110. Devaluation refers to a decline in the value of a nation’s currency relative to other
currencies.
111. Bartering is the exchange of goods or services for other goods or services with no
exchange of money traded.
112. Countertrading is a form of exchange where firms will put certain products “on the
counter” offering them to foreign customers at a cheaper price than what they would offer them
to domestic customers.
113. Efficient currency exchange markets have eliminated countertrade in global business
transactions.
114. Currency fluctuations can be an advantage to firms trading in the global market.
115. Technological differences can prevent some companies from doing business abroad.
116. The introduction of standardized international laws regulating business organizations has
greatly simplified global trade.
117. The same proven management styles used by companies in their domestic operations
can be employed in their foreign subsidiaries.
118. A devaluation of the U.S. dollar would make American goods cheaper to foreign buyers.
119. From a sociocultural perspective, foreign companies have experienced a good amount of
success in adapting their products and services to the U.S. market.
120. When it comes to ethics, successful American businesspeople are encouraged to follow
the policy of “when in Rome, do as the Romans.”
121. Since patent and copyright laws are the same in all nations, they are not of much impact
to firms that compete globally.
122. If you travel to Mexico and the exchange rate is 12 pesos for one U.S. dollar, the peso is
said to have strength against the dollar because you can get so many more pesos than you can
dollars.
123. American businesspersons often fail to adapt to foreign markets because they feel that
American culture is superior to other cultures in the world.
124. Differences in electrical systems throughout the world can impair a U.S. firm’s ability to
sell its products to other countries.
125. Recently a news article described the bootlegging of music originally recorded by popular
celebrities in the U.S. It seems that a recording made in the U.S. can be copied within a couple of
hours and sold abroad. The U.S. government is able to readily prosecute foreign companies
involved in these illegal actions.
126. A United States firm recently won a large contract with a company in Bangladesh by
providing government officials and company officials with American cars and promises to provide
monetary gifts in exchange for the business. Fortunately, U.S. law, under the Foreign Corrupt
Practices Act, permits U.S. companies to operate in this manner.
127. When studying abroad last year, Reilly found that his U.S. dollars did not stretch as far as
he had hoped. Each time he exchanged U.S. dollars for euros, he gave up more U.S. dollars in
exchange for less euros. Obviously, the dollar had strength against the euro.
128. The Ozark Bike Company recently entered into an agreement with a large Japanese
retailer to distribute its bicycles in Japan. Ozark Bike Company sees itself in a favorable position
because the yen is gaining strength compared to the U.S. dollar making it cheaper for Japanese
customers to buy U.S. products.
129. A few years ago, a well-known celebrity who promoted a line of clothing was accused of
supporting child labor in a Honduras manufacturing site where the clothes were made. Although
the celebrity’s image was tarnished, he immediately was able to close down the operation due to
a violation of international law.
130. Idle Time Gaming, Inc., needed silicon wafers that it knew could be mass-produced
efficiently by Silicon City, Inc., a start-up firm in India. The Indian company needed MSG
(metallurgical grade silicon) in order to make the wafers, which it knew it could get from a
Chinese firm. The Chinese firm (mostly owned by the Chinese government) agreed to supply the
silicon to the Indian company if it could get a certain quantity of gaming hardware from Idle Time.
This beneficial exchange is described as countertrading.
131. Johanna Breese, a graduate student from Carnegie Mellon, connected with the culture of
Madagascar when she created lamba hoany (a native garment) with artful messages to save the
more than 150 rare species of animals that inhabit Madagascar. In contrast to many Americans
trying to do business abroad, Johanna successfully adapted her message to the native culture
when she imprinted it on the native garment.
132. Trade protectionism is the use of government regulations to encourage the import of
goods and services.
133. Countries often use trade protectionism measures to protect their domestic industries
from foreign competition.
134. Under mercantilism, the basic economic idea was to achieve a favorable balance of trade.
135. Protective tariffs are designed to raise money for the government.
136. An import quota is a complete ban on the import or export of certain products.
137. A complete ban on the import or export of a specific good is called an embargo.
138. Restrictive standards that detail exactly how a product must be sold in a country are
examples of protective tariffs.
139. Nontariff barriers can be just as detrimental to free trade as tariffs.
140. The main goal of the General Agreement on Tariffs and Trade (GATT) was to reduce trade
restrictions among world nations.
141. The World Trade Organization (WTO) was established to mediate trade disputes among
nations.
142. One goal of the World Trade Organization (WTO) is to increase national subsidies on
agricultural products.
143. A common market is a group of countries that have no internal tariffs among member
nations, yet have a common external tariff.
144. A major goal of the Mercosur common market consisting of several South American
countries is to develop a common currency.
145. In 1999, the European Economic Community adopted a common currency known as the
euro.
146. CAFTA permits the United States, Canada, and Mexico to reduce trade barriers with one
another while maintaining independent trade agreements with other countries.
147. Since the approval of the North American Free Trade Agreement (NAFTA), the value of
U.S. exports to Mexico and Canada has increased.
148. Opponents of the North American Free Trade Agreement (NAFTA) warned that it would
have serious economic consequences such as the loss of U.S. jobs.
149. According to the theory of mercantilism, a country should develop policies that encourage
a favorable balance of trade.
150. The principle of mercantilism encouraged nations to keep economics separate from
politics.
151. If a protective tariff is placed on an imported product, the added cost will go to the
government.
152. The complete ban on the sale of Cuban cigars in the United States is an example of an
import quota.
153. Imported wines such as Pinot Noirs from France or Italy often sell at a higher price than
wine from Napa Valley, California. This is due to the protective tariff importers pay for the foreign
wine.
154. The purpose of enacting some type of protectionist policy toward foreign goods is to limit
competition from abroad, particularly when the country has domestic companies that produce
and sell the same products and services.
155. The North American Free Trade Agreement (NAFTA) requires member nations to
negotiate uniform trade agreements with nonmember nations.
156. With the achievements of the General Agreement on Tariffs and Trade (GATT) and the
World Trade Organization (WTO), nearly all barriers to trade expansion are finally removed.
157. The objectives of the North American Free Trade Agreement (NAFTA) include allowing
free immigration among Canada, Mexico, and the U.S.
158. A more recent free-trade agreement among Cost Rica, the Dominican Republic, El
Salvador, Guatemala, Honduras, Nicaragua, and the U.S. is known as the Central American Free
Trade Agreement. Its strategy is to open new markets for all member countries and to lower
tariffs among participating nations.
159. On a number of issues, the strategy behind common markets is debatable, but GATT is
certain that such alliances do not prohibit individual member nations from expanding globally.
160. One of the rules of a common market is that all participating nations will uphold a
common tariff on goods and services that are imported from countries that are not members of
the trading bloc. Goods imported from nonmember countries are more expensive than goods
coming from member countries.
161. If two nations have a dispute over an international patent, the World Trade Organization
may be asked to mediate and provide a decision within one year’s time.