CHAPTER 11
GLOBAL BUSINESS
TRUE/FALSE
11.1 The Smoot-Hawley Act of 1930 was passed in the hope of keeping foreign-made
products out of US markets.
Answer: T
11.2 Currently tariff rates are below the 4 percent level, which the World Trade Organization
established as a goal in the early 1990s.
Answer: T
11.3 While the United States has the largest population in the world, it represents only 5
percent of the world’s commerce.
Answer: F
11.4 The goal of the North American Free Trade Agreement (NAFTA) is to make trade
between the United States, Canada, and Mexico easier.
Answer: T
11.5 Since the early 1970s the United States has had balance of trade surpluses.
Answer: F
11.6 In deciding whether to export a product it is important to remember that having export
potential is not the same thing as being export ready.
Answer: T
11.7 Both Mexico and Canada are currently small buyers of U.S. exports, but they are
growing.
Answer: F
11.8 One way to determine what price to use in overseas markets is to let the costs of doing
business internationally drive the process.
Answer: T
,11.9 An export management company will function like the international marketing
department of a firm.
Answer: T
11.10 The major advantage of using a letter of credit is that no banks will then get involved in
the process of transacting the money.
Answer: F
MULTIPLE CHOICE
11.11 The Smoot-Hawley Act of 1930
a. established the Small Business Administration.
b. opened up the U.S. markets to foreign producers.
c. established the International Trade Commission.
d. resulted in the North American Free Trade Agreement.
e. none of the above.
Answer: e
11.12 Tariff rates in 1950 were commonly in the ______ range.
a. 2–3 percent
b. 15–25 percent
c. 50–60 percent
d. 100 percent or more
Answer: b
11.13 The goal of the World Trade Organization for tariff levels for the year 2000 was
a. below 4 percent.
b. 45–50 percent.
c. 12 percent.
d. 4.3 percent.
Answer: d
11.14 The increase in world trade since World War II is the result of
a. changes in the political climate.
b. improvements in transportation.
c. improvements in communication technology.
d. all of the above.
, Answer: d
11.15 The United States has the largest economy in the world and approximately __________
of the world’s population.
a. 1 percent
b. 5 percent
c. 10 percent
d. 20 percent
Answer: b
11.16 During the period 1980-1994 world output rose 40 percent and world trade
a. declined slightly.
b. increased 10 percent.
c. increased 40 percent.
d. increased 80 percent.
Answer: d
11.17 Our country’s share of the world population is about 25 percent; our share of world
exports is
a. 5-7%.
b. 12%.
c. 25%.
d. 50%.
Answer: b
11.18 In comparison to the United States, the growth rates of developing nations such as China
and India are
a. remarkably close.
b. considerably higher.
c. lower, but improving.
d. lower, and getting worse.
Answer: b
11.19 Among the reasons for small firms to consider exporting are the following:
a. to put excess capacity to use.
b. to take advantage of different seasons in the southern hemisphere.
c. to lengthen the life cycle of a product that is in decline in the US market.
d. all of the above.
Answer: d
, 11.20 With all of the good reasons for firms to export,
a. practically all businesses, regardless of size, export regularly.
b. only slightly over half of our country’s firms export regularly.
c. the only industry actively engaged in it is agriculture.
d. none of the above.
Answer: d
11.21 Among the reasons why small firms do not enter world markets are the following:
a. there is no assistance available for researching overseas markets.
b. most entrepreneurs feel that until they have fully exploited domestic market
opportunities there is no point in exporting.
c. with all of its rules and procedures, exporting is just too complex an undertaking for
most small companies to consider.
d. all of the above.
Answer: b
11.22 The adjustments that a company will have to make upon entry into exporting are made
necessary by
a. factors which complicate the market research.
b. difficulties inherent in the payment process.
c. issues concerning distribution.
d. all of the above
Answer: d
11.23 Perhaps the best advice for an entrepreneur who is deciding whether to export a product is
a. choose a product that is not doing well in the U.S. market anyway and let the cultural
differences give sales a boost.
b. choose only new products because international markets are becoming increasingly
sophisticated.
c. product choice doesn’t matter much because the cultural factors that will determine
the success or failure of the product are too hard to figure out anyway.
d. choose products that have succeeded here in the U.S. market.
Answer: d
11.24 Levi Jeans, Coca-Cola, and McDonald’s fast food are examples of products that
a. seem to have appeal in all cultures.
b. represent an era that is ending rapidly.
c. show improper United States behavior in international competition.
d. none of the above.
Answer: a
GLOBAL BUSINESS
TRUE/FALSE
11.1 The Smoot-Hawley Act of 1930 was passed in the hope of keeping foreign-made
products out of US markets.
Answer: T
11.2 Currently tariff rates are below the 4 percent level, which the World Trade Organization
established as a goal in the early 1990s.
Answer: T
11.3 While the United States has the largest population in the world, it represents only 5
percent of the world’s commerce.
Answer: F
11.4 The goal of the North American Free Trade Agreement (NAFTA) is to make trade
between the United States, Canada, and Mexico easier.
Answer: T
11.5 Since the early 1970s the United States has had balance of trade surpluses.
Answer: F
11.6 In deciding whether to export a product it is important to remember that having export
potential is not the same thing as being export ready.
Answer: T
11.7 Both Mexico and Canada are currently small buyers of U.S. exports, but they are
growing.
Answer: F
11.8 One way to determine what price to use in overseas markets is to let the costs of doing
business internationally drive the process.
Answer: T
,11.9 An export management company will function like the international marketing
department of a firm.
Answer: T
11.10 The major advantage of using a letter of credit is that no banks will then get involved in
the process of transacting the money.
Answer: F
MULTIPLE CHOICE
11.11 The Smoot-Hawley Act of 1930
a. established the Small Business Administration.
b. opened up the U.S. markets to foreign producers.
c. established the International Trade Commission.
d. resulted in the North American Free Trade Agreement.
e. none of the above.
Answer: e
11.12 Tariff rates in 1950 were commonly in the ______ range.
a. 2–3 percent
b. 15–25 percent
c. 50–60 percent
d. 100 percent or more
Answer: b
11.13 The goal of the World Trade Organization for tariff levels for the year 2000 was
a. below 4 percent.
b. 45–50 percent.
c. 12 percent.
d. 4.3 percent.
Answer: d
11.14 The increase in world trade since World War II is the result of
a. changes in the political climate.
b. improvements in transportation.
c. improvements in communication technology.
d. all of the above.
, Answer: d
11.15 The United States has the largest economy in the world and approximately __________
of the world’s population.
a. 1 percent
b. 5 percent
c. 10 percent
d. 20 percent
Answer: b
11.16 During the period 1980-1994 world output rose 40 percent and world trade
a. declined slightly.
b. increased 10 percent.
c. increased 40 percent.
d. increased 80 percent.
Answer: d
11.17 Our country’s share of the world population is about 25 percent; our share of world
exports is
a. 5-7%.
b. 12%.
c. 25%.
d. 50%.
Answer: b
11.18 In comparison to the United States, the growth rates of developing nations such as China
and India are
a. remarkably close.
b. considerably higher.
c. lower, but improving.
d. lower, and getting worse.
Answer: b
11.19 Among the reasons for small firms to consider exporting are the following:
a. to put excess capacity to use.
b. to take advantage of different seasons in the southern hemisphere.
c. to lengthen the life cycle of a product that is in decline in the US market.
d. all of the above.
Answer: d
, 11.20 With all of the good reasons for firms to export,
a. practically all businesses, regardless of size, export regularly.
b. only slightly over half of our country’s firms export regularly.
c. the only industry actively engaged in it is agriculture.
d. none of the above.
Answer: d
11.21 Among the reasons why small firms do not enter world markets are the following:
a. there is no assistance available for researching overseas markets.
b. most entrepreneurs feel that until they have fully exploited domestic market
opportunities there is no point in exporting.
c. with all of its rules and procedures, exporting is just too complex an undertaking for
most small companies to consider.
d. all of the above.
Answer: b
11.22 The adjustments that a company will have to make upon entry into exporting are made
necessary by
a. factors which complicate the market research.
b. difficulties inherent in the payment process.
c. issues concerning distribution.
d. all of the above
Answer: d
11.23 Perhaps the best advice for an entrepreneur who is deciding whether to export a product is
a. choose a product that is not doing well in the U.S. market anyway and let the cultural
differences give sales a boost.
b. choose only new products because international markets are becoming increasingly
sophisticated.
c. product choice doesn’t matter much because the cultural factors that will determine
the success or failure of the product are too hard to figure out anyway.
d. choose products that have succeeded here in the U.S. market.
Answer: d
11.24 Levi Jeans, Coca-Cola, and McDonald’s fast food are examples of products that
a. seem to have appeal in all cultures.
b. represent an era that is ending rapidly.
c. show improper United States behavior in international competition.
d. none of the above.
Answer: a
