International Business Ch. 4

When countries join together to eliminate duties and other trade barriers, allow companies to invest freely in each other’s country, and allow workers to move freely across borders, they are said to have

• Free-Trade Zones

• Most favored nation status

• A free trade agreement

• A common market

A tax that can be used as a trade barrier is the

• Personal tax

• Excise tax

• Value-added tax

• Import duty tax

The most serious form of political risk for a multinational company is

• Privatizaiton

• Exproptriation

• Import quotas

• Double taxation

Governments privatize their state-owned companies to

• Provide tax incentives to their exporting companies

• Make these companies more efficient and profitable

• Create free-trade agreements

• Establish foreign-trade zones

In 1979, the Shah of Iran was overthrown and a new government was established. This government immediately seized control of all US companies and assets in Iran. This is an example of

• Privatization

• Expropriation

• Commercial Risk

• Granting most favored nation status

A US company can obtain political risk insurance on an overseas subsidiary or investment from

• The US Dept of Agriculture

• The US Dept. of Commerce

• The Overseas Private Investment Corporation

• Free-trade agreements

A US company can obtain political risk insurance on its export shipments from

• The US Dept of Agriculture

• The Export-Import Bank of the United States

• The Overseas Private Investment Corporation

• Free-trade agreements

If the United States placed a trade embargo on a foreign country

• Quotas would be placed on all goods entering the US

• No products could be traded between the US and the foreign country

• All businesses owned by the foreign government in the US would be privatized

• The US would have granted most favored nation status to this foreign country

Of the following characteristics, the one that is not typical of a democratic system is that

• Individuals have the freedom to own and operate private businesses.

• Individuals can build a small business into a very large business

• The economy is usually a command economy

• Individuals may travel freely to other countries

A political system in which one political party holds all the power and prohibits members of other parties from participating is a

• Democracy

• Totalitarian

• Exclusive system

• None of these