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WorksheetsBAC 106 Midterm Exam
Total questions: 60
Worksheet time: 30mins
It refers to the unrestricted flow of goods, services, and productive resources between countries
free trade
balance of trade
trade surplus
trade deficit
It is the tax on imports which increases production costs for foreign firms.
tariff
import quota
subsidy
embargo
Specific tariffs are
levied as a proportion of the value of the imported good.
government payment to domestic producers.
in the form of manufacturing or production requirements of goods
levied as a fixed charge for each unit of a good imported
Ad Valorem tariffs are
levied as a proportion of the value of the imported good.
government payment to domestic producers.
in the form of manufacturing or production requirements of goods
levied as a fixed charge for each unit of a good imported
It is the quantitative limit on the sale of a foreign good.
tariff
import quota
subsidy
embargo
It is a form of government financial assistance to help cut production costs of domestic firms, enabling them to compete against foreign producers.
tariff
import quota
subsidy
embargo
it is the agreement with other governments to restrict export to the the country.
embargo
import quota
exchange control
voluntary export restraints
It refers to selling products in a foreign market at a price below the cost of production.
infant industries
declining industries
strategic industries
dumping
Which of the statements is FALSE about costs and benefits of tariffs?
Domestic producers will gain because a tariff raises the price
The domestic consumers will gain
There is also gain in Government revenue
The domestic consumers will lose
The main criticisms of tariffs and subsidies as forms of trade barriers are
According to the strategic trade policy argument:
government intervention is not required cause firm can borrow money from the capital markets to finance the required
investments.
selling goods in a foreign market at below their fair price is legally and ethically justified.
government support can help domestic firms overcome the first- mover advantages enjoyed by foreign competitors
a government should use subsidies to support promising firms
To ease shipping goods across borders, protecting the value of Innovation, creativity and branding
Non tariff measures
Countervailing protection
Intellectual property protection
Special taxes and duties
According to the 1986 Uruguay Round, the............. will implement the GATT agreement.
World Trade Organization
International Monetary Fund
United Nations
World Bank
They are imposed after an investigation finds that a foreign country subsidizes its exports, injuring domestic producers in the importing country.
Countervailing duties
Special duties and non tariff regulations
Mixed duties
Ad valorem duties
An international trade treaty designed to encourage worldwide trade among its members
NAFTA (North American Free Trade Agreement)
GATT (General Agreement on Tariffs and Trade)
WTO (World Trade Organization)
The gold standard is applied if a currency
has a higher value than the price of gold
has its value pegged to dollar
has its value pegged to the price of gold
has a lower value than the price of gold
What was the agreement for Bretton Woods System?
Fixed Exchange Rate
US Dollar as reserve currency
US dollar was pegged to gold at $35 an ounce
All of the above
A country has a(n) ___________ when the government lets the exchange rate go wherever the market takes it.
Floating Exchange Rate
Exchange Rate Regime
Fixed Exchange Rate
A country has a(n) ___________ when the government keeps the exchange rate against some other currency at or near a particular target.
Fixed Exchange Rate
Exchange Rate Regime
Floating Exchange Rate
Government purchases or sales of currency in the foreign exchange market constitute ___________.
Exchange Market Intervention
Foreign Exchange Reserves
Foreign Exchange Controls
Exchange Rate Regime
Which of the following is the balance of payments?
a record of international payments over the course of a year.
increase in the general price level
the amount of unemployed workers receiving benefits
when imports> exports
The capital account
Payment is received by the exporter before the goods are shipped.
Bills for collection
Letters of credit
Advance payment
Open account
Goods are shipped to the buyer before payment is made
Advance payment
Open account
Bills for collection
Letters of credit
A ____ is a document from a bank guaranteeing that a seller will receive payment in full as long as certain delivery conditions have been met:
Agreement
Letter of Credit
Bill Paper
None of The Above
Which LC has conditions and required documents?
Revolving LC
Revocable LC
Documentary LC
Fixed LC
When is LC issued by the importer's bank?
After application by the importer
Right after agreement between importer and exporter
After application by the exporter
After importer pays for the goods
When does the exporter get paid for the goods?
After the importer pays his/her bank
After the exporter submits documents to his/her bank
After importer's bank paid the exporter's bank
After the importer pays the exporter directly
bank card
Choose correct statement about documentary collections:
The exporter's bank has obligations to pay upon presentation.
The exporter's bank has no obligations to pay upon presentation.
The importer's bank has obligations to pay upon presentation.
The importer has no obligations to pay upon presentation.
Documents against payment term indicates
the documents are sent by post.
the export is risky.
the collecting bank will hand the documents to the buyer against payment.
the exporter delivers the documents to the bank against advance.
It refers to that on the basis of business credit, after delivering goods, exporters transfer the possession of invoices for accounts receivable and shipping documents to factors.
Documentary Collections
Open Accounts
International Factoring
Letter of Credit
As an importer, choosing a payment method that ____ your risks and ____ your negotiating power can help you get the best possible terms
incurs - takes
maximizes - minimizes
encounters - gains
minimizes - maximizes
What is the first step when choosing the right payment method?
Assess Risk and Trust
Evaluate the existing relationship between the exporter and importer
Understand Different Payment Methods
Consider the type of goods or services being traded
The process of increasing unification and interdependence of countries
Trade creation
A free trade agreement
Economic integration
Economic union
What is a monetary union?
situation that involves a common currency, such as the Euro as well as universal monetary policy.
an agreement between two nations or trading groups that gives each party favored trade status.
an agreement between a number nations or trading groups that give each party favored trade status.
an agreement between two or more countries to lower trade barriers between each other on particular products
A free trade area ________.
is complete political and economic integration of two or more countries
allows workers to move freely among trade nations
eliminates trade barriers among member countries
avoids problems stemming from trade deflections
Which of the following characterizes a customs union?
It requires each member to maintain different external policies regarding non-members.
It imposes common external policies on
non-members.
It integrates the political and economic affairs of a region.
It permits the free movement of goods and people among its members.
What kind of economic integration arrangement has common policies on product regulation, and free movement of goods, services, capital and labour?
Common markets
Preferential trading area
Free trade areas
Custom unions
Groups of nations that come together to trade under a trading agreement
Economic Integration
Globalization
Trading bloc
CARICOM
Which of the following is true of ASEAN?
China, India, South Korea are among its members
Collectively, member states account for 55% of world trade
It is slowly progressing toward a free trade area
It has been successful in filling basic objectives of fostering a freer trade among members
The EU is better seen as an example of...
Free trade area
A Complete Economic integration
Economic and monetary union
A Customs Union
All of these are the economic reasons for regional integration, except:
Benefiting from the free flow of trade and investment
Specialized in the production of goods
Free movement of factors of production
Reduce potential violent conflict
A business that has direct investments (in the form of marketing or manufacturing subsidiaries) abroad in several countries is called a ________.
shell corporation
multinational corporation
domestic corporation
shell corporation
This form of Business have to follow much stricter guidelines. It is very common to fast food chain.
Licensing
Franchising
Joint Venture
Importing
It is the procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers.
Joint Venture
Outsourcing
Offshoring
Contract Manufacturing
When management determines that the home country is best able to drive international activities, they follow which approach?
Ethnocentric
Polycentric
Regiocentric
Geocentric
Which of the following approaches seeks the best people for key jobs regardless of nationality?
Regiocentric
Ethnocentric
Geocentric
Polycentric
Outsourcing a part of or entire production and concentrating on marketing operations in international business is known as
Licensing
Contract Manufacturing
Joint venture
Franchising
The approach that requires host-country nationals to be recruited to manage subsidiaries is called
geocentric
polycentric
ethnocentric
global
