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WorksheetsReview Chapter 3
Total questions: 34
Worksheet time: 20mins
In the context of competitive advantage, the value of the first-best choice represents the opportunity cost of producing a second product.
True
False
Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.
True
False
A country has an absolute advantage when it can produce more of a good than other nations, using the same amount of resources.
True
False
Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.
True
False
The balance of trade is also referred to as countertrade.
True
False
The balance of trade plays a central role in determining the balance of payments.
True
False
Balance of trade incorporates trade with all foreign nations.
True
False
A disadvantage of foreign outsourcing is higher wages.
True
False
Despite the growth rates in many high-population countries being weak, most of these nations remain ahead of the United States in terms of development and prosperity.
True
False
In the context of global trade, the exchange rate can directly measure global commerce.
True
False
Which of the following statements is true about the markets around the world?
India's subscriber base for cell phones has grown explosively over the past five years.
China has lower gross domestic product (GDP) growth rate than the U.S
China and India have a smaller opportunity to attract investments because of to their economic growth.
Most of the developing countries remain ahead of the United States in terms of development and prosperity.
Compared to the U.S., China and India have:
smaller market size.
higher GDP growth rates.
higher per capita GDPs.
limited market potential.
Identify a true statement about global trade.
It increases a firm's dependence on its domestic economy.
It offers companies an invaluable source of new ideas.
It increases the economic risk of multinational companies.
It reduces a firm's opportunity to tap into growing new markets.
One of the major reasons India, China, and the Philippines attract multibillion-dollar investments is that:
they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers.
the value of Euros is lower in the Asian market than in the American market
they are more developed than any other developed country in the world.
the level of prosperity in these countries is the highest in the world, ahead of the United States and Europe
Alice learns that the labor is expensive and that the technical equipment required for production is unavailable in the international market she is looking at. In this case, which of the following is most likely affecting the global trade of Alice's firm?
Economic dependence in the international market
Absence of plentiful capital
Lack of innovative ideas
Limited access to factors of production
Johnny is able to produce more of a particular variety of cloth than its neighboring countries. Johnny and its neighboring countries have the same amount of resources for producing this particular cloth. In this case, which of the following is definitely true of Sloimekia?
Johnny has a lower balance of payments and a lower trade deficit.
Johnny enjoys the highest balance of trade among its neighboring countries
Johnny enjoys an absolute advantage in producing this particular cloth
Johnny has a higher trade surplus than its neighboring countries.
Identify a true statement about comparative advantage
It is the tendency of a country to choose goods that have a higher opportunity cost compared to other countries.
It stays the same regardless of the changes in the technology or workforce in a country.
It is affected by major trade barriers to international trade.
It always remains static for developing countries
When the total value of a nation's exports is higher than the total value of its imports, that country has a(n) _____.
absolute advantage
trade surplus
trade deficit
comparative advantage
Balance of payments deficit means that:
foreign borrowing and lending are excluded from calculating the balance of payments.
more money flows in than out.
foreign payments and receipts are excluded from calculating the balance of payments
more money flows out than in.
Identify a true statement about balance of payments.
Balance of payments includes foreign borrowing and lending.
Balance of payments surplus indicates more money flowing out than in.
Balance of payments excludes overseas investments
Balance of payments deficit indicates more money flowing in than out.
Who among the following is most likely to benefit in a case where there is a strong dollar against a euro?
Johnny, an American who exports goods to Europ
Dial Corp., a European firm that imports goods from America
Marriott Inc., a European firm with American operations
Cindee, an American who is touring Europe
Who among the following is most likely to benefit in a case where there is a weak dollar against a euro?
Katherine, an American who exports goods to Europe
Pfsizer Corp., an American firm that imports goods from Europe
Kronkike Inc., an American firm with European operations
Kim, an American who is touring Europe
Companies typically engage in _____ to meet the needs of customers that don't have access to hard currency or credit.
importing
direct selling
countertrade
product churning
Which of the following is a disadvantage of foreign outsourcing?
The cost of shipping the goods can be very high.
The cost of production becomes irrecoverable.
The foreign company pays higher wages to the workers.
The risk of poor quality control becomes higher
Identify a true statement about exporting.
It is also known as foreign outsourcing.
It is ineffective for small and mid-sized companies
It is the most basic level of international market development.
It is ineffective for small and mid-sized companies.
Which of the following is a specialized type of licensing?
Partnership
Foreign franchising
Exporting
Joint venture
Which of the following is the most costly form of foreign direct investment?
Offshoring
Importing
Franchising
Licensing
Which of the following is a feature of joint ventures?
Elimination of local partners
Merging of companies
Absence of formal agreements
Sharing of resources
Which of the following is true of a partnership?
It is a formal, long-term agreement.
It is the most basic level of global trade.
It is the most expensive form of direct investment.
It is otherwise known as domestic franchising.
Identify a true statement about the World Trade Organization (WTO).
Ministers of the WTO meet every five years to address current world trade issues.
The WTO promotes reduction of trade barriers and mediates disputes among members.
Choice 1
It is beyond the scope of the WTO to monitor the provisions of the General Agreement on Tariffs and Trade (GATT).
It is beyond the scope of the WTO to settle international trade disputes.
Identify a true statement about the International Monetary Fund (IMF).
It is a lender of the last resort to nations in financial trouble.
It was created during the Uruguay round to address international trade disputes.
It is funded by only the members of the European Union (EU).
It is not accountable to the governments of the member nations for its actions.
The _ expresses the value of one nation's currency in terms of another nation's currency.
liquidity ratio
countertrade ratio
exchange rate
_ is an international trade that involves the barter of products for products rather than for currency.
Outsourcing
Direct selling
Countertrade
Licensing
_ are limitations on the amount of specific products that may be imported from certain countries during a given time period.
Embargoes
Voluntary export restraints
Quotas
Tariffs
