Test Bank for International Marketing, 18th Edition Philip Cateora, Gilly, Bruce by digitaldownload87

TEST BANK International Marketing, 18th Edition Philip Cateora, John Graham, Mary Gilly, Bruce Money

TABLE OF CONTENTS Part One an Overview1. The Scope and Challenge of International Marketing CHAPTER 2. The Dynamic Environment of International Trade Part Two The Cultural Environment of Global Market CHAPTER 3. History and Geography: The Foundations of Culture CHAPTER 4. Cultural Dynamics in Assessing Global Markets CHAPTER 5. Culture, Management Style, and Business Systems CHAPTER 6. The Political Environment: A Critical Concern CHAPTER 7. The International Legal Environment: Playing by the Rules Part Three Assessing Global Market Opportunities CHAPTER 8. Developing a Global Vision through Marketing Research CHAPTER 9. Economic Development and the Americas CHAPTER 10. Europe, Africa, and the Middle East CHAPTER 11.The Asia Pacific Region

Part Four Developing Global Marketing Strategies CHAPTER 12. Global Marketing Management: Planning and Organization CHAPTER 13. Products and Services for Consumers CHAPTER 14. Products and Services for Businesses CHAPTER 15. International Marketing Channels CHAPTER 16. Integrated Marketing Communications and International Advertising CHAPTER 17. Personal Selling and Sales Management CHAPTER 18. Pricing for International Markets Part Five Implementing Global Marketing Strategies CHAPTER 19. Inventive Negotiations with International Customers, Partners, and Regulators

International Marketing, 18e (Cateora) Chapter 1 The Scope and Challenge of International Marketing 1) Today, becoming international is a luxury only some companies can afford. 2) Companies from the Netherlands are the leading group of investors in the United States. 3) International marketing involves selling of a company's goods and services to consumers or users in more than one nation for a profit. 4) The main difference between domestic and international marketing lies in the different concepts of marketing. 5) An international marketer must deal with at least two levels of uncontrollable uncertainty. 6) The geography and infrastructure of a country are uncontrollable factors that influence the business decisions of a company in an international market. 7) The uncontrollable factors affecting international marketing are limited to political forces, economic climate, and competitive structure. 8) The level of technology in a country is a controllable element for international marketers. 9) The uncontrollable factors a company has to deal with decrease with the number of foreign markets in which it operates. 10) The controllable elements for marketers can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. 11) Political and legal forces, economic climate, and competition are some of the domestic environment's controllable factors. 12) The foreign policies of a country are one example of a home-country element that has a direct effect on a firm's international marketing success. 13) Abolition of apartheid in South Africa is an example of a positive effect on foreign policy, an uncontrollable element, in an international marketing scenario. 14) Commercial contracts with a Chinese company can only be entered into if that company is considered a "legal person." 15) The process of evaluating the uncontrollable elements in an international marketing program may involve cultural, political, and economic shock. 16) Level of technology typically remains unchanged across countries, making it a fairly controllable factor in international marketing. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) Political and legal issues a company may face abroad are mitigated by the "alien status" of the company. 18) The political details and the ramifications of political and legal events are often more transparent in a domestic situation than they are in a foreign market. 19) The political/legal environment is a controllable element for international marketers because of their potent ability to lobby and influence legislation in foreign markets. 20) The uncontrollable elements of the foreign business environment include the culture. 21) A foreign company is always subject to the political whims of the local government to a greater degree than a domestic firm. 22) John refuses to buy Japanese products because he considers this as a way of selling out to a nation that was once our enemy. John is using a self-reference criterion to make his decision. 23) The self-reference criterion is closely related to collectivism—or the importance of the group. 24) Renata just ate cookies and, therefore, feels justified in refusing food offered by her Middle Eastern host. In this instance, Renata's self-reference criterion has just saved her from making a cultural blunder. 25) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that emphasizes the need for ethnocentrism. 26) Family reference and upbringing provides a complete basis for understanding one's culture and no additional study is required to become aware of cultural norms and activities. 27) The most effective approach to build global awareness into an organization is to increase the diversity mix of the employee profile for entry-level jobs. 28) Traditional manufacturing companies possess the most favorable factors for doing business internationally. 29) A company in the "no direct foreign marketing" stage of international marketing involvement does not actively cultivate customers outside national boundaries. 30) The global marketing concept views the marketplace as consisting of one primary domestic market that is complimented by several smaller regional markets.

31) What is one of the most dynamic trends that is affecting current global business strategies? A) the trend toward buying American cars in Europe B) the trend toward the acceptance of the free market system among developing countries C) the trend toward using English as the global language D) the trend toward establishing a world currency E) the trend toward providing aid to developing and less developed nations 32) What event spurred the final downfall of the U.S. economy in 2008 when world trade experienced its deepest decline in more than 50 years? A) The stock market ended at a record high. B) The U.S. and Cuba joined forces. C) The Senate and House failed to compromise on interest rates. D) The housing market collapsed. E) The voters elected a third-party candidate. 33) How has globalization impacted domestic markets in the United States? A) Companies with only domestic markets have been able to sustain their customary rates of growth. B) Multinational companies are making more profits from their domestic operations compared to their earnings from the foreign markets. C) Only multinational companies with large production facilities have outperformed their strictly domestic U.S. counterparts. D) The domestic companies have reduced their manufacturing employment more than U.S. multinationals. E) Multinational manufacturing companies in all industries and sizes have outperformed their domestic counterparts. 34) What is an essential requirement for experienced, as well as new, firms to succeed in international markets? A) adhering strictly to their traditional methods of production and operations B) focusing primarily on their production to exclusively meet domestic demand C) venturing into multiple markets by investing in all of them at once D) committing themselves completely to foreign markets E) having beneficial relations with lobbyists of foreign markets 35) Jason's department is responsible for the business activities designed to plan, price, promote, and direct the flow of his company's small appliance products to consumers in various nations around the world for a profit. What is his department in charge of? A) internal marketing B) importing C) performance appraisal D) international marketing E) domestic trade

36) What is considered the most critical difference between domestic marketing and international marketing? A) the difference in marketing principles being followed B) the different concepts of marketing C) the difference in marketing theories being followed D) the environment in which marketing plans must be implemented E) the basic processes used to market products and services 37) Marketers must be especially cognizant of ________ for both domestic and international markets because of the dominantly uncontrollable nature of this factor. A) price B) promotion C) research activities D) political/legal forces E) channels of distribution 38) ________ is a controllable element for an international marketer. A) Level of technology B) Geography and infrastructure C) Channels-of-distribution D) Cultural forces E) Competitive forces 39) What is an uncontrollable element for an international marketer? A) firm characteristics B) channels-of-distribution C) price D) research E) level of technology 40) For an international marketer, the ________ can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. A) competitive structure B) economic climate C) structure of distribution D) environmental factors E) controllable elements 41) Ian works for a sports equipment manufacturer in Boston and is responsible for shipping products across the United States. What is one factor that would be uncontrollable for Ian? A) firm characteristics B) competitive structure C) channels of distribution D) price of the product E) promotional measures 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

42) Which political action is most likely to favor international marketing? A) placing trade embargoes on Cuba owing to widespread political instability in the country B) the U.S. government placing a trade ban on Libya owing to rampant terrorism C) South Africa abolishing apartheid and the U.S. lifting the embargo D) tariff hike for imports established by China E) the U.S. government coupling human rights issues with foreign trade policy 43) What is an accurate description of the relationship between international business and domestic business? A) The domestic economic climate has no effect on a company's competitive position in foreign markets. B) Domestic businesses must focus on capital mobility toward international businesses before capital generation. C) Countries must not restrict foreign investment even if domestic economic conditions deteriorate. D) The ability to invest abroad is to a large extent a function of domestic economic vitality. E) Domestic businesses are more viable than international businesses as capital tends to move toward minimum use. 44) How can "alien status" unfavorably affect a company? A) prejudiced treatment by the host country's politicians and legal authorities B) an inflated balance of trade C) a sharp rise in domestic and international demand D) lower trade tariffs in the host country E) an economic situation of the magnitude of the Great Depression 45) With respect to the environment in which a business operates, factors such as competition, political and legal forces, and economic climate would all be classified as A) controllable elements. B) uncontrollable elements. C) tractable elements. D) demographic elements. E) cultural elements. 46) ________ is a controllable element in both domestic and international marketing environments. A) Economic climate B) Competition within the home country C) Price of products D) Political force E) Foreign policy

47) The marketing tasks of an international marketer differ from that of a domestic marketer as the A) international marketer has fewer uncontrollable elements to deal than a domestic marketer. B) level of technology and cultural forces are controllable elements for the international marketer. C) structure of distribution is an uncontrollable element for the international marketer. D) competitive structure is one of the controllable factors for an international marketer. E) international marketer is less concerned about geography and infrastructure than the domestic marketer. 48) Kelly Reeves is in charge of a new marketing effort directed toward Peru. In order for her company to market effectively and distribute to all of Peru's major cities, Kelly must devise a logistics plan for crossing the Andes Mountains on a daily basis. Which of these foreign environment uncontrollable variables would be a chief concern as Kelly devises her firm's logistics plan? A) price B) product C) geography and infrastructure D) promotional strategies E) channels of distribution 49) Compared to the foreign environment variables, which of the following uncontrollable variables is least likely to affect a domestic marketer? A) political forces B) competitive structure C) economic climate D) cultural forces E) legal forces 50) Angelica Wu is preparing a marketing plan for her company for the upcoming year's business activities. She knows that she should begin her plan by examining the variables she has some control over. These controllable variables would include price, product, channels-ofdistribution, and A) level of technology. B) political forces. C) competition. D) economic climate. E) promotion.

51) M&G Inc., a company producing musical instruments, had dominated its home market for several years before venturing into international markets. The company was focusing more on international operations until Beige N, a German company in the same business, entered its home market. Beige N started selling good quality products at prices much lower than M&G's and affected its sales adversely. Which of the following elements in the marketing environment has affected the business of M&G Inc. with the market entry of Beige N? A) level of technology B) structure of distribution C) competition in the domestic market D) cultural forces E) promotion of the product 52) Shondra McDonald, a marketing manager at a hearing aid manufacturing firm, is asked to review the marketing opportunities of her company in a foreign market. She is aware that she can modify certain elements of the marketing environment to suit the foreign market needs. She focuses her attention on the uncontrollable factors that might affect the firm's business prospects. Which of the following uncontrollable elements is most likely to affect the company's business prospects in the foreign market? A) pricing policies in the domestic market B) research methodologies used by her company C) promotional activities required to market the product D) level of technology in the targeted market E) product distribution channels adopted by his company 53) The uncontrollable issue of ________ faced by a company abroad is often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. A) research B) channel of distribution C) product specification D) politics E) product promotion 54) Which scenario best illustrates the political and legal issues faced by companies because of their "alien status" when they attempt to do business in foreign countries? A) a company doing moderate business in international markets because of violent history of its home country B) a company being forced by the local government to share its core competencies in order to continue doing business C) a product not being widely accepted in the foreign market because of its irrelevance to the customers D) a company utilizing an identical promotional campaign it used in the domestic country E) a company not succeeding in a foreign market because its product pricing is above the purchasing power of the local customers

55) Adaptation on the part of an international marketer is best described as A) a conscious effort to make themselves aware of the home cultural reference in their analyses and decision making. B) a conscious effort to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. C) the notion that people in one's own company or country know best how to do things. D) the process of identifying the similarities that exists between the domestic and foreign markets. E) an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions and then to adjust the marketing mix in order to closely reflect these decisions. 56) A natural off shoot of a person's self-reference criterion is ________ that also creates a concern for the international marketer. A) sympathy B) self-actualization C) ethnocentrism D) empathy E) collectivism 57) ________ is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. A) Xenocentrism B) Holism C) Self-reference criterion D) Segregation E) Orientalism 58) People seldom stop to think about a reaction; they simply react. Thus, when faced with a problem in another culture, their tendency is to react instinctively and refer to their ________ for a solution. A) self-space principle B) segregation principle C) integration criterion D) space command criterion E) self-reference criterion 59) Parul believes that her culture and country know how to do things best and she looks down on the cultural habits of other countries. What is Parul exhibiting? A) differentiation B) marketing myopia C) ethnocentrism D) multiculturalism E) pluralism

60) What characteristic would impede the ability of a person to assess a foreign market in its true light? A) polycentrism B) pluralism C) xenocentrism D) ethnocentrism E) relativism 61) Brett, who is from Ohio, has taken a job in Thailand. Last week, he was confronted with a personnel issue and resolved it by saying that "In the U.S., you would be given one warning and then fired for this type of behavior." Brett did not take into account that company standards might differ in Thailand and the employee was acting appropriately. Which obstacle to international marketing does this demonstrate? A) collectivism B) self-reference criterion C) tragedy of the commons D) individualism E) marketing myopia 62) The most effective way to control the influence of ethnocentrism and the self-reference criterion is to A) reduce interaction with a culturally diverse audience. B) design products and services in a traditional manner. C) recognize their effects on our behavior. D) learn at least two foreign languages to understand the cultural differences. E) establish beneficial relations with the host country's government. 63) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion (SRC) influences. What is the first step in this analysis? A) redefining the problem without the SRC influence B) solving the problem for the optimum business goal situation C) isolating the SRC influence in the problem D) defining the business problem or goal in home-country cultural traits, habits, or norms E) examining the isolated SRC influence to see how it complicates the problem 64) Why does understanding one's own culture require additional study? A) to find out why cultural traits in one's own country does not affect market behavior B) because much of the cultural influence on market behavior is at the subconscious level C) since without which, understanding the cultural traits of one's own country is impossible D) because an average manager must have extensive cultural knowledge of all countries in the world E) because cultural influence on one's own market behavior is generally minimal

65) A globally aware manager is characterized by A) using one's home culture's values alone to market one's products in foreign countries B) accepting the cultural ways of another individual as his or her own C) tolerating cultural differences and allowing others to be different and equal D) discarding one's home culture's standards to adopt the global cultural standards E) controlling any influences that the global cultural standards may have on the marketing process 66) Tomas is a manager at a frozen food company and wants to understand the way people in different countries think and act so that the company can respond to their needs appropriately. What is the best aid he can use to accomplish this? A) a sound financial background B) better political connections C) an understanding of foreign investment opportunities D) an understanding of macroeconomics E) knowledge of the foreign country's history 67) What is the most effective way to achieve organizational global awareness? A) hiring entry-level employees based on the sole criterion of global awareness B) organizing frequent employee trips to foreign cultures to increase their sensitivity C) increasing the diversity mix of the front-level employee profile D) having a culturally diverse senior executive staff or board of directors E) promoting social networking as a means to improve inter-cultural communication 68) Which firm seems better equipped for internationalization? A) a firm that sells its products only to those foreign customers who directly contact the firm B) a firm that has a production capacity that is larger than home market demand C) a firm that focuses its production activities on meeting the demands in the home market D) a firm that has a culturally diverse employee profile but few competitive offerings at the global level E) a firm that has little intention of maintaining a continuous market representation 69) Which firm has a better chance of accelerating the internationalization process? A) Box-Co has key managers well-networked internationally. B) Ironworks International uses more traditional manufacturing practices. C) Piano Plus primarily focuses all its operations and production capacities to meet the domestic market needs. D) Animal Awareness and Action refrains from using the Internet as its major communication platform. E) Kenilworth Karts has larger home markets and smaller production capacities.

70) When considering the stages of international marketing involvement, it is important to remember that A) a firm essentially progresses through the stages in a linear order. B) the international marketing stage is a direct result of temporary surpluses caused by variations in production levels or demand. C) a larger home market with a smaller production base favors internationalization. D) a firm may be in more than one stage simultaneously. E) at the global marketing level, a firm focuses on market segmentation based on geographical borders. 71) In the context of stages of international marketing involvement, a company's product reaches a foreign market without any conscious effort on the part of a marketer during which stage of the process? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage 72) Watson's, a firm that specializes in dog food and grooming products, has a very wellestablished domestic market. The company does not actively sell its products outside national borders but provides goods to customers who contact them directly or place orders with them through the Internet. Watson's is currently in the ________ stage of international marketing involvement. A) frequent foreign marketing B) active foreign marketing C) global marketing D) regular foreign marketing E) no direct foreign marketing 73) While Heidi's company does not typically sell internationally, they have a temporary surplus in the small appliances they manufacture and decide to promote them in other countries. Which stage of international marketing involvement does this represent? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage 74) Natasha's company seeks markets all over the world and attempts to sell products that are a result of planned production for markets in various countries. Which stage best characterizes the stage of international marketing involvement for Natasha's company? A) infrequent foreign marketing B) domestic marketing C) no direct foreign marketing D) international marketing E) internal marketing 11 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

75) Marta's company treats the world, including the home market in Spain, as one market. Market segmentation decisions no longer focus on national borders. Instead, market segments are defined by income levels, usage patterns, and other factors that span countries and regions. Which of the following stages best characterizes the stage of international marketing involvement for Marta's company? A) infrequent foreign marketing B) test marketing C) no direct foreign marketing D) internal marketing E) global marketing 76) Kentax Corporation makes industrial cleaning products and decides to enter the international marketing arena by marketing its products to China, Japan, and South Korea, with separate marketing strategies for each country. Which of the following approaches is most likely used by Kentax Corporation to formulate its international policies and strategies? A) domestic market extension B) multidomestic market C) mass marketing D) regional marketing E) standardized marketing 77) What factor is favorable when determining whether or not a company should consider internationalization efforts? A) A company currently has large home markets but smaller production capacities. B) A company has home country managers who have never worked outside of the home country. C) A company wants to pair with an existing international company to access technology. D) A company has minimal storage and transportation capabilities. E) A company has high-technology resources already in place. 78) What is true of firms in the first two stages of international marketing involvement—no direct foreign marketing and infrequent foreign marketing? A) They do not begin internationalization at these stages. B) They take a strategic approach to decision making regarding international expansion. C) They are more reactive in nature and embark on internationalization without planning. D) They intend to maintain a continuous market representation in foreign markets. E) They are a result of dedicated production capacity maintained for foreign markets. 79) In what stage of international marketing involvement do companies primarily focus all their operations and production to service domestic market needs, even though they have a permanent productive capacity devoted to the production of goods to be marketed in foreign markets? A) no direct foreign marketing B) internal marketing C) regular foreign marketing D) international marketing E) financial marketing 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

80) In the infrequent foreign marketing stage of international marketing involvement, firms A) sell products that are a result of planned production in markets in various countries. B) no longer make market segmentation decisions on the basis of national borders. C) have a global perspective and view the entire world as one market. D) have more than half their sales revenues coming from international markets. E) have no intention of maintaining continuous market representation in foreign markets. 81) A firm that is involved with the international marketing stage of marketing involvement will A) have its primary focus of operations and production on servicing domestic market needs. B) reduce foreign sales activity. C) consider profit expectations from foreign markets as a bonus in addition to regular domestic profits. D) plan both marketing and production of goods outside the home market. E) consider international marketing only when there is a surplus of goods. 82) What is the most profound change for firms at the global marketing stage of internationalization? A) More than half of the multinational firm's revenue is generated from domestic markets. B) Sales to foreign markets are made as and when goods become available. C) Temporary surpluses marketed in foreign markets is the only element of internationalization. D) Companies treat the world, along with home market, as one market. E) Domestic demand always exceeds the firm's production capacity. 83) Which one of the following firms/products reflects a global marketing orientation? A) skin-care products aimed at African American women B) a company promoting Latino jazz musicals C) a firm producing highly cost-effective and durable computers to attract students and young people under 25 D) a famous restaurant in Singapore specializing in Eurasian fusion food E) a Japanese to English translation software 84) For a company at the ________ stage of internationalization, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. A) domestic market extension B) no direct foreign marketing C) global marketing D) internal marketing E) infrequent foreign marketing 85) Describe the four trends that have been pointed to as influencers for the role of international business for the future. Explain how these four trends will affect international business. 86) Discuss some of the U.S.-based companies that are now foreign controlled and describe how U.S. companies have been affected by this. 87) Explain the key difference between domestic and international marketing. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

88) How can a manager construct a marketing program designed for optimal adjustment to the uncertainty of the business climate? 89) List and briefly explain the domestic environment uncontrollable elements that influence an international marketer. 90) Kendrik's Boston-based company would like to expand into Europe. How will competition within the United States affect international marketing for Kendrik? 91) Explain how the "alien status" of a company amplifies the political and legal issues faced by the company in a foreign market. 92) What are the two primary obstacles to success in international marketing and how do they affect the international marketer? 93) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion influences. List the four steps that make up the framework for such an analysis. 94) Explain why a company might choose to use infrequent foreign marketing.

International Marketing, 18e (Cateora) Chapter 1 The Scope and Challenge of International Marketing 1) Today, becoming international is a luxury only some companies can afford. Answer: FALSE Explanation: For a growing number of companies, being international is no longer a luxury but a necessity for economic survival. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-01 The benefits of international markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Companies from the Netherlands are the leading group of investors in the United States. Answer: FALSE Explanation: Foreign direct investment in the United States is more than $3 trillion. Companies from the United Kingdom lead the group of investors, with companies from Japan, the Netherlands, Canada, and France following, in that order. Difficulty: 1 Easy Topic: Benefits and Challenges of Foreign Direct Investment Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) International marketing involves selling of a company's goods and services to consumers or users in more than one nation for a profit. Answer: TRUE Explanation: International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) The main difference between domestic and international marketing lies in the different concepts of marketing. Answer: FALSE Explanation: The difference between domestic and international marketing lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) An international marketer must deal with at least two levels of uncontrollable uncertainty. Answer: TRUE Explanation: The international marketer must deal with at least two levels of uncontrollable uncertainty instead of one. Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds its own unique set of uncontrollable factors. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) The geography and infrastructure of a country are uncontrollable factors that influence the business decisions of a company in an international market. Answer: TRUE Explanation: The uncontrollable international environment includes political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) The uncontrollable factors affecting international marketing are limited to political forces, economic climate, and competitive structure. Answer: FALSE Explanation: The uncontrollable international environment includes political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The level of technology in a country is a controllable element for international marketers. Answer: FALSE Explanation: The uncontrollable international environment includes political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 2 Medium Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) The uncontrollable factors a company has to deal with decrease with the number of foreign markets in which it operates. Answer: FALSE Explanation: The more the foreign markets in which a company operates, the greater is the possible variety of foreign environmental factors with which to contend. Difficulty: 2 Medium Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) The controllable elements for marketers can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Answer: TRUE Explanation: The successful manager constructs a marketing program designed for optimal adjustment to the uncertainty of the business climate. The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Political and legal forces, economic climate, and competition are some of the domestic environment's controllable factors. Answer: FALSE Explanation: Domestic environment uncontrollable factors include home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) The foreign policies of a country are one example of a home-country element that has a direct effect on a firm's international marketing success. Answer: TRUE Explanation: Domestic environment uncontrollable elements include home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. A political decision involving foreign policy can have a direct effect on a firm's international marketing success. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) Abolition of apartheid in South Africa is an example of a positive effect on foreign policy, an uncontrollable element, in an international marketing scenario. Answer: TRUE Explanation: Positive effects occur when changes in foreign policy offer countries favored treatment. Such was the case when South Africa abolished apartheid and the embargo was lifted. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Commercial contracts with a Chinese company can only be entered into if that company is considered a "legal person." Answer: TRUE Explanation: Commercial contracts can be entered into with a Chinese company or individual only if that company or person is considered a "legal person." To be a "legal person" in China, the company or person must have registered as such with the Chinese government. Difficulty: 1 Easy Topic: How Resources and Capabilities Influence Competitive Dynamics Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) The process of evaluating the uncontrollable elements in an international marketing program may involve cultural, political, and economic shock. Answer: TRUE Explanation: The process of evaluating the uncontrollable elements in an international marketing program often involves substantial doses of cultural, political, and economic shock. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Level of technology typically remains unchanged across countries, making it a fairly controllable factor in international marketing. Answer: FALSE Explanation: The level of technology is an uncontrollable element that can often be misread because of the vast differences that may exist between developed and developing countries. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Political and legal issues a company may face abroad are mitigated by the "alien status" of the company. Answer: FALSE Explanation: Political and legal issues a business faces abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) The political details and the ramifications of political and legal events are often more transparent in a domestic situation than they are in a foreign market. Answer: TRUE Explanation: In a domestic situation, political details and the ramifications of political and legal events are often more transparent than they are in some foreign countries. In many foreign countries, corruption may prevail, foreigners may receive unfair treatment, or the laws may be so different from those in the home country that they are misinterpreted. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) The political/legal environment is a controllable element for international marketers because of their potent ability to lobby and influence legislation in foreign markets. Answer: FALSE Explanation: Political/legal forces and the level of technology are two of the uncontrollable aspects of the foreign environment along with economic forces, competitive forces, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) The uncontrollable elements of the foreign business environment include the culture. Answer: TRUE Explanation: The more significant elements in the uncontrollable international environment include political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) A foreign company is always subject to the political whims of the local government to a greater degree than a domestic firm. Answer: TRUE Explanation: In many foreign countries, corruption may prevail, foreigners may receive unfair treatment, or the laws may be so different from those in the home country that they are misinterpreted. A foreign company is foreign and thus always subject to the political whims of the local government to a greater degree than a domestic firm. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) John refuses to buy Japanese products because he considers this as a way of selling out to a nation that was once our enemy. John is using a self-reference criterion to make his decision. Answer: TRUE Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one's own company, culture, or country know best how to do things. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 23) The self-reference criterion is closely related to collectivism—or the importance of the group. Answer: FALSE Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one's own company, culture, or country know best how to do things. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

24) Renata just ate cookies and, therefore, feels justified in refusing food offered by her Middle Eastern host. In this instance, Renata's self-reference criterion has just saved her from making a cultural blunder. Answer: FALSE Explanation: When faced with a problem in another culture, our tendency is to react instinctively and refer to our SRC for a solution. Our reaction, however, is based on meanings, values, symbols, and behavior relevant to our own culture and usually different from those of the foreign culture. Such decisions are often not good ones. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 25) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that emphasizes the need for ethnocentrism. Answer: FALSE Explanation: To avoid errors in business decisions, the knowledgeable marketer will conduct a cross-cultural analysis that isolates the self-reference criterion influences and maintain vigilance regarding ethnocentrism. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Family reference and upbringing provides a complete basis for understanding one's culture and no additional study is required to become aware of cultural norms and activities. Answer: FALSE Explanation: Understanding one's own culture may require additional study, because much of the cultural influence on market behavior remains at a subconscious level and is not clearly defined. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

27) The most effective approach to build global awareness into an organization is to increase the diversity mix of the employee profile for entry-level jobs. Answer: FALSE Explanation: The most effective approach to build global awareness into an organization is to have a culturally diverse senior executive staff or board of directors. Difficulty: 2 Medium Topic: Creating a Global Mindset Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 28) Traditional manufacturing companies possess the most favorable factors for doing business internationally. Answer: FALSE Explanation: Research has revealed a number of factors favoring faster internationalization: (1) companies with either high-technology or marketing-based resources appear to be better equipped to internationalize than more traditional manufacturing kinds of companies; (2) smaller home markets and larger production capacities appear to favor internationalization; and (3) firms with key managers well networked internationally are able to accelerate the internationalization process. Difficulty: 2 Medium Topic: Choosing An International Business Strategy Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) A company in the "no direct foreign marketing" stage of international marketing involvement does not actively cultivate customers outside national boundaries. Answer: TRUE Explanation: A company in the stage of "no direct foreign marketing" does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who directly contact the firm. Difficulty: 2 Medium Topic: Choosing An International Business Strategy Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

30) The global marketing concept views the marketplace as consisting of one primary domestic market that is complimented by several smaller regional markets. Answer: FALSE Explanation: At the global marketing stage of international marketing involvement, companies treat the world, including their home market, as one market. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 31) What is one of the most dynamic trends that is affecting current global business strategies? A) the trend toward buying American cars in Europe B) the trend toward the acceptance of the free market system among developing countries C) the trend toward using English as the global language D) the trend toward establishing a world currency E) the trend toward providing aid to developing and less developed nations Answer: B Explanation: Of all the events and trends affecting global business today, four stand out as the most dynamic, the ones that will influence the shape of international business beyond today's "bumpy roads" and far into the future: (1) the rapid growth of the World Trade Organization and regional free trade areas such as the North American Free Trade Area and the European Union; (2) the trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and eastern Europe; (3) the burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders; and (4) the mandate to manage the resources and global environment properly for the generations to come. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 01-01 The benefits of international markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

32) What event spurred the final downfall of the U.S. economy in 2008 when world trade experienced its deepest decline in more than 50 years? A) The stock market ended at a record high. B) The U.S. and Cuba joined forces. C) The Senate and House failed to compromise on interest rates. D) The housing market collapsed. E) The voters elected a third-party candidate. Answer: D Explanation: Lower government interest rates had yielded a refinancing stampede, distributing the cash that fueled the consumer spending, which finally began flagging in early 2008. Then in September and October of that year, the housing bubble burst, and the world financial system teetered on collapse. The ever faithful American consumer stopped buying, and world trade experienced its deepest decline in more than 50 years, a drop of 11.0 percent. Difficulty: 2 Medium Topic: The Changing Nature of the Global Economy Learning Objective: 01-01 The benefits of international markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 33) How has globalization impacted domestic markets in the United States? A) Companies with only domestic markets have been able to sustain their customary rates of growth. B) Multinational companies are making more profits from their domestic operations compared to their earnings from the foreign markets. C) Only multinational companies with large production facilities have outperformed their strictly domestic U.S. counterparts. D) The domestic companies have reduced their manufacturing employment more than U.S. multinationals. E) Multinational manufacturing companies in all industries and sizes have outperformed their domestic counterparts. Answer: E Explanation: Companies with only domestic markets have found increasing difficulty in sustaining their customary rates of growth, and many are seeking foreign markets in which to expand. Companies with foreign operations find that foreign earnings are making an important overall contribution to total corporate profits. Multinationals of all sizes and in all industries outperformed their strictly domestic U.S. counterparts. Furthermore, U.S. multinationals reduced their manufacturing employment, both at home and abroad, more than domestic companies. Difficulty: 2 Medium Topic: The Changing Nature of the Global Economy Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

34) What is an essential requirement for experienced, as well as new, firms to succeed in international markets? A) adhering strictly to their traditional methods of production and operations B) focusing primarily on their production to exclusively meet domestic demand C) venturing into multiple markets by investing in all of them at once D) committing themselves completely to foreign markets E) having beneficial relations with lobbyists of foreign markets Answer: D Explanation: For firms venturing into international marketing for the first time and for those already experienced, the requirement is generally the same: a thorough and complete commitment to foreign markets and, for many, new ways of operating. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 35) Jason's department is responsible for the business activities designed to plan, price, promote, and direct the flow of his company's small appliance products to consumers in various nations around the world for a profit. What is his department in charge of? A) internal marketing B) importing C) performance appraisal D) international marketing E) domestic trade Answer: D Explanation: International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

36) What is considered the most critical difference between domestic marketing and international marketing? A) the difference in marketing principles being followed B) the different concepts of marketing C) the difference in marketing theories being followed D) the environment in which marketing plans must be implemented E) the basic processes used to market products and services Answer: D Explanation: The difference lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 37) Marketers must be especially cognizant of ________ for both domestic and international markets because of the dominantly uncontrollable nature of this factor. A) price B) promotion C) research activities D) political/legal forces E) channels of distribution Answer: D Explanation: Political/legal forces represent the uncontrollable element that domestic and international marketers need to consider. Price, promotion, research activities, and channels of distribution are all controllable elements for international marketers. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

38) ________ is a controllable element for an international marketer. A) Level of technology B) Geography and infrastructure C) Channels-of-distribution D) Cultural forces E) Competitive forces Answer: C Explanation: Channels-of-distribution represent a controllable element for an international marketer. The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 39) What is an uncontrollable element for an international marketer? A) firm characteristics B) channels-of-distribution C) price D) research E) level of technology Answer: E Explanation: The uncontrollable elements of the foreign environment are political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Refer to Exhibit 1.3 The International Marketing Task. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

40) For an international marketer, the ________ can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. A) competitive structure B) economic climate C) structure of distribution D) environmental factors E) controllable elements Answer: E Explanation: The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. The controllable elements include product, price, promotion, distribution, and research activities. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 41) Ian works for a sports equipment manufacturer in Boston and is responsible for shipping products across the United States. What is one factor that would be uncontrollable for Ian? A) firm characteristics B) competitive structure C) channels of distribution D) price of the product E) promotional measures Answer: B Explanation: Competitive forces, political/legal forces, and economic climate are the three domestic uncontrollable elements in marketing. Price, promotion, firm characteristics, and channels of distribution are all controllable elements for international marketers. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

42) Which political action is most likely to favor international marketing? A) placing trade embargoes on Cuba owing to widespread political instability in the country B) the U.S. government placing a trade ban on Libya owing to rampant terrorism C) South Africa abolishing apartheid and the U.S. lifting the embargo D) tariff hike for imports established by China E) the U.S. government coupling human rights issues with foreign trade policy Answer: C Explanation: A political decision involving foreign policy can have a direct effect on a firm's international marketing success. Conversely, positive effects occur when changes in foreign policy offer countries favored treatment. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 43) What is an accurate description of the relationship between international business and domestic business? A) The domestic economic climate has no effect on a company's competitive position in foreign markets. B) Domestic businesses must focus on capital mobility toward international businesses before capital generation. C) Countries must not restrict foreign investment even if domestic economic conditions deteriorate. D) The ability to invest abroad is to a large extent a function of domestic economic vitality. E) Domestic businesses are more viable than international businesses as capital tends to move toward minimum use. Answer: D Explanation: The capacity to invest in plants and facilities, either in domestic or foreign markets, is to a large extent a function of domestic economic vitality. It is generally true that capital tends to flow toward optimum uses; however, capital must be generated before it can have mobility. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

44) How can "alien status" unfavorably affect a company? A) prejudiced treatment by the host country's politicians and legal authorities B) an inflated balance of trade C) a sharp rise in domestic and international demand D) lower trade tariffs in the host country E) an economic situation of the magnitude of the Great Depression Answer: A Explanation: The "alien status" of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Difficulty: 2 Medium Topic: Managing Political Risk and Differences Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 45) With respect to the environment in which a business operates, factors such as competition, political and legal forces, and economic climate would all be classified as A) controllable elements. B) uncontrollable elements. C) tractable elements. D) demographic elements. E) cultural elements. Answer: B Explanation: With respect to the environment in which a business operates, factors such as competition, political and legal forces, economic climate would all be classified as uncontrollable elements. Refer to Exhibit 1.3 The International Marketing Task. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

46) ________ is a controllable element in both domestic and international marketing environments. A) Economic climate B) Competition within the home country C) Price of products D) Political force E) Foreign policy Answer: C Explanation: Price is a controllable element in both domestic and international marketing. Factors such as competition, political and legal forces, and economic climate would all be classified as uncontrollable elements. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 47) The marketing tasks of an international marketer differ from that of a domestic marketer as the A) international marketer has fewer uncontrollable elements to deal than a domestic marketer. B) level of technology and cultural forces are controllable elements for the international marketer. C) structure of distribution is an uncontrollable element for the international marketer. D) competitive structure is one of the controllable factors for an international marketer. E) international marketer is less concerned about geography and infrastructure than the domestic marketer. Answer: C Explanation: The uncontrollable elements of the foreign environment are political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

48) Kelly Reeves is in charge of a new marketing effort directed toward Peru. In order for her company to market effectively and distribute to all of Peru's major cities, Kelly must devise a logistics plan for crossing the Andes Mountains on a daily basis. Which of these foreign environment uncontrollable variables would be a chief concern as Kelly devises her firm's logistics plan? A) price B) product C) geography and infrastructure D) promotional strategies E) channels of distribution Answer: C Explanation: Geography and infrastructure will be a chief concern for Kelly in devising a logistics plan to extend marketing across the Andes. The uncontrollable elements of the foreign environment are political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 49) Compared to the foreign environment variables, which of the following uncontrollable variables is least likely to affect a domestic marketer? A) political forces B) competitive structure C) economic climate D) cultural forces E) legal forces Answer: D Explanation: Cultural forces are not included as an uncontrollable element for the domestic marketer, while they constitute an uncontrollable element for the international marketer. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

50) Angelica Wu is preparing a marketing plan for her company for the upcoming year's business activities. She knows that she should begin her plan by examining the variables she has some control over. These controllable variables would include price, product, channels-ofdistribution, and A) level of technology. B) political forces. C) competition. D) economic climate. E) promotion. Answer: E Explanation: Angelica Wu would include the variable of promotion while preparing a marketing plan for her company as it is a controllable variable. Price, product, promotion, research, firm characteristics, channels of distribution, and research are the controllable elements for a domestic marketer. Refer to Exhibit 1.3 The International Marketing Task. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 51) M&G Inc., a company producing musical instruments, had dominated its home market for several years before venturing into international markets. The company was focusing more on international operations until Beige N, a German company in the same business, entered its home market. Beige N started selling good quality products at prices much lower than M&G's and affected its sales adversely. Which of the following elements in the marketing environment has affected the business of M&G Inc. with the market entry of Beige N? A) level of technology B) structure of distribution C) competition in the domestic market D) cultural forces E) promotion of the product Answer: C Explanation: The entry of Beige N into the domestic market has brought about competition for M&G Inc. Competition within the home country can have a profound effect on the international marketer's task. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

52) Shondra McDonald, a marketing manager at a hearing aid manufacturing firm, is asked to review the marketing opportunities of her company in a foreign market. She is aware that she can modify certain elements of the marketing environment to suit the foreign market needs. She focuses her attention on the uncontrollable factors that might affect the firm's business prospects. Which of the following uncontrollable elements is most likely to affect the company's business prospects in the foreign market? A) pricing policies in the domestic market B) research methodologies used by her company C) promotional activities required to market the product D) level of technology in the targeted market E) product distribution channels adopted by his company Answer: D Explanation: The level of technology is different for different countries. Being an uncontrollable element, it is most likely to affect the hearing aid manufacturing firm's business in the foreign market. The uncontrollable elements in an international environment include political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. These forces constitute the principal elements of uncertainty an international marketer must cope with in designing a marketing program. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 53) The uncontrollable issue of ________ faced by a company abroad is often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. A) research B) channel of distribution C) product specification D) politics E) product promotion Answer: D Explanation: Political and legal issues face a business, whether it operates at home or in a foreign country. However, the issues abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 22 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

54) Which scenario best illustrates the political and legal issues faced by companies because of their "alien status" when they attempt to do business in foreign countries? A) a company doing moderate business in international markets because of violent history of its home country B) a company being forced by the local government to share its core competencies in order to continue doing business C) a product not being widely accepted in the foreign market because of its irrelevance to the customers D) a company utilizing an identical promotional campaign it used in the domestic country E) a company not succeeding in a foreign market because its product pricing is above the purchasing power of the local customers Answer: B Explanation: The "alien status" of a foreign business has two dimensions: It is alien in that foreigners control the business and in that the culture of the host country is alien to management. The alien status of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 55) Adaptation on the part of an international marketer is best described as A) a conscious effort to make themselves aware of the home cultural reference in their analyses and decision making. B) a conscious effort to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. C) the notion that people in one's own company or country know best how to do things. D) the process of identifying the similarities that exists between the domestic and foreign markets. E) an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions and then to adjust the marketing mix in order to closely reflect these decisions. Answer: B Explanation: Adaptation is a conscious effort on the part of an international marketer to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

56) A natural off shoot of a person's self-reference criterion is ________ that also creates a concern for the international marketer. A) sympathy B) self-actualization C) ethnocentrism D) empathy E) collectivism Answer: C Explanation: The primary obstacles to success in international marketing are a person's selfreference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 57) ________ is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. A) Xenocentrism B) Holism C) Self-reference criterion D) Segregation E) Orientalism Answer: C Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

58) People seldom stop to think about a reaction; they simply react. Thus, when faced with a problem in another culture, their tendency is to react instinctively and refer to their ________ for a solution. A) self-space principle B) segregation principle C) integration criterion D) space command criterion E) self-reference criterion Answer: E Explanation: When confronted with a set of facts, a person reacts spontaneously on the basis of knowledge assimilated over a lifetime—knowledge that is a product of the history of his or her culture. Seldom stopping to think about a reaction, a person simply reacts. Thus, when faced with a problem in another culture, the tendency is to react instinctively and refer to his or her self-reference criterion for a solution. A person's reaction, however, is based on meanings, values, symbols, and behavior relevant to his or her own culture and usually different from those of the foreign culture. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 59) Parul believes that her culture and country know how to do things best and she looks down on the cultural habits of other countries. What is Parul exhibiting? A) differentiation B) marketing myopia C) ethnocentrism D) multiculturalism E) pluralism Answer: C Explanation: Ethnocentrism is the notion that people in one's own company, culture, or country know best how to do things Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

60) What characteristic would impede the ability of a person to assess a foreign market in its true light? A) polycentrism B) pluralism C) xenocentrism D) ethnocentrism E) relativism Answer: D Explanation: Ethnocentrism is the notion that people in one's own company, culture, or country know best how to do things. Ethnocentrism is generally a problem when managers from affluent countries work with managers and markets in less affluent countries. It impedes the ability to assess a foreign market in its true light. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 61) Brett, who is from Ohio, has taken a job in Thailand. Last week, he was confronted with a personnel issue and resolved it by saying that "In the U.S., you would be given one warning and then fired for this type of behavior." Brett did not take into account that company standards might differ in Thailand and the employee was acting appropriately. Which obstacle to international marketing does this demonstrate? A) collectivism B) self-reference criterion C) tragedy of the commons D) individualism E) marketing myopia Answer: B Explanation: The primary obstacles to success in international marketing are a person's selfreference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

62) The most effective way to control the influence of ethnocentrism and the self-reference criterion is to A) reduce interaction with a culturally diverse audience. B) design products and services in a traditional manner. C) recognize their effects on our behavior. D) learn at least two foreign languages to understand the cultural differences. E) establish beneficial relations with the host country's government. Answer: C Explanation: The most effective way to control the influence of ethnocentrism and the selfreference criterion is to recognize their effects on our behavior. An awareness of the need to be sensitive to differences and to ask questions when doing business in another culture can help you avoid many of the mistakes possible in international marketing. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 63) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion (SRC) influences. What is the first step in this analysis? A) redefining the problem without the SRC influence B) solving the problem for the optimum business goal situation C) isolating the SRC influence in the problem D) defining the business problem or goal in home-country cultural traits, habits, or norms E) examining the isolated SRC influence to see how it complicates the problem Answer: D Explanation: Defining the business problem or goal in home-country cultural traits, habits, or norms is the first step provided in the analysis framework to avoid errors in business decisions owing to SRC. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

64) Why does understanding one's own culture require additional study? A) to find out why cultural traits in one's own country does not affect market behavior B) because much of the cultural influence on market behavior is at the subconscious level C) since without which, understanding the cultural traits of one's own country is impossible D) because an average manager must have extensive cultural knowledge of all countries in the world E) because cultural influence on one's own market behavior is generally minimal Answer: B Explanation: Understanding one's own culture may require additional study, because much of the cultural influence on market behavior remains at a subconscious level and is not clearly defined. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 65) A globally aware manager is characterized by A) using one's home culture's values alone to market one's products in foreign countries B) accepting the cultural ways of another individual as his or her own C) tolerating cultural differences and allowing others to be different and equal D) discarding one's home culture's standards to adopt the global cultural standards E) controlling any influences that the global cultural standards may have on the marketing process Answer: C Explanation: Tolerance is understanding cultural differences and accepting and working with others whose behaviors may be different from yours. You do not have to accept as your own the cultural ways of another, but you must allow others to be different and equal. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

66) Tomas is a manager at a frozen food company and wants to understand the way people in different countries think and act so that the company can respond to their needs appropriately. What is the best aid he can use to accomplish this? A) a sound financial background B) better political connections C) an understanding of foreign investment opportunities D) an understanding of macroeconomics E) knowledge of the foreign country's history Answer: E Explanation: Knowledge of history is important because the way people think and act is influenced by their history. For example, some Latin Americans' reluctance toward foreign investment or Chinese reluctance to open completely to outsiders can be understood better if you have a historical perspective. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 67) What is the most effective way to achieve organizational global awareness? A) hiring entry-level employees based on the sole criterion of global awareness B) organizing frequent employee trips to foreign cultures to increase their sensitivity C) increasing the diversity mix of the front-level employee profile D) having a culturally diverse senior executive staff or board of directors E) promoting social networking as a means to improve inter-cultural communication Answer: D Explanation: Global awareness can be obtained through personal relationships in other countries. But perhaps the most effective approach is to have a culturally diverse senior executive staff or board of directors. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

68) Which firm seems better equipped for internationalization? A) a firm that sells its products only to those foreign customers who directly contact the firm B) a firm that has a production capacity that is larger than home market demand C) a firm that focuses its production activities on meeting the demands in the home market D) a firm that has a culturally diverse employee profile but few competitive offerings at the global level E) a firm that has little intention of maintaining a continuous market representation Answer: B Explanation: One of the factors favoring faster internationalization is smaller home markets and larger production capacities. Many companies begin tentatively in international marketing, growing as they gain experience and gradually changing strategy and tactics as they become more committed. Difficulty: 2 Medium Topic: Choosing An International Business Strategy Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 69) Which firm has a better chance of accelerating the internationalization process? A) Box-Co has key managers well-networked internationally. B) Ironworks International uses more traditional manufacturing practices. C) Piano Plus primarily focuses all its operations and production capacities to meet the domestic market needs. D) Animal Awareness and Action refrains from using the Internet as its major communication platform. E) Kenilworth Karts has larger home markets and smaller production capacities. Answer: A Explanation: Firms with key managers well-networked internationally are able to accelerate the internationalization process. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

70) When considering the stages of international marketing involvement, it is important to remember that A) a firm essentially progresses through the stages in a linear order. B) the international marketing stage is a direct result of temporary surpluses caused by variations in production levels or demand. C) a larger home market with a smaller production base favors internationalization. D) a firm may be in more than one stage simultaneously. E) at the global marketing level, a firm focuses on market segmentation based on geographical borders. Answer: D Explanation: Though presented in a linear fashion, it cannot be inferred that a firm progresses from one stage to another; quite to the contrary, a firm may begin its international involvement at any one stage or be in more than one stage simultaneously. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 71) In the context of stages of international marketing involvement, a company's product reaches a foreign market without any conscious effort on the part of a marketer during which stage of the process? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage Answer: C Explanation: A company in the no direct foreign marketing stage does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who directly contact the firm Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

72) Watson's, a firm that specializes in dog food and grooming products, has a very wellestablished domestic market. The company does not actively sell its products outside national borders but provides goods to customers who contact them directly or place orders with them through the Internet. Watson's is currently in the ________ stage of international marketing involvement. A) frequent foreign marketing B) active foreign marketing C) global marketing D) regular foreign marketing E) no direct foreign marketing Answer: E Explanation: Watson's does not actively cultivate customers outside national boundaries; however, the company's products may reach foreign markets. Therefore, it is in the no direct foreign marketing stage of international marketing involvement. In this stage, sales may be made to trading companies as well as foreign customers who directly contact a firm. As companies develop websites on the Internet, many receive orders from international Internet users Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 73) While Heidi's company does not typically sell internationally, they have a temporary surplus in the small appliances they manufacture and decide to promote them in other countries. Which stage of international marketing involvement does this represent? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage Answer: A Explanation: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available with little or no intention of maintaining continuous market representation. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

74) Natasha's company seeks markets all over the world and attempts to sell products that are a result of planned production for markets in various countries. Which stage best characterizes the stage of international marketing involvement for Natasha's company? A) infrequent foreign marketing B) domestic marketing C) no direct foreign marketing D) international marketing E) internal marketing Answer: D Explanation: Natasha's company seeks markets all over the world and sells products that are a result of planned production for markets in various countries. Therefore, it is in the international marketing stage. Companies in the international marketing stage are fully committed to and involved in international marketing activities. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 75) Marta's company treats the world, including the home market in Spain, as one market. Market segmentation decisions no longer focus on national borders. Instead, market segments are defined by income levels, usage patterns, and other factors that span countries and regions. Which of the following stages best characterizes the stage of international marketing involvement for Marta's company? A) infrequent foreign marketing B) test marketing C) no direct foreign marketing D) internal marketing E) global marketing Answer: E Explanation: Marta's company is in the global marketing stage of international marketing involvement as it treats the world, including their home market, as one market. Market segmentation decisions are no longer focused on national borders. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

76) Kentax Corporation makes industrial cleaning products and decides to enter the international marketing arena by marketing its products to China, Japan, and South Korea, with separate marketing strategies for each country. Which of the following approaches is most likely used by Kentax Corporation to formulate its international policies and strategies? A) domestic market extension B) multidomestic market C) mass marketing D) regional marketing E) standardized marketing Answer: B Explanation: Kentax Corporation is fully committed to and involved in international marketing activities with a multidomestic strategy. Such companies seek markets all over the world and sell products that are a result of planned production for markets in various countries. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 77) What factor is favorable when determining whether or not a company should consider internationalization efforts? A) A company currently has large home markets but smaller production capacities. B) A company has home country managers who have never worked outside of the home country. C) A company wants to pair with an existing international company to access technology. D) A company has minimal storage and transportation capabilities. E) A company has high-technology resources already in place. Answer: E Explanation: Research has revealed a number of factors favoring faster internationalization: (1) Companies with either high-technology and/or marketing-based resources appear to be better equipped to internationalize than more traditional manufacturing kinds of companies; (2) smaller home markets and larger production capacities appear to favor internationalization; and (3) firms with key managers well networked internationally are able to accelerate the internationalization process. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

78) What is true of firms in the first two stages of international marketing involvement—no direct foreign marketing and infrequent foreign marketing? A) They do not begin internationalization at these stages. B) They take a strategic approach to decision making regarding international expansion. C) They are more reactive in nature and embark on internationalization without planning. D) They intend to maintain a continuous market representation in foreign markets. E) They are a result of dedicated production capacity maintained for foreign markets. Answer: C Explanation: The first two stages of international marketing involvement are more reactive in nature and often do not represent careful strategic thinking about international expansion. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 79) In what stage of international marketing involvement do companies primarily focus all their operations and production to service domestic market needs, even though they have a permanent productive capacity devoted to the production of goods to be marketed in foreign markets? A) no direct foreign marketing B) internal marketing C) regular foreign marketing D) international marketing E) financial marketing Answer: C Explanation: At the regular foreign marketing level, the firm has permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets. The primary focus of operations and production is to service domestic market needs. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

80) In the infrequent foreign marketing stage of international marketing involvement, firms A) sell products that are a result of planned production in markets in various countries. B) no longer make market segmentation decisions on the basis of national borders. C) have a global perspective and view the entire world as one market. D) have more than half their sales revenues coming from international markets. E) have no intention of maintaining continuous market representation in foreign markets. Answer: E Explanation: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 81) A firm that is involved with the international marketing stage of marketing involvement will A) have its primary focus of operations and production on servicing domestic market needs. B) reduce foreign sales activity. C) consider profit expectations from foreign markets as a bonus in addition to regular domestic profits. D) plan both marketing and production of goods outside the home market. E) consider international marketing only when there is a surplus of goods. Answer: D Explanation: Companies in the international marketing stage are fully committed to and involved in international marketing activities. Such companies seek markets all over the world and sell products that are a result of planned production for markets in various countries. This planning generally entails not only the marketing but also the production of goods outside the home market. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

82) What is the most profound change for firms at the global marketing stage of internationalization? A) More than half of the multinational firm's revenue is generated from domestic markets. B) Sales to foreign markets are made as and when goods become available. C) Temporary surpluses marketed in foreign markets is the only element of internationalization. D) Companies treat the world, along with home market, as one market. E) Domestic demand always exceeds the firm's production capacity. Answer: D Explanation: At the global marketing level, the most profound change is the orientation of the company toward markets and associated planning activities. At this stage, companies treat the world, including their home market, as one market. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 83) Which one of the following firms/products reflects a global marketing orientation? A) skin-care products aimed at African American women B) a company promoting Latino jazz musicals C) a firm producing highly cost-effective and durable computers to attract students and young people under 25 D) a famous restaurant in Singapore specializing in Eurasian fusion food E) a Japanese to English translation software Answer: C Explanation: For a firm with a global marketing orientation, market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

84) For a company at the ________ stage of internationalization, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. A) domestic market extension B) no direct foreign marketing C) global marketing D) internal marketing E) infrequent foreign marketing Answer: C Explanation: At the global marketing stage of internationalization, market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 85) Describe the four trends that have been pointed to as influencers for the role of international business for the future. Explain how these four trends will affect international business. Answer: Of all the events and trends affecting global business today, four stand out as the most dynamic, the ones that will influence the shape of international business far into the future. These are: (1) the rapid growth of the World Trade Organization and new free trade agreements around the world; (2) the trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and eastern Europe; (3) the burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders; and, (4) the mandate to properly manage the resources and global environment for the generations to come. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-01 The benefits of international markets. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

86) Discuss some of the U.S.-based companies that are now foreign controlled and describe how U.S. companies have been affected by this. Answer: Student examples may vary. Many familiar U.S. companies are now foreign controlled or headed in that direction. When you drop in at a 7-Eleven convenience store or buy Firestone tires, you are buying directly from Japanese companies. Some well-known brands no longer owned by U.S. companies are Carnation (Swiss), The Wall Street Journal (Australian), and the all-American Smith & Wesson handgun that won the U.S. West, which is owned by a British firm. The last U.S.-owned company to manufacture TV sets was Zenith, but even it was acquired by South Korea's LG Electronics Inc., which manufactures TVs and other products. Pearle Vision, Universal Studios, and many more are currently owned or controlled by foreign multinational businesses (see Exhibit 1.1). Foreign direct investment in the United States is more than $3 trillion. Companies from the United Kingdom lead the group of investors, with companies from the Japan, the Netherlands, Canada, and France following, in that order. Once the private domain of domestic businesses, the vast U.S. market that provided an opportunity for continued growth must now be shared with a variety of foreign companies and products. Companies with only domestic markets have found increasing difficulty in sustaining their customary rates of growth, and many are seeking foreign markets in which to expand. Companies with foreign operations find that foreign earnings are making an important overall contribution to total corporate profits. A four-year Conference Board study of 1,250 U.S. manufacturing companies found that multinationals of all sizes and in all industries outperformed their strictly domestic U.S. counterparts. They grew twice as fast in sales and earned significantly higher returns on equity and assets. Furthermore, U.S. multinationals reduced their manufacturing employment, both at home and abroad, more than domestic companies. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) Explain the key difference between domestic and international marketing. Answer: The only difference between the definitions of domestic marketing and international marketing is that in the latter case, marketing activities take place in more than one country. This apparently minor difference, "in more than one country," accounts for the complexity and diversity found in international marketing operations. If this is the case, what is the difference between domestic and international marketing? The answer lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) How can a manager construct a marketing program designed for optimal adjustment to the uncertainty of the business climate? Answer: Assuming the necessary overall corporate resources, structures, and competencies that can limit or promote strategic choice, the marketing manager blends price, product, promotion, channels-of-distribution, and research activities to capitalize on anticipated demand. These controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) List and briefly explain the domestic environment uncontrollable elements that influence an international marketer. Answer: The aspects of the domestic environment uncontrollable elements include homecountry elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. A political decision involving foreign policy can have a direct effect on a firm's international marketing success. The domestic economic climate is another important home-based uncontrollable variable with far-reaching effects on a company's competitive position in foreign markets. The capacity to invest in plants and facilities, either in domestic or foreign markets, is to a large extent a function of domestic economic vitality. Competition within the home country can also have a profound effect on the international marketer's task. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) Kendrik's Boston-based company would like to expand into Europe. How will competition within the United States affect international marketing for Kendrik? Answer: Competition within a home country affects a company's domestic and international plans. Competition within the home country can have a profound effect on the international marketer's task. Students' examples might vary. For more than a century, Eastman Kodak dominated the U.S. film market and could depend on achieving profit goals that provided capital to invest in foreign markets. However, the competitive structure changed when Fuji Photo Film became a formidable competitor by lowering film prices in the United States, opening a $300 million plant, and soon gaining 12 percent of the U.S. market. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Explain how the "alien status" of a company amplifies the political and legal issues faced by the company in a foreign market. Answer: Political and legal issues a business faces abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. The alien status of a foreign business has two dimensions: It is alien in that foreigners control the business and in that the culture of the host country is alien to management. The alien status of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Political activists can rally support by advocating the expulsion of the "foreign exploiters," often with the open or tacit approval of authorities. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) What are the two primary obstacles to success in international marketing and how do they affect the international marketer? Answer: The primary obstacles to success in international marketing are a person's selfreference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one's own company, culture, or country know best how to do things. Ethnocentrism is generally a problem when managers from affluent countries work with managers and markets in less affluent countries. Both the SRC and ethnocentrism impede the ability to assess a foreign market in its true light. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion influences. List the four steps that make up the framework for such an analysis. Answer: The steps are: (1) define the business problem or goal in home-country cultural traits, habits, or norms; (2) define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country—make no value judgments; (3) isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem; and, (4) redefine the problem without the SRC influence and solve for the optimum business goal situation. Difficulty: 1 Easy Topic: The Nature of Cross-Cultural Risk Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Explain why a company might choose to use infrequent foreign marketing. Answer: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. As domestic demand increases and absorbs surpluses, foreign sales activity is reduced or even withdrawn. In this stage, little or no change is seen in the company organization or product lines. However, few companies fit this model today because customers around the world increasingly seek long-term commercial relationships. Furthermore, evidence suggests that financial returns from such short-term international expansions are limited. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 2 The Dynamic Environment of International Trade 1) The Marshall Plan was developed by the United States as a method to assist Europe in rebuilding after World War II. 2) The GATT became part of the World Trade Organization in 1995 with the ratification of the Uruguay Round agreements. 3) The United States faced decreasing competition in export markets beginning in 1970 with the ending of the Vietnam War. 4) By the year 1971, the United States was selling less to other countries than it bought from them; that is, the United States had a trade deficit. 5) The Organization for Economic Cooperation and Development (OECD) estimates that the economies of the developed world will expand at much faster rates when compared to the developing economies. 6) A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time. 7) In a balance-of-payments record, the current account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. 8) When reviewing a balance-of-payments statement, you would check the reserves account to view exports and imports of gold. 9) When foreign currencies can be traded for more dollars, U.S. products and companies are more expensive for the foreign customer and exports decrease. 10) Establishing a tariff on fabrics imported from Uruguay so that U.S. manufacturers sell more fabrics is an example of a protectionist measure. 11) In general, economists do not recognize "protection of the home market" as a valid argument for protectionist measures. 12) Quotas, boycotts, monetary barriers, and market barriers are examples of tariff barriers. 13) In general, a tariff will decrease inflationary pressures. 14) Tariffs are often used as reprisals against protectionist moves of trading partners. 15) The United States has placed a limit on the tons of sugar that can be imported into the country. This is an example of a tariff. 16) An import license limits the quantities that can be imported on a case-by-case basis. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) Voluntary export restraints are common in the agricultural industry when an agreement is made between the importing and exporting countries for a restriction on the volume of exports. 18) An embargo sets a limit on the quantity of goods one country can sell to another. 19) In the context of blocked currency, blockage is accomplished by refusing to allow an importer to exchange its national currency for the currency of the seller. 20) It is mandatory for importers who want to buy a foreign good from a foreign country to apply for a business permit in that country. 21) An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government. 22) The United States and other countries require some products to contain a percentage of "local content" to gain admission to their markets. 23) Antidumping laws encourage foreign producers to sell their products at a higher cost than the cost of production and create more opportunities for free trade. 24) The Omnibus Trade and Competitiveness Act of 1988 focuses on assisting businesses to be more competitive in world markets, but does not get involved in trade practices. 25) Under the Omnibus Trade and Competitiveness Act, the U.S. president has the authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. 26) One advantage of the Omnibus Trade and Competitiveness Act is a more flexible process to obtain export licenses. 27) The GATT panels were formed to resolve bilateral trade disputes and have both advisory and enforcement powers. 28) The decisions taken by the World Trade Organization in solving trade disputes among members are binding ones. 29) The International Monetary Fund was created before World War II to help individual states regain economic profitability. 30) As both special drawing rights (SDRs) and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold and silver rather than dollars.

31) After World War II, the United States led efforts to provide financial and industrial development assistance to rebuild Japan and channeled funds to foster economic growth in the underdeveloped world. These efforts were primarily aimed at A) halting the growth of Nazi Germany. B) dampening the spread of communism. C) dampening the spread of capitalism. D) building a stronger defense force. E) creating a worldwide trade bloc to counter the OPEC countries' clout. 32) After World War II, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. As a result, most of the noncommunist economies in the world A) stagnated. B) grew significantly. C) failed. D) quickly matched the U.S. economy. E) faced high inflation rates. 33) What was the most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II? A) European countries formed an alliance to counter the OPEC countries' clout. B) Outflow of labor to the recipient countries increased dramatically. C) All recipient countries appointed Americans to manage their central banks. D) Purchases of U.S. agricultural products, manufactured goods, and services by the recipient countries increased. E) Distribution of economic power and potential became more uneven. 34) What factor was primarily responsible for the excess in production capacity in the United States after World War II? A) The United States government raised the tariffs on most imports by 60%. B) Many firms from other nations shifted their production facilities to the United States. C) Domestic demand was at a historic low and resulted in excess capacity. D) The returning military after World War II increased the labor supply in the United States. E) The implementation of the Marshall Plan dampened the overseas demand. 35) How did GATT prevent the repeat of the economic disaster that occurred after World War I? A) It provided short-term loans to struggling nations. B) It promoted dumping policies to allow stronger ties between member nations. C) It fostered isolationism for nations that were market leaders. D) It provided for a third party, the United Nations, to negotiate peace treaties. E) It provided a forum for member countries to negotiate a reduction of tariffs and other barriers to trade.

36) Why did the Smoot-Hawley Act play a role in sending the world's economies into the Great Depression? A) It encouraged the majority of world economies to lower tariffs to imported goods. B) It raised U.S. tariffs on thousands of imported goods by more than 60 percent. C) It created an embargo on all agricultural products. D) It divided the United States into factions based on race. E) It forced independent countries to band together to stay economically viable. 37) What was the outcome for GATT after the ratification of the Uruguay Round agreements? A) GATT allowed the United States to increase its import tax. B) GATT became part of the World Trade Organization. C) GATT directly led to the uneven distribution of economic power and potential. D) The European Union decided to stay away from the treaty. E) The original purpose was sidelined in favor of political and military intervention between member states. 38) The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II, led to A) the rise of new global marketing opportunities. B) the decrease in demand for American goods worldwide. C) the dissolution of GATT. D) the spread of communism by the United States. E) the sharp reduction in the production capacity of the United States. 39) Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s? A) the creation of the Soviet Union and the higher tariffs on imports B) growing jingoistic nationalism and a negative population growth rate in major international markets C) resistance to direct investment and increasing competition in export markets D) increasing Chinese domination in the manufacturing sector and the falling dollar in global markets E) the decreased demand for U.S. goods in the global market and the growing influence of consumer rights advocacy in the home market 40) Post-World War II, worldwide economic growth was in strong evidence and countries that were once classified as less developed were reclassified as A) communist countries. B) free trade economies. C) tier-II countries. D) developed countries. E) newly industrialized countries.

41) Which statement presents the correct picture of the outcome of increased world trade after the 1950s, contrary to Servan-Schreiber's prediction? A) Third World countries have been excluded from this economic growth leading to stark imbalances in wealth. B) The European Union has become the center of world trade, taking the position away from the United States. C) The United States has continuously maintained the positive balance of trade it attained during the 1950s. D) Economic power and potential has become more evenly distributed among the countries of the world. E) SDRs and gold have lost their utility as the basic medium of financial exchange and most monetary statistics have started relating to the U.S. dollar. 42) What is the major reason behind the failure of American MNCs to completely dominate the European markets as predicted by Servan-Schreiber? A) The resurgence of competition for U.S. businesses from all over the world B) The elimination of import taxes in the European countries C) The restructuring of U.S industries D) The decadence of communism E) The dissolution of colonial powers 43) What strategy was employed by the United States to regain its lost market share for capital goods by the late 1990s? A) funding the competitive developing nations B) restructuring its industries to be more "lean and mean" C) decreasing its exports and increasing its imports D) raising average U.S. tariffs on more than 20,000 imported goods by 60 percent E) provoking increased protectionism from other countries 44) Following World War II, it is noted that the West created the trade patterns. This was especially true in which one of the following? A) North America B) Europe C) South America D) Asia E) Central America 45) In the last few years, most of the countries of the world saw a dramatic slowdown in the growth of their economies with the exception of A) the United States. B) Spain. C) China. D) Greece. E) France.

46) The World Bank estimates that five countries whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. Which of these countries is included on this list? A) Canada B) Nigeria C) Netherlands D) Indonesia E) Zimbabwe 47) The system of accounts that records a nation's international financial transactions is most accurately called its A) supply chain management system. B) gross domestic product system. C) net domestic product payments. D) balance of payments. E) net national product systems. 48) What is used to ensure that balance-of-payments records are always in balance? A) sum of squares recording system B) bank reconciliation system C) double-entry bookkeeping system D) archival records system E) multifactor recording system 49) A balance-of-payments statement for a country reveals A) how rich or poor a country is financially. B) a record of the country's financial condition. C) a comparison of one country's finances to another country's debt. D) a balanced budget for the country. E) the spending power available to the country for specific goods. 50) What is a defining characteristic of a balance-of-payments statement? A) It is a record of the domestic transactions between the government of a country and the private companies in that country. B) It records all financial transactions between the residents of a country and those of the rest of the world. C) It records the trade policies of the member nations of the WTO. D) It is an annual record of the profitable foreign transactions made by a particular country. E) It is a financial statement in which the credits must exceed the debits. 51) Which of the following falls on the plus side of the U.S. balance of payments? A) payments to the United States for insurance B) the costs of goods imported C) spending by American tourists overseas D) new overseas investments E) the cost of foreign military 6 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

52) Which of the following falls on the minus side of the U.S. balance of payments? A) payments to the United States for insurance B) payments of dividends and interest on investments abroad C) return on capital invested abroad D) new foreign investments in the United States E) spending by American tourists overseas 53) What occurs in the balance of payments account when international payments are greater than receipts? A) a tariff B) inflation C) recession D) a credit E) a deficit 54) The ________ account of the balance-of-payments statement is used to record all merchandise exports, imports, and services plus unilateral transfers of funds. A) current B) capital C) credit D) receivables E) reserves 55) Which account in the balance-of-payments statement is a record of direct investment, portfolio investment, and short-term movement of cash and technology to and from countries? A) current account B) capital account C) credit account D) receivables account E) reserves account 56) The ________ of the balance-of-payments statement is used to record increases or decreases in foreign exchange and increases or decreases in liabilities to foreign central banks. A) current account B) capital account C) credit account D) receivables account E) reserves account 57) What argument regarding the need for protectionism is recognized by economists as valid? A) need to keep money at home B) encouragement of capital accumulation C) industrialization of a low-wage nation D) conservation of natural resources E) maintenance of employment and reduction of unemployment 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

58) Rishi, a protectionist, has seen several small businesses go bankrupt because they were unable to compete with the cheaper prices of goods provided by foreign companies. The cellphone manufacturing industry has just started in the United Kingdom, and Rishi's company is one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be used by Rishi to persuade his government to restrict the import of foreign cell phones from foreign companies? A) protection of an infant industry B) the need to keep money at home C) conservation of natural resources D) national defense E) maintenance of standard of living 59) What is a tariff? A) It is a tax levied by a government on goods being exported out of the country. B) It is a tax paid by individual states to the federal government for goods transferred across state lines. C) It is a tax imposed by a government on goods that are imported into the country. D) It is a limit on the amount of goods that can be imported into the country. E) It is a limit on the amount of goods that can be exported out of the country. 60) In general, tariffs weaken A) inflationary pressures. B) special interests' privileges. C) balance-of-payments positions. D) government control in economic matters. E) the number of reciprocal tariffs by other countries. 61) Which statement is true of tariffs? A) They strengthen balance-of-payments positions. B) They strengthen supply-and-demand patterns. C) They increase special interests' privileges. D) They strengthen international relations. E) They promote competition. 62) The tariff on certain goods is based on the percentage of the determined value of the item being imported. What type of tariff is this? A) compound duty B) quota duty C) specific duty D) reciprocal duty E) ad valorem duty

63) A specific unit or dollar limit applied to a particular type of good is called a(n) A) trade license. B) quota. C) ad valorem duty. D) predatory price. E) exchange rate. 64) A boycott on importing produce from Mexico would be an example of a A) compound duty. B) revenue tariff. C) nontariff barrier. D) specific duty. E) quota embargo. 65) If a country refuses to sell some products to another country, it is utilizing which barrier to trade? A) import credit discriminations B) export subsidies C) voluntary export restraints D) embargoes E) packaging, labeling, or marking standards 66) If a country decided to refuse to allow an importer to exchange its national currency for the sellers' currency, it would be an example of a(n) ________ currency. A) blocked B) spot C) embargo D) taxed E) quota 67) Exporting countries primarily agree to voluntary export restraints (VERs) to A) minimize exposure in the importing country. B) reduce market competitiveness. C) avoid stiffer quotas being set by the importing country. D) take over local industries of the importing country. E) avoid criminal prosecution. 68) A voluntary export restraint is an agreement signed willingly between the importing country and the exporting country for a restriction on the A) overall tax. B) number of businesses eligible for imports. C) volume of exports. D) government's portion of the paid tariff. E) balance-of-payments statements.

69) Voluntary export restraints are commonly used in what industry? A) finance B) furniture C) agriculture D) media E) education 70) The marketing manager for Glorious Products wants to export the company's line of fashion boots to an EU country. However, she discovers that there is a complete restriction on the import of any form of leather into that country. This is an example of A) an orderly market agreement. B) a quota. C) a monetary barrier. D) a voluntary export restraint. E) a boycott. 71) One country refuses to sell goods to its neighboring country based on the belief that the neighboring country harbors radicals and terrorists. In this case, the refusal is referred to as a(n) A) antidumping penalty. B) embargo. C) monetary barrier. D) orderly market agreement. E) voluntary export restraint. 72) In the context of monetary barriers, blockage is ideally accomplished when A) a country refuses to allow an importer to exchange its national currency for the country's currency. B) two countries enter into a voluntary agreement to determine the value of their currencies. C) a country applies a specific unit or dollar limit to a particular type of good. D) money dealers limit the rate at which foreign currencies are exchanged. E) the government of a country imposes a mandatory tax on goods entering at its borders. 73) In order to effectively secure foreign exchange, what is most likely to be used by countries experiencing severe shortages of foreign exchange? A) privatization B) government approval C) spot pricing D) voluntary export restriction E) monopoly 74) What trade policy tool makes it mandatory for its importers who want to buy a foreign good to apply for an exchange permit? A) tariff B) import quota C) blocked currency D) government approval E) export levy 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

75) An exchange permit can stipulate the A) quantity of goods that can be exchanged for a particular sum of foreign currency. B) number of parties that can be involved in an exchange transaction. C) amount to be exchanged that must be deposited in a local bank for a set period. D) quality standards of the goods involved in an exchange. E) number of times one party can avail exchange permits. 76) Active Bicycle Company has just received notice that a shipment of 300 bicycles has been rejected by the customs administration of the recipient country because the bikes did not include a metal plate surrounding the chain. What category of nontariff barriers primarily uses such quality issues as a trade barrier? A) quotas B) licenses C) embargoes D) boycotts E) standards 77) The United States and other countries require some products (automobiles in particular) to contain a percentage of "local content" to gain admission to their markets. This is an example of the stringent usage of ________ to restrict trade. A) exchange permits B) embargoes C) blocked currencies D) standards E) antidumping penalties 78) ________ pricing is the practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. A) Basing point B) Spot C) Defensive D) Counterpoint E) Predatory 79) ________ is/are a nontariff barrier that was specifically designed to prevent foreign producers from using predatory pricing to take control of U.S. markets. A) Quotas B) Embargoes C) Blocked currency D) Antidumping laws E) Exchange permits

80) Which trading partner of the United States became its number one "trade problem" at the beginning of the 21st century? A) United Kingdom B) Japan C) Germany D) Canada E) China 81) What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners? A) the Neutrality Pact of 1941 B) the Omnibus Trade and Competitiveness Act of 1988 C) the League of Nations Act of 1920 D) the Hawley-Smoot Tariff Act of 1930 E) the International Monetary Fund and Bank Act of 1945 82) What was the impetus for the Omnibus Trade and Competitiveness Act? A) Markets in the U.S. were open to most of the world but markets in Europe and many Asian countries were relatively closed. B) The U.S. market was relatively closed to the rest of the world. C) Markets in the U.S. were being driven by foreign demand. D) The trade volume in the U.S. was declining. E) Markets in the U.S. were trading with partners based on how they hoped they would respond rather than how they actually operated. 83) The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act. A) market access B) export expansion C) import relief D) foreign exchange regulation E) trade deficit 84) Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm? A) the market access section B) the export expansion section C) the import relief section D) the foreign exchange regulation section E) the trade deficit section

85) What is one of the four ongoing activities that support the growth of international trade? A) Warsaw Pact B) Kyoto Protocol C) International Monetary Fund D) World Summit on Sustainable Development E) Treaty of Waitangi 86) Which statements accurately describes the General Agreement on Tariffs and Trade (GATT)? A) The United States, the United Kingdom, and Germany were the only signatories of the original GATT. B) The original agreement provided a process to increase the tariffs on trade goods. C) GATT member nations seek to resolve their trade disputes unilaterally. D) The GATT panels have enforcement powers apart from advisory powers. E) It created an agency to serve as watchdog over world trade. 87) What does GATT use as the primary method to solve global trade problems? A) GATT works with government agencies of trade members. B) GATT uses coercion. C) GATT uses consultation. D) GATT implements the legislative agenda of trade members. E) GATT creates binding agreements between member nations. 88) What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels? A) Trade-Related Aspects of Intellectual Property Rights (TRIPs) B) Trade-Related Investment Measures (TRIMs) C) General Agreement on Trade in Services (GATS) D) Marrakesh Agreement E) Stockholm Agreement 89) The Uruguay Round resulted in which institution becoming the successor to the GATT? A) International Monetary Fund B) World Bank C) European Services Forum D) World Trade Organization E) Association of Southeast Asian Nations 90) How are WTO decisions enforced? A) All WTO decisions are enforceable under law. B) Member nations pay a duty to join WTO and this creates natural compliance. C) The World Court reviews and enforces all WTO decisions. D) International pressure to comply with WTO decisions is expected to force compliance. E) Decisions must pass through both houses of Congress to be enforced.

91) __________ are becoming a popular way to circumvent WTO guidelines and impose new duties. A) Antidumping duties B) Basic excise duties C) Special excise duties D) Production taxes E) Manufacturing taxes 92) Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are A) negotiating bilateral trade agreements. B) forming a rival organization. C) refusing to accept all the rules and regulations imposed by the WTO. D) using legal means to sue the WTO. E) opting out of membership in the WTO. 93) _________ and the World Bank Group are two global institutions created primarily to assist nations in becoming and remaining economically viable. A) Amnesty International B) The World Court C) The International Monetary Fund D) The International Red Cross E) The International Federation of Blue Cross 94) What market barriers led to the creation of the International Monetary Fund? A) trade embargoes B) inflation and recession in Europe C) new taxing bodies governing trade D) inadequate monetary reserves and unstable currencies E) export quotas and higher tariffs 95) Developed by the International Monetary Fund to cope with universally floating exchange rates, ________ represent an average base of value derived from the value of a group of major currencies. A) exchange permits B) special drawing rights C) floating currencies D) gold rates E) dollar parities 96) The special drawing rights (SDRs) developed by the IMF can be thought of as A) black gold. B) exchange permits. C) floating currencies. D) paper gold. E) virtual dollars. 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

97) What is a basic criticism of global financial institutions? A) They failed to focus on the aim of reducing inequalities between rich and poor countries. B) They failed to help the Asian countries substantially when they underwent a major financial crisis in the 1990s. C) They failed to respect the autonomy of member nations by deeming any bilateral agreements between members as illegal if made without their approval. D) They failed to foresee and counter the unintended effects of globalization like pollution, exploitation, and cultural extinction. E) They failed to suppress the terrorists who were responsible for the attack in London that coincided with the G8 summit. 98) While unintended, what is an adverse consequence of globalization? A) nationalization of private sector holdings B) lower and more competitive oil prices C) reduced variety and quality of goods and services D) worker exploitation and domestic job losses E) provision of loans from the World Bank 99) Which statement accurately explains the status of protests against global financial institutions? A) Organized protests against global financial institutions have been catching the attention of the world since the establishment of the IMF in 1945. B) The sole focus of the anticapitalist protestors has been the environmental impact of globalization and the need for stability. C) The "antisweatshop" campaigns by students in America have translated into changes in policy. D) The entire gamut of anticapitalist protests have been weak and ineffectual in the face of the tremendous power of global financial institutions. E) The protests against global financial institutions have been organized yet nonviolent as a rule. 100) What steps did the United States take following World War II to minimize the spread of communism around the world? Name at least one specific piece of legislation that was created. 101) Compare the U.S. position in world trade today to when Servan-Schreiber warned Europe about U.S. multinational domination. 102) Why must the balance-of-payments record always be in balance? What does a balanced record signify? 103) Compare and contrast the three accounts of a balance-of-payments statement. 104) Describe the cost to the consumer when protectionist measures are in place. 105) Name three things that can be restricted when tariffs are imposed. 106) Explain the difference between a quota and a licensing limit. 15 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

107) Describe the three areas covered by the Omnibus Trade and Competitiveness Act of 1988 that are considered critical in improving U.S. trade. 108) Describe how the General Agreement on Trade in Services (GATS) helped the United States reduce barriers to international trade in services. 109) Why was the International Monetary Fund (IMF) formed? How does the IMF deal with universally floating rates?

International Marketing, 18e (Cateora) Chapter 2 The Dynamic Environment of International Trade 1) The Marshall Plan was developed by the United States as a method to assist Europe in rebuilding after World War II. Answer: TRUE Explanation: The United States wanted to infuse capitalism throughout the world to dampen the spread of communism. The Marshall Plan was a means to assist Europe in rebuilding after World War II. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The GATT became part of the World Trade Organization in 1995 with the ratification of the Uruguay Round agreements. Answer: TRUE Explanation: With the ratification of the Uruguay Round agreements, the GATT became part of the World Trade Organization (WTO) in 1995, and its 117 original members moved into a new era of free trade. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) The United States faced decreasing competition in export markets beginning in 1970 with the ending of the Vietnam War. Answer: FALSE Explanation: At the close of the 1960s, U.S. MNCs were facing resistance to direct investments and increasing competition in export markets. Difficulty: 1 Easy Topic: How Formal Institutions Affect Domestic and International Competition Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

4) By the year 1971, the United States was selling less to other countries than it bought from them; that is, the United States had a trade deficit. Answer: TRUE Explanation: Before 1971, the United States sold more to other countries than it bought from them, so the United States had a favorable balance of trade. By 1971, however, the United States had a trade deficit of $2 billion that grew steadily until it peaked at $160 billion in 1987. Difficulty: 1 Easy Topic: Overview of Trade Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) The Organization for Economic Cooperation and Development (OECD) estimates that the economies of the developed world will expand at much faster rates when compared to the developing economies. Answer: FALSE Explanation: The Organization for Economic Cooperation and Development (OECD) estimates that the economies of developed countries will expand an average of 3 percent annually for the next 25 years, the same rate as in the past 25 years. Conversely, the economies of developing countries will expand an average of 6 percent annually for the next 25 years, higher than the 4 percent rate in the past 25 years. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time. Answer: TRUE Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

7) In a balance-of-payments record, the current account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. Answer: FALSE Explanation: In a balance-of-payments statement, the current account is a record of all merchandise exports, imports, and service plus unilateral transfers of funds. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) When reviewing a balance-of-payments statement, you would check the reserves account to view exports and imports of gold. Answer: TRUE Explanation: The reserves account is a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) When foreign currencies can be traded for more dollars, U.S. products and companies are more expensive for the foreign customer and exports decrease. Answer: FALSE Explanation: When foreign currencies can be traded for more dollars, U.S. products (and companies) are less expensive for the foreign customer and exports increase, and foreign products are more expensive for the U.S. customer and the demand for imported goods is dampened. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) Establishing a tariff on fabrics imported from Uruguay so that U.S. manufacturers sell more fabrics is an example of a protectionist measure. Answer: TRUE Explanation: Protectionism occurs when nations utilize legal barriers, exchange barriers, and psychological barriers to restrain the entry of unwanted goods. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) In general, economists do not recognize "protection of the home market" as a valid argument for protectionist measures. Answer: TRUE Explanation: In general, economists recognize arguments regarding protection of an infant industry, national defense, and the industrialization of underdeveloped countries as valid. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) Quotas, boycotts, monetary barriers, and market barriers are examples of tariff barriers. Answer: FALSE Explanation: A tariff is a tax imposed by a government on goods entering at its borders. It is used to encourage development of domestic industry and protect existing industry. Governments may establish such barriers to trade as tariffs and a variety of nontariff barriers including quotas, boycotts, monetary barriers, and market barriers. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) In general, a tariff will decrease inflationary pressures. Answer: FALSE Explanation: In general, tariffs increase inflationary pressures, special interests' privileges, government control and political considerations in economic matters, and the number of tariffs (they beget other tariffs via reciprocity). Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Tariffs are often used as reprisals against protectionist moves of trading partners. Answer: TRUE Explanation: Tariffs can be arbitrary, discriminatory, and require constant administration and supervision. In addition, tariffs are often used as reprisals against protectionist moves of trading partners. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) The United States has placed a limit on the tons of sugar that can be imported into the country. This is an example of a tariff. Answer: FALSE Explanation: A quota is a specific unit or dollar limit applied to a particular type of good. The United States has specific guidelines restricting how many tons of sugar can be imported. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

16) An import license limits the quantities that can be imported on a case-by-case basis. Answer: TRUE Explanation: The fundamental difference between quotas and import licenses as a means of controlling imports is the greater flexibility of import licenses over quotas. Quotas permit importing until the quota is filled while import licenses limit quantities on a case-by-case basis. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Voluntary export restraints are common in the agricultural industry when an agreement is made between the importing and exporting countries for a restriction on the volume of exports. Answer: TRUE Explanation: A voluntary export restraint (VER) is called voluntary because the exporting country sets the limits; however, it is generally imposed under the threat of stiffer quotas and tariffs being set by the importing country if a VER is not established. It is common in the textiles, clothing, steel, agriculture, and automobile industries. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) An embargo sets a limit on the quantity of goods one country can sell to another. Answer: FALSE Explanation: An embargo is a refusal to sell to a specific country. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) In the context of blocked currency, blockage is accomplished by refusing to allow an importer to exchange its national currency for the currency of the seller. Answer: TRUE Explanation: Blockage is accomplished by refusing to allow an importer to exchange its national currency for the currency of the seller. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) It is mandatory for importers who want to buy a foreign good from a foreign country to apply for a business permit in that country. Answer: FALSE Explanation: Importers who want to buy a foreign good must apply for an exchange permit, that is, permission to exchange an amount of local currency for foreign currency. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government. Answer: TRUE Explanation: An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government. Difficulty: 1 Easy Topic: The Main Instruments and Institutions of the Foreign Exchange Market Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) The United States and other countries require some products to contain a percentage of "local content" to gain admission to their markets. Answer: TRUE Explanation: The United States and other countries require some products (automobiles in particular) to contain a percentage of "local content" to gain admission to their markets. This is an example of how countries use standards to protect their domestic industry. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Antidumping laws encourage foreign producers to sell their products at a higher cost than the cost of production and create more opportunities for free trade. Answer: FALSE Explanation: Antidumping laws were designed to prevent foreign producers from "predatory pricing," a practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) The Omnibus Trade and Competitiveness Act of 1988 focuses on assisting businesses to be more competitive in world markets, but does not get involved in trade practices. Answer: FALSE Explanation: The Omnibus Trade and Competitiveness Act of 1988 is many faceted, focusing on assisting businesses to be more competitive in world markets as well as on correcting perceived injustice in trade practices. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Under the Omnibus Trade and Competitiveness Act, the U.S. president has the authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. Answer: TRUE Explanation: The Omnibus Trade and Competitiveness Act gives the U.S. president authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) One advantage of the Omnibus Trade and Competitiveness Act is a more flexible process to obtain export licenses. Answer: TRUE Explanation: The act has resulted in a much more flexible process for obtaining export licenses, in fewer products on the export control list and in greater access to information. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) The GATT panels were formed to resolve bilateral trade disputes and have both advisory and enforcement powers. Answer: FALSE Explanation: GATT member nations seek to resolve their trade disputes bilaterally; if that fails, special GATT panels are set up to recommend action. The panels are only advisory and have no enforcement powers. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) The decisions taken by the World Trade Organization in solving trade disputes among members are binding ones. Answer: TRUE Explanation: The World Trade Organization sets many rules governing trade among its 160 members, provides a panel of experts to hear and rule on trade disputes among members, and, unlike GATT, issues binding decisions. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) The International Monetary Fund was created before World War II to help individual states regain economic profitability. Answer: FALSE Explanation: The International Monetary Fund (IMF) was formed to overcome international market barriers such as inadequate monetary reserves and unstable currencies which are particularly vexing problems in global trade. Difficulty: 2 Medium Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) As both special drawing rights (SDRs) and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold and silver rather than dollars. Answer: FALSE Explanation: As both gold and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to SDRs rather than dollars. The SDR is in effect "paper gold" and represents an average base of value derived from the value of a group of major currencies. Difficulty: 1 Easy Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

31) After World War II, the United States led efforts to provide financial and industrial development assistance to rebuild Japan and channeled funds to foster economic growth in the underdeveloped world. These efforts were primarily aimed at A) halting the growth of Nazi Germany. B) dampening the spread of communism. C) dampening the spread of capitalism. D) building a stronger defense force. E) creating a worldwide trade bloc to counter the OPEC countries' clout. Answer: B Explanation: After World War II, as a means to dampen the spread of communism, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) After World War II, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. As a result, most of the noncommunist economies in the world A) stagnated. B) grew significantly. C) failed. D) quickly matched the U.S. economy. E) faced high inflation rates. Answer: B Explanation: As these countries worked to gain economic independence, the financial assistance provided by the United States allowed the economies of most of the noncommunist world to grow and new markets were created. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What was the most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II? A) European countries formed an alliance to counter the OPEC countries' clout. B) Outflow of labor to the recipient countries increased dramatically. C) All recipient countries appointed Americans to manage their central banks. D) Purchases of U.S. agricultural products, manufactured goods, and services by the recipient countries increased. E) Distribution of economic power and potential became more uneven. Answer: D Explanation: For every dollar the United States invested in the economic development and rebuilding of other countries after World War II, hundreds of dollars more returned in the form of purchases of U.S. agricultural products, manufactured goods, and services. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) What factor was primarily responsible for the excess in production capacity in the United States after World War II? A) The United States government raised the tariffs on most imports by 60%. B) Many firms from other nations shifted their production facilities to the United States. C) Domestic demand was at a historic low and resulted in excess capacity. D) The returning military after World War II increased the labor supply in the United States. E) The implementation of the Marshall Plan dampened the overseas demand. Answer: D Explanation: The overseas demand created by the Marshall Plan and other programs was important to the U.S. economy because the vast manufacturing base built to supply World War II and the swelling labor supply of returning military created a production capacity well beyond domestic needs. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) How did GATT prevent the repeat of the economic disaster that occurred after World War I? A) It provided short-term loans to struggling nations. B) It promoted dumping policies to allow stronger ties between member nations. C) It fostered isolationism for nations that were market leaders. D) It provided for a third party, the United Nations, to negotiate peace treaties. E) It provided a forum for member countries to negotiate a reduction of tariffs and other barriers to trade. Answer: E Explanation: Determined not to repeat the economic disaster that followed World War I, world leaders created the General Agreement on Tariffs and Trade (GATT), a forum for member countries to negotiate a reduction of tariffs and other barriers to trade. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) Why did the Smoot-Hawley Act play a role in sending the world's economies into the Great Depression? A) It encouraged the majority of world economies to lower tariffs to imported goods. B) It raised U.S. tariffs on thousands of imported goods by more than 60 percent. C) It created an embargo on all agricultural products. D) It divided the United States into factions based on race. E) It forced independent countries to band together to stay economically viable. Answer: B Explanation: The Smoot-Hawley Act raised average U.S. tariffs on more than 20,000 imported goods to levels in excess of 60 percent and in retaliation 60 countries erected high tariff walls, and international trade stalled. A major worldwide recession catapulted the world's economies into the Great Depression. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) What was the outcome for GATT after the ratification of the Uruguay Round agreements? A) GATT allowed the United States to increase its import tax. B) GATT became part of the World Trade Organization. C) GATT directly led to the uneven distribution of economic power and potential. D) The European Union decided to stay away from the treaty. E) The original purpose was sidelined in favor of political and military intervention between member states. Answer: B Explanation: With the ratification of the Uruguay Round agreements, the GATT became part of the World Trade Organization (WTO) in 1995, and its 117 original members moved into a new era of free trade. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II, led to A) the rise of new global marketing opportunities. B) the decrease in demand for American goods worldwide. C) the dissolution of GATT. D) the spread of communism by the United States. E) the sharp reduction in the production capacity of the United States. Answer: A Explanation: The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance, led to new global marketing opportunities. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s? A) the creation of the Soviet Union and the higher tariffs on imports B) growing jingoistic nationalism and a negative population growth rate in major international markets C) resistance to direct investment and increasing competition in export markets D) increasing Chinese domination in the manufacturing sector and the falling dollar in global markets E) the decreased demand for U.S. goods in the global market and the growing influence of consumer rights advocacy in the home market Answer: C Explanation: At the close of the 1960s, U.S. multinational corporations (MNCs) were facing major challenges on two fronts: resistance to direct investment and increasing competition in export markets. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) Post-World War II, worldwide economic growth was in strong evidence and countries that were once classified as less developed were reclassified as A) communist countries. B) free trade economies. C) tier-II countries. D) developed countries. E) newly industrialized countries. Answer: E Explanation: The post-World War II era witnessed worldwide economic growth and countries once classified as less developed were reclassified as newly industrialized countries (NICs). Various NICs such as Brazil, Mexico, South Korea, Taiwan, Singapore, and Hong Kong experienced rapid industrialization. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) Which statement presents the correct picture of the outcome of increased world trade after the 1950s, contrary to Servan-Schreiber's prediction? A) Third World countries have been excluded from this economic growth leading to stark imbalances in wealth. B) The European Union has become the center of world trade, taking the position away from the United States. C) The United States has continuously maintained the positive balance of trade it attained during the 1950s. D) Economic power and potential has become more evenly distributed among the countries of the world. E) SDRs and gold have lost their utility as the basic medium of financial exchange and most monetary statistics have started relating to the U.S. dollar. Answer: D Explanation: As a result of the expansionary trade measures led by the United States, economic power and potential has become more evenly distributed among countries than was the case when Servan-Schreiber warned Europe about U.S. multinational domination. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) What is the major reason behind the failure of American MNCs to completely dominate the European markets as predicted by Servan-Schreiber? A) The resurgence of competition for U.S. businesses from all over the world B) The elimination of import taxes in the European countries C) The restructuring of U.S industries D) The decadence of communism E) The dissolution of colonial powers Answer: A Explanation: Servan-Schreiber's prediction did not come true for many reasons, but one of the more important was that American MNCs confronted a resurgence of competition from all over the world. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What strategy was employed by the United States to regain its lost market share for capital goods by the late 1990s? A) funding the competitive developing nations B) restructuring its industries to be more "lean and mean" C) decreasing its exports and increasing its imports D) raising average U.S. tariffs on more than 20,000 imported goods by 60 percent E) provoking increased protectionism from other countries Answer: B Explanation: In the 1980s, the United States saw its competitive position in capital goods such as computers and machinery erode sharply. But U.S. industry got a wake-up call and responded by restructuring its industries, in essence, "getting lean and mean." By the late 1990s, the United States was once again holding its own in capital goods, particularly with trade surpluses in the high-tech category. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) Following World War II, it is noted that the West created the trade patterns. This was especially true in which one of the following? A) North America B) Europe C) South America D) Asia E) Central America Answer: D Explanation: By the last decade of the 20th century, Asia was controlled and managed by Asians for the first time in 400 years. During the decades since World War II, the West set the patterns for trade, but increasingly, Asia will be a major force. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) In the last few years, most of the countries of the world saw a dramatic slowdown in the growth of their economies with the exception of A) the United States. B) Spain. C) China. D) Greece. E) France. Answer: C Explanation: The unprecedented and precipitous growth of the U.S. economy in the late 1990s slowed dramatically in the last few years, and of course dramatically so in 2009. Growth in most of the rest of the world has followed suit, with the exception of China. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) The World Bank estimates that five countries whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. Which of these countries is included on this list? A) Canada B) Nigeria C) Netherlands D) Indonesia E) Zimbabwe Answer: D Explanation: The World Bank estimates that five countries—Brazil, China, India, Indonesia, and Russia—whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) The system of accounts that records a nation's international financial transactions is most accurately called its A) supply chain management system. B) gross domestic product system. C) net domestic product payments. D) balance of payments. E) net national product systems. Answer: D Explanation: The system of accounts that records a nation's international financial transactions is called its balance of payments. A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) What is used to ensure that balance-of-payments records are always in balance? A) sum of squares recording system B) bank reconciliation system C) double-entry bookkeeping system D) archival records system E) multifactor recording system Answer: C Explanation: As the balance-of-payments record of a nation is maintained on a double-entry bookkeeping system, it must always be in balance. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) A balance-of-payments statement for a country reveals A) how rich or poor a country is financially. B) a record of the country's financial condition. C) a comparison of one country's finances to another country's debt. D) a balanced budget for the country. E) the spending power available to the country for specific goods. Answer: B Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. A balance of payments is a record of condition, not a determinant of condition. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) What is a defining characteristic of a balance-of-payments statement? A) It is a record of the domestic transactions between the government of a country and the private companies in that country. B) It records all financial transactions between the residents of a country and those of the rest of the world. C) It records the trade policies of the member nations of the WTO. D) It is an annual record of the profitable foreign transactions made by a particular country. E) It is a financial statement in which the credits must exceed the debits. Answer: B Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) Which of the following falls on the plus side of the U.S. balance of payments? A) payments to the United States for insurance B) the costs of goods imported C) spending by American tourists overseas D) new overseas investments E) the cost of foreign military Answer: A Explanation: On the plus side of the U.S. balance of payments are merchandise export sales; money spent by foreign tourists; payments to the United States for insurance, transportation, and similar services; payments of dividends and interest on investments abroad; return on capital invested abroad; new foreign investments in the United States; and foreign government payments to the United States. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) Which of the following falls on the minus side of the U.S. balance of payments? A) payments to the United States for insurance B) payments of dividends and interest on investments abroad C) return on capital invested abroad D) new foreign investments in the United States E) spending by American tourists overseas Answer: E Explanation: On the minus side of the U.S. balance of payments are the costs of goods imported, spending by American tourists overseas, new overseas investments, and the cost of foreign military and economic aid. A deficit results when international payments are greater than receipts. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) What occurs in the balance of payments account when international payments are greater than receipts? A) a tariff B) inflation C) recession D) a credit E) a deficit Answer: E Explanation: A deficit results when international payments are greater than receipts. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) The ________ account of the balance-of-payments statement is used to record all merchandise exports, imports, and services plus unilateral transfers of funds. A) current B) capital C) credit D) receivables E) reserves Answer: A Explanation: The current account shows a record of all merchandise exports, imports, and services plus unilateral transfers of funds. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) Which account in the balance-of-payments statement is a record of direct investment, portfolio investment, and short-term movement of cash and technology to and from countries? A) current account B) capital account C) credit account D) receivables account E) reserves account Answer: B Explanation: The capital account of the balance-of-payments statement is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) The ________ of the balance-of-payments statement is used to record increases or decreases in foreign exchange and increases or decreases in liabilities to foreign central banks. A) current account B) capital account C) credit account D) receivables account E) reserves account Answer: E Explanation: The reserves account of the balance-of-payments statement is a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) What argument regarding the need for protectionism is recognized by economists as valid? A) need to keep money at home B) encouragement of capital accumulation C) industrialization of a low-wage nation D) conservation of natural resources E) maintenance of employment and reduction of unemployment Answer: C Explanation: Countless reasons to maintain government restrictions on trade are espoused by protectionists, but economists in general recognize as valid only the arguments regarding infant industry, national defense, and industrialization of low-wage nations. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Rishi, a protectionist, has seen several small businesses go bankrupt because they were unable to compete with the cheaper prices of goods provided by foreign companies. The cellphone manufacturing industry has just started in the United Kingdom, and Rishi's company is one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be used by Rishi to persuade his government to restrict the import of foreign cell phones from foreign companies? A) protection of an infant industry B) the need to keep money at home C) conservation of natural resources D) national defense E) maintenance of standard of living Answer: A Explanation: The case tells us that cell-phone manufacturing is a new industry in the United Kingdom. Protecting this infant industry would be the most probable reason for seeking protection from foreign competition. Difficulty: 3 Hard Topic: Economic Development Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

59) What is a tariff? A) It is a tax levied by a government on goods being exported out of the country. B) It is a tax paid by individual states to the federal government for goods transferred across state lines. C) It is a tax imposed by a government on goods that are imported into the country. D) It is a limit on the amount of goods that can be imported into the country. E) It is a limit on the amount of goods that can be exported out of the country. Answer: C Explanation: A tariff is a tax imposed by a government on goods entering at its borders. Tariffs may be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) In general, tariffs weaken A) inflationary pressures. B) special interests' privileges. C) balance-of-payments positions. D) government control in economic matters. E) the number of reciprocal tariffs by other countries. Answer: C Explanation: In general, tariffs weaken balance-of-payments positions, supply-and-demand patterns, and international relations (they can start trade wars). Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) Which statement is true of tariffs? A) They strengthen balance-of-payments positions. B) They strengthen supply-and-demand patterns. C) They increase special interests' privileges. D) They strengthen international relations. E) They promote competition. Answer: C Explanation: In general, tariffs increase inflationary pressures, special interests' privileges, government control and political considerations in economic matters, and the number of tariffs. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) The tariff on certain goods is based on the percentage of the determined value of the item being imported. What type of tariff is this? A) compound duty B) quota duty C) specific duty D) reciprocal duty E) ad valorem duty Answer: E Explanation: In the United States the types of customs duties used are classified as ad valorem duties, specific duties, and compound duty. Ad valorem duties are based on a percentage of the determined value of the imported goods. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) A specific unit or dollar limit applied to a particular type of good is called a(n) A) trade license. B) quota. C) ad valorem duty. D) predatory price. E) exchange rate. Answer: B Explanation: A quota is a specific unit or dollar limit applied to a particular type of good. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) A boycott on importing produce from Mexico would be an example of a A) compound duty. B) revenue tariff. C) nontariff barrier. D) specific duty. E) quota embargo. Answer: C Explanation: Nontariff barriers include quotas, boycotts, monetary barriers, and market barriers. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) If a country refuses to sell some products to another country, it is utilizing which barrier to trade? A) import credit discriminations B) export subsidies C) voluntary export restraints D) embargoes E) packaging, labeling, or marking standards Answer: D Explanation: To encourage development of domestic industry and protect existing industry, governments may establish such barriers to trade as U.S. tariffs and a variety of nontariff barriers and import policies including quotas, embargoes, import licensing requirements, minimum import price limits, and proportional restrictions of foreign to domestic goods. An embargo is a refusal to sell to a specific country. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) If a country decided to refuse to allow an importer to exchange its national currency for the sellers' currency, it would be an example of a(n) ________ currency. A) blocked B) spot C) embargo D) taxed E) quota Answer: A Explanation: Blocked currency is used as a political weapon or as a response to difficult balance-of-payments situations. In effect, blockage cuts off all importing or all importing above a certain level. Blockage is accomplished by refusing to allow an importer to exchange its national currency for the sellers' currency. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) Exporting countries primarily agree to voluntary export restraints (VERs) to A) minimize exposure in the importing country. B) reduce market competitiveness. C) avoid stiffer quotas being set by the importing country. D) take over local industries of the importing country. E) avoid criminal prosecution. Answer: C Explanation: A voluntary export restraint (VER) is called voluntary because the exporting country sets the limits; however, it is generally imposed under the threat of stiffer quotas and tariffs being set by the importing country if a VER is not established. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) A voluntary export restraint is an agreement signed willingly between the importing country and the exporting country for a restriction on the A) overall tax. B) number of businesses eligible for imports. C) volume of exports. D) government's portion of the paid tariff. E) balance-of-payments statements. Answer: C Explanation: Similar to quotas are the voluntary export restraints (VERs) or orderly market agreements (OMAs). Common in textiles, clothing, steel, agriculture, and automobiles, the VER is an agreement between the importing country and the exporting country for a restriction on the volume of exports. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) Voluntary export restraints are commonly used in what industry? A) finance B) furniture C) agriculture D) media E) education Answer: C Explanation: A voluntary export restraint (VER) is called voluntary because the exporting country sets the limits on its exports. They are common in textiles, clothing, steel, agriculture, and automobiles. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) The marketing manager for Glorious Products wants to export the company's line of fashion boots to an EU country. However, she discovers that there is a complete restriction on the import of any form of leather into that country. This is an example of A) an orderly market agreement. B) a quota. C) a monetary barrier. D) a voluntary export restraint. E) a boycott. Answer: E Explanation: A government boycott is an absolute restriction against the purchase and importation of certain goods and/or services from other countries. As the country mentioned in the scenario has absolutely restricted the importation of leather, it has issued a government boycott against leather. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

71) One country refuses to sell goods to its neighboring country based on the belief that the neighboring country harbors radicals and terrorists. In this case, the refusal is referred to as a(n) A) antidumping penalty. B) embargo. C) monetary barrier. D) orderly market agreement. E) voluntary export restraint. Answer: B Explanation: In this case, the refusal is most accurately referred to as an embargo. An embargo is a refusal to sell to a specific country. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 72) In the context of monetary barriers, blockage is ideally accomplished when A) a country refuses to allow an importer to exchange its national currency for the country's currency. B) two countries enter into a voluntary agreement to determine the value of their currencies. C) a country applies a specific unit or dollar limit to a particular type of good. D) money dealers limit the rate at which foreign currencies are exchanged. E) the government of a country imposes a mandatory tax on goods entering at its borders. Answer: A Explanation: In the context of monetary barriers, blockage is accomplished by refusing to allow an importer to exchange its national currency for the seller's currency. In effect, blockage cuts off all importing or all importing above a certain level. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) In order to effectively secure foreign exchange, what is most likely to be used by countries experiencing severe shortages of foreign exchange? A) privatization B) government approval C) spot pricing D) voluntary export restriction E) monopoly Answer: B Explanation: Government approval to secure foreign exchange is often used by countries experiencing severe shortages of foreign exchange. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) What trade policy tool makes it mandatory for its importers who want to buy a foreign good to apply for an exchange permit? A) tariff B) import quota C) blocked currency D) government approval E) export levy Answer: D Explanation: Government approval requires that importers who want to buy a foreign good must apply for an exchange permit, that is, permission to exchange an amount of local currency for foreign currency. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) An exchange permit can stipulate the A) quantity of goods that can be exchanged for a particular sum of foreign currency. B) number of parties that can be involved in an exchange transaction. C) amount to be exchanged that must be deposited in a local bank for a set period. D) quality standards of the goods involved in an exchange. E) number of times one party can avail exchange permits. Answer: C Explanation: An exchange permit may stipulate that the amount to be exchanged must be deposited in a local bank for a set period prior to the transfer of goods. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Active Bicycle Company has just received notice that a shipment of 300 bicycles has been rejected by the customs administration of the recipient country because the bikes did not include a metal plate surrounding the chain. What category of nontariff barriers primarily uses such quality issues as a trade barrier? A) quotas B) licenses C) embargoes D) boycotts E) standards Answer: E Explanation: Standards are sometimes used in an unduly stringent or discriminating way to restrict trade, but the sheer volume of regulations in this category is a problem in itself. Nontariff barriers of this category include standards to protect health, safety, and product quality. As the customs administration of the recipient country has used the quality of goods imported as a reason for restricting trade, it has used standards as a nontariff barrier. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

77) The United States and other countries require some products (automobiles in particular) to contain a percentage of "local content" to gain admission to their markets. This is an example of the stringent usage of ________ to restrict trade. A) exchange permits B) embargoes C) blocked currencies D) standards E) antidumping penalties Answer: D Explanation: Nontariff barriers of the standards category include standards to protect health, safety, and product quality. The standards are sometimes used in an unduly stringent or discriminating way to restrict trade. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) ________ pricing is the practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. A) Basing point B) Spot C) Defensive D) Counterpoint E) Predatory Answer: E Explanation: Antidumping laws were designed to prevent foreign producers from "predatory pricing," a practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) ________ is/are a nontariff barrier that was specifically designed to prevent foreign producers from using predatory pricing to take control of U.S. markets. A) Quotas B) Embargoes C) Blocked currency D) Antidumping laws E) Exchange permits Answer: D Explanation: Antidumping laws were designed to prevent foreign producers from predatory pricing. Violators are assessed antidumping duties for selling below cost and/or countervailing duties to prevent the use of foreign government subsidies to undermine American industry. Many countries have similar laws, and they are allowed under WTO rules. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) Which trading partner of the United States became its number one "trade problem" at the beginning of the 21st century? A) United Kingdom B) Japan C) Germany D) Canada E) China Answer: E Explanation: At the turn of the century, China took over from Japan as America's number one "trade problem." Difficulty: 1 Easy Topic: Overview of Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners? A) the Neutrality Pact of 1941 B) the Omnibus Trade and Competitiveness Act of 1988 C) the League of Nations Act of 1920 D) the Hawley-Smoot Tariff Act of 1930 E) the International Monetary Fund and Bank Act of 1945 Answer: B Explanation: The Omnibus Trade and Competitiveness Act of 1988 is many faceted, focusing on assisting businesses to be more competitive in world markets as well as on correcting perceived injustice in trade practices. The trade act was designed to deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) What was the impetus for the Omnibus Trade and Competitiveness Act? A) Markets in the U.S. were open to most of the world but markets in Europe and many Asian countries were relatively closed. B) The U.S. market was relatively closed to the rest of the world. C) Markets in the U.S. were being driven by foreign demand. D) The trade volume in the U.S. was declining. E) Markets in the U.S. were trading with partners based on how they hoped they would respond rather than how they actually operated. Answer: A Explanation: The Omnibus Trade and Competitiveness Act of 1988 is many faceted, focusing on assisting businesses to be more competitive in world markets as well as on correcting perceived injustice in trade practices. The trade act was designed to deal with trade deficits, protectionism, and the overall fairness of our trading partners. Congressional concern centered on the issue that U.S. markets were open to most of the world but markets in Japan, western Europe, and many Asian countries were relatively closed. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act. A) market access B) export expansion C) import relief D) foreign exchange regulation E) trade deficit Answer: B Explanation: Export controls, the Foreign Corrupt Practices Act (FCPA), and export promotion were specifically addressed in the export expansion section of the Omnibus Trade and Competitiveness Act. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm? A) the market access section B) the export expansion section C) the import relief section D) the foreign exchange regulation section E) the trade deficit section Answer: C Explanation: Recognizing that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and, occasionally, severe financial harm, the import relief section of the Omnibus Trade and Competitiveness Act provides a menu of remedies for U.S. businesses adversely affected by imports. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) What is one of the four ongoing activities that support the growth of international trade? A) Warsaw Pact B) Kyoto Protocol C) International Monetary Fund D) World Summit on Sustainable Development E) Treaty of Waitangi Answer: C Explanation: Four ongoing activities to support the growth of international trade are GATT, the associated WTO, the International Monetary Fund (IMF), and the World Bank Group. Difficulty: 1 Easy Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) Which statements accurately describes the General Agreement on Tariffs and Trade (GATT)? A) The United States, the United Kingdom, and Germany were the only signatories of the original GATT. B) The original agreement provided a process to increase the tariffs on trade goods. C) GATT member nations seek to resolve their trade disputes unilaterally. D) The GATT panels have enforcement powers apart from advisory powers. E) It created an agency to serve as watchdog over world trade. Answer: E Explanation: GATT member nations seek to resolve their trade disputes bilaterally; if that fails, special GATT panels are set up to recommend action. The original agreement provided a process to reduce tariffs and created an agency to serve as watchdog over world trade. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) What does GATT use as the primary method to solve global trade problems? A) GATT works with government agencies of trade members. B) GATT uses coercion. C) GATT uses consultation. D) GATT implements the legislative agenda of trade members. E) GATT creates binding agreements between member nations. Answer: C Explanation: In general, the agreement covers these basic elements: (1) trade shall be conducted on a nondiscriminatory basis; (2) protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quotas; and (3) consultation shall be the primary method used to solve global trade problems. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels? A) Trade-Related Aspects of Intellectual Property Rights (TRIPs) B) Trade-Related Investment Measures (TRIMs) C) General Agreement on Trade in Services (GATS) D) Marrakesh Agreement E) Stockholm Agreement Answer: B Explanation: As a result of TRIMs, restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels can be challenged. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) The Uruguay Round resulted in which institution becoming the successor to the GATT? A) International Monetary Fund B) World Bank C) European Services Forum D) World Trade Organization E) Association of Southeast Asian Nations Answer: D Explanation: Perhaps the most notable achievement of the Uruguay Round was the creation of a new institution as a successor to the GATT—the World Trade Organization. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) How are WTO decisions enforced? A) All WTO decisions are enforceable under law. B) Member nations pay a duty to join WTO and this creates natural compliance. C) The World Court reviews and enforces all WTO decisions. D) International pressure to comply with WTO decisions is expected to force compliance. E) Decisions must pass through both houses of Congress to be enforced. Answer: D Explanation: Although the WTO has no means of enforcement, international pressure to comply with WTO decisions from other member countries is expected to force compliance. Difficulty: 3 Hard Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) __________ are becoming a popular way to circumvent WTO guidelines and impose new duties. A) Antidumping duties B) Basic excise duties C) Special excise duties D) Production taxes E) Manufacturing taxes Answer: A Explanation: Antidumping duties are becoming a favorite way for nations to impose new duties. The WTO continues to fight these new, creative barriers to trade. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are A) negotiating bilateral trade agreements. B) forming a rival organization. C) refusing to accept all the rules and regulations imposed by the WTO. D) using legal means to sue the WTO. E) opting out of membership in the WTO. Answer: A Explanation: Frustrated with the slow progress of the most recent round of WTO trade negotiations, several countries are negotiating bilateral trade agreements. For example, the United States has signed free trade agreements with twenty countries including Peru, Colombia, Panama, and South Korea. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation