Chapter 3 Business in The Global Economy

Without foreign trade, many things you buy would cost more or not be available at all.

• true

• false

A free-trade zone is a selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing

• true

• false

A(n) ______ is the value of a currency of one country compared with the value of another.

• balance of payments

• excnage rate

• inflation rate

• discount rate

A balance-of-payments calculation includes other forms of exchange among nations in addition to trade.

• true

• false

A U.S. manufacturer of computer chips wants to produce some of its chips in Japan. The U.S. company wants to do this with as little financial investment and risk as possible. It also does not want to be actively involved with the Japanese company. Which expansion method should the U.S. company use?

• joint venture

• international partnership

• franchising

• licensing

An organization that does business in several countries is known as a(n)

• parent company

• multinational company

• world trade organization

• imperialist company

Which of the following situations in Russia would likely cause the value of the Russian ruble to rise?

• high inflation

• low interest rates

• a new law restricting foreign businesses

• an unstable government

A corporation that uses a global strategy _____

• adapts its products and marketing strategies to each country's customs, tastes, and buying habits

• has a parent company and divisions or separate companies in the host country

• intends to gain political power in other countries

• uses the same product and marketing strategy worldwide

One goal of the World Trade Organization (WTO) is to encourage lower tariffs.

• true

• false

A country may set a quota to protect one of its industries from too much foreign competition

• true

• false