74) Which of the following is an advantage of countertrade?
A) Countertrade uses instruments such as time drafts and sight drafts.
B) It is an effective way of doing business with developing nations.
C) It provides exporters an opportunity to obtain direct revenue.
D) Countertrade prevents the exchange of unusable or poor-quality goods.
75) Which of the following is a major drawback of engaging in countertrade?
A) Countertrade is not useful when trading with developing nations.
B) Financing is difficult when engaging in a countertrade.
C) It is not attractive to small organizations.
D) Countertrade may involve the exchange of unusable goods.
76) Countertrade is
A) most attractive to small, primarily domestic enterprises.
B) least attractive to small, primarily domestic enterprises.
C) most attractive to large, diverse multinational enterprises.
D) least attractive to large, diverse multinational enterprises.
77) _____ can be used when a government restricts the convertibility of its currency to
preserve its foreign exchange reserves so they can be used to service international debt
commitments and purchase crucial imports.
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A) A buyback
B) Countertrade
C) An offset
D) Switch trading
78) _____ occurs when a third-party trading house buys the firm’s counterpurchase credits
and sells them to another firm that can better use them.
A) Countertrading
B) Offsetting
C) Switch trading
D) Bartering
79) The main attraction of _____ is that it can give a firm a way to finance an export deal
when other means are not available.
A) switch trading
B) counterpurchase
C) offsets
D) countertrade
80) What is a disadvantage of countertrade?
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A) Countertrade contracts may involve the exchange of unusable or poor-quality good.
B) Countertrade requires the firm to use an out-of–house trading company to which
much of the profit will go.
C) Countertrade contracts often involve high-quality, expensive goods that the firm
cannot move enough of to be profitable.
D) Countertrade requires employing lawyers who specialize in these unique types of
contracts.
81) Proactive firms do not consider exporting until their domestic market is saturated.
⊚ true
⊚ false
82) Ignorance of the potential opportunities is a huge barrier to exporting.
⊚ true
⊚ false
83) Exporters often face voluminous paperwork and complex formalities.
⊚ true
⊚ false
84) Hiring an export management company (EMC) will help a novice exporter identify
opportunities and navigate the paperwork involved in exporting.
⊚ true
⊚ false
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85) Lack of knowledge is one of the biggest impediments to a company becoming a
successful exporter.
⊚ true
⊚ false
86) The Japanese sogo shosha have offices all over Japan, and companies wishing to trade
with Japan must go through them.
⊚ true
⊚ false
87) The most comprehensive source of information for U.S. firms on exporting opportunities
is the U.S. Department of Commerce.
⊚ true
⊚ false
88) The Small Business Administration organizes trade events that help potential exporters
make foreign contacts and explore export opportunities, held in major cities worldwide.
⊚ true
⊚ false
89) An export packer can advise companies who are unfamiliar with exporting on appropriate
design and materials for the packaging of their items.
⊚ true
⊚ false
90) Nearly every state in the United States maintains active trade commissions to promote
exports.
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⊚ true
⊚ false
91) A letter of credit states that an exporter has availed credit from the bank to manufacture
goods.
⊚ true
⊚ false
92) The bank promises to pay on behalf of the importer when a bank is used as a third party
in international transactions.
⊚ true
⊚ false
93) A draft is simply an order written by an exporter instructing an importer to pay a
specified amount of money at a specified time.
⊚ true
⊚ false
94) A sight draft allows for a delay in payment.
⊚ true
⊚ false
95) When a time draft is drawn on and accepted by a business firm, it is called a trade
acceptance.
⊚ true
⊚ false
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96) Time drafts cannot be sold to investors at a discount from face value.
⊚ true
⊚ false
97) The bill of lading does not serve as a document of title as such.
⊚ true
⊚ false
98) The bill of lading can function as collateral against which funds may be advanced to the
exporter by its local bank.
⊚ true
⊚ false
99) U.S. organizations can get financing aid from the Export-Import Bank.
⊚ true
⊚ false
100) Ex-Im Bank has a direct lending operation under which it lends dollars to foreign
borrowers.
⊚ true
⊚ false
101) The Foreign Credit Insurance Association is part of the U.S Department of Commerce
and guides the activities of the Export-Import Bank.
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⊚ true
⊚ false
102) Countertrade denotes a whole range of barter-like agreements that involve trading goods
and services when they cannot be traded for money.
⊚ true
⊚ false
103) Barter is a reciprocal buying agreement that occurs when a firm agrees to purchase a
certain amount of materials back from a country to which a sale is made.
⊚ true
⊚ false
104) A counterpurchase gives exporters more flexibility than an offset.
⊚ true
⊚ false
105) The term switch trading refers to the use of a specialized third-party trading house in a
countertrade arrangement.
⊚ true
⊚ false
106) Countertrade is least attractive to large, diverse multinational enterprises.
⊚ true
⊚ false
Answer Key
Test name: chapter 16
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