This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
attributed to OpenStax, Rice University and any changes must be noted.
Chapter 3 COMPETING IN THE GLOBAL MARKETPLACE
TRUE-FALSE QUESTIONS
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE:
Global vision is the ability to recognize and react to international business opportunities, be aware of
threats from foreign competition, and effectively use international distribution networks to obtain raw
materials and move finished products to customers.
1. Having a global vision simply means having a willingness to sell outside one’s national borders if, and
when, the opportunity arises.
a. True
b. False
Title: ANSWER: T REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1
2. International trade-dependent jobs have grown at a rate three times the growth of U.S.-dependent jobs.
a. True
b. False
Title: ANSWER: T REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1
3. Mines in Colombia produce emeralds and sell them to jewelers in the United States. To Colombia
miners, emeralds are an export.
a. True
b. False
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE:
Exports are the goods and services products in one country and sold in other countries.
4. Telecommunications equipment manufacturers in the United States sell their products to people who
live in Canada. To Canadians, the telecommunications equipment is an export.
a. True
b. False
Title: ANSWER: T REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1
5. The difference in value between a country's imports and exports is called its balance of trade.
a. True
b. False
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE: A
balance of trade is the difference between the value of a country's exports and the value of its imports
during a certain time. Armenia experienced a trade deficit in 2018.
6. Armenia had a favorable balance of trade in 2018 when it exported $800 million in goods and services
and imported $1.5 billion.
a. True
b. False
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE: The
exchange rate is the price of one country's currency in terms of another country's currency.
7. The exchange rate is the interest rate that foreign banks receive when borrowing money from the
United States.
a. True
b. False
,This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
attributed to OpenStax, Rice University and any changes must be noted.
Title: ANSWER: F REFERENCE: Why Nations Trade LEARNING OUTCOME: 2 RATIONALE: With absolute
advantage, a country can produce and sell a product at a lower cost than any other country or it may be
the only country that can provide the product.
8. According to the principle of absolute advantage, each country should specialize in the products that it
can produce most readily and cheaply and trade those products for products that foreign countries can
produce most readily and cheaply.
a. True
b. False
Title: ANSWER: T REFERENCE: Why Nations Trade LEARNING OUTCOME: 2
9. The opposite of free trade is protectionism.
a. True
b. False
Title: ANSWER: T REFERENCE: Barriers to Trade LEARNING OUTCOME: 3
10. The tax that the United States imposes on imported carbon steel products is called a tariff.
a. True
b. False
Title: ANSWER: T REFERENCE: Barriers to Trade LEARNING OUTCOME: 3
11. Limitations on the quantity of certain types of goods that can be imported over a period of time are
called import quotas.
a. True
b. False
Title: ANSWER: T REFERENCE: Fostering Global Trade LEARNING OUTCOME: 4
12. When a country sells its products in a foreign country at a cheaper price than usual, and sometimes
even at a loss, it is dumping products.
a. True
b. False
Title: ANSWER: F REFERENCE: Fostering Global Trade LEARNING OUTCOME: 4 RATIONALE: The Uruguay
Round has been signed by 148 nations.
13. The Uruguay Round of trade negotiation is an agreement that only affects trade among Latin American
countries.
a. True
b. False
Title: ANSWER: T REFERENCE: Fostering Global Trade LEARNING OUTCOME: 4
14. The International Monetary Fund (IMF) was created to promote trade through financial cooperation by
working to eliminate trade barriers.
a. True
b. False
Title: ANSWER: F REFERENCE: International Economic Communities LEARNING OUTCOME: 5 RATIONALE:
This would be an example of a preferential tariff.
15. If Syria gives Lebanon a tariff advantage over other countries, Lebanon has been given a biased tariff.
a. True
, b. False
Title: ANSWER: T REFERENCE: International Economic Communities LEARNING OUTCOME: 5
16. The signing of the Central America Free Trade Agreement by the United States will more than likely not
result in a major increase of U.S. exports.
a. True
b. False
Title: ANSWER: T REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6
17. In international licensing, the licensor is the domestic firm that allows the licensee to use its trademark
or brand.
a. True
b. False
Title: ANSWER: F REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6 RATIONALE:
This is the definition of licensing.
18. When a domestic company allows a foreign firm to use its brand in exchange for royalty fees, it is called
a joint venture.
a. True
b. False
Title: ANSWER: T REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6
19. When Coca-Cola sends cases of Coke to France and receives sparkling water as payment, a
countertrade has taken place.
a. True
b. False
Title: ANSWER: F REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6 RATIONALE:
A countertrade is a form of international trade in which part or all of the payment for products is in the
form of other products.
20. A countertrade in international terms pertains to the sale of retail goods that are usually sold "over the
counter."
a. True
b. False
Title: ANSWER: F REFERENCE: Threats and Opportunities in the Global Marketplace LEARNING OUTCOME:
7 RATIONALE: This is the definition of confiscation.
21. Expropriation is a political risk in which a country seizes the assets of a foreign firm and does not
compensate the firm.
a. True
b. False
Title: ANSWER: F REFERENCE: Threats and Opportunities in the Global Marketplace LEARNING OUTCOME:
7 RATIONALE: Each country has its own customs and traditions that determine business practices and
influences how countries perceive products.
22. A well-designed product transcends cultural barriers. It does not need to be changed to suit different
countries or cultures.
a. True
b. False
October 22, 2018 3
attributed to OpenStax, Rice University and any changes must be noted.
Chapter 3 COMPETING IN THE GLOBAL MARKETPLACE
TRUE-FALSE QUESTIONS
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE:
Global vision is the ability to recognize and react to international business opportunities, be aware of
threats from foreign competition, and effectively use international distribution networks to obtain raw
materials and move finished products to customers.
1. Having a global vision simply means having a willingness to sell outside one’s national borders if, and
when, the opportunity arises.
a. True
b. False
Title: ANSWER: T REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1
2. International trade-dependent jobs have grown at a rate three times the growth of U.S.-dependent jobs.
a. True
b. False
Title: ANSWER: T REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1
3. Mines in Colombia produce emeralds and sell them to jewelers in the United States. To Colombia
miners, emeralds are an export.
a. True
b. False
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE:
Exports are the goods and services products in one country and sold in other countries.
4. Telecommunications equipment manufacturers in the United States sell their products to people who
live in Canada. To Canadians, the telecommunications equipment is an export.
a. True
b. False
Title: ANSWER: T REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1
5. The difference in value between a country's imports and exports is called its balance of trade.
a. True
b. False
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE: A
balance of trade is the difference between the value of a country's exports and the value of its imports
during a certain time. Armenia experienced a trade deficit in 2018.
6. Armenia had a favorable balance of trade in 2018 when it exported $800 million in goods and services
and imported $1.5 billion.
a. True
b. False
Title: ANSWER: F REFERENCE: Global Trade in the United States LEARNING OUTCOME: 1 RATIONALE: The
exchange rate is the price of one country's currency in terms of another country's currency.
7. The exchange rate is the interest rate that foreign banks receive when borrowing money from the
United States.
a. True
b. False
,This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
attributed to OpenStax, Rice University and any changes must be noted.
Title: ANSWER: F REFERENCE: Why Nations Trade LEARNING OUTCOME: 2 RATIONALE: With absolute
advantage, a country can produce and sell a product at a lower cost than any other country or it may be
the only country that can provide the product.
8. According to the principle of absolute advantage, each country should specialize in the products that it
can produce most readily and cheaply and trade those products for products that foreign countries can
produce most readily and cheaply.
a. True
b. False
Title: ANSWER: T REFERENCE: Why Nations Trade LEARNING OUTCOME: 2
9. The opposite of free trade is protectionism.
a. True
b. False
Title: ANSWER: T REFERENCE: Barriers to Trade LEARNING OUTCOME: 3
10. The tax that the United States imposes on imported carbon steel products is called a tariff.
a. True
b. False
Title: ANSWER: T REFERENCE: Barriers to Trade LEARNING OUTCOME: 3
11. Limitations on the quantity of certain types of goods that can be imported over a period of time are
called import quotas.
a. True
b. False
Title: ANSWER: T REFERENCE: Fostering Global Trade LEARNING OUTCOME: 4
12. When a country sells its products in a foreign country at a cheaper price than usual, and sometimes
even at a loss, it is dumping products.
a. True
b. False
Title: ANSWER: F REFERENCE: Fostering Global Trade LEARNING OUTCOME: 4 RATIONALE: The Uruguay
Round has been signed by 148 nations.
13. The Uruguay Round of trade negotiation is an agreement that only affects trade among Latin American
countries.
a. True
b. False
Title: ANSWER: T REFERENCE: Fostering Global Trade LEARNING OUTCOME: 4
14. The International Monetary Fund (IMF) was created to promote trade through financial cooperation by
working to eliminate trade barriers.
a. True
b. False
Title: ANSWER: F REFERENCE: International Economic Communities LEARNING OUTCOME: 5 RATIONALE:
This would be an example of a preferential tariff.
15. If Syria gives Lebanon a tariff advantage over other countries, Lebanon has been given a biased tariff.
a. True
, b. False
Title: ANSWER: T REFERENCE: International Economic Communities LEARNING OUTCOME: 5
16. The signing of the Central America Free Trade Agreement by the United States will more than likely not
result in a major increase of U.S. exports.
a. True
b. False
Title: ANSWER: T REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6
17. In international licensing, the licensor is the domestic firm that allows the licensee to use its trademark
or brand.
a. True
b. False
Title: ANSWER: F REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6 RATIONALE:
This is the definition of licensing.
18. When a domestic company allows a foreign firm to use its brand in exchange for royalty fees, it is called
a joint venture.
a. True
b. False
Title: ANSWER: T REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6
19. When Coca-Cola sends cases of Coke to France and receives sparkling water as payment, a
countertrade has taken place.
a. True
b. False
Title: ANSWER: F REFERENCE: Participating in the Global Marketplace LEARNING OUTCOME: 6 RATIONALE:
A countertrade is a form of international trade in which part or all of the payment for products is in the
form of other products.
20. A countertrade in international terms pertains to the sale of retail goods that are usually sold "over the
counter."
a. True
b. False
Title: ANSWER: F REFERENCE: Threats and Opportunities in the Global Marketplace LEARNING OUTCOME:
7 RATIONALE: This is the definition of confiscation.
21. Expropriation is a political risk in which a country seizes the assets of a foreign firm and does not
compensate the firm.
a. True
b. False
Title: ANSWER: F REFERENCE: Threats and Opportunities in the Global Marketplace LEARNING OUTCOME:
7 RATIONALE: Each country has its own customs and traditions that determine business practices and
influences how countries perceive products.
22. A well-designed product transcends cultural barriers. It does not need to be changed to suit different
countries or cultures.
a. True
b. False
October 22, 2018 3
