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Exam 3: Doing Business in Global Markets

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Question 71

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The United States currently enjoys a favorable balance of trade with the rest of the world.

A) True
B) False

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Question 72

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Opponents of The North American Free Trade Agreement (NAFTA)warned that it would have serious economic consequences such as the loss of U.S.jobs.

A) True
B) False

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Question 73

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Sociocultural,economic,and legal/regulatory hurdles cause significant challenges in global trade.

Which of the following is included when calculating a country's balance of payments?

If a protective tariff is placed on an imported product,the added cost will go to the government. The goal of protective tariffs is to raise the retail price of imported products so that domestic products will be more competitive.Revenue tariffs are designed to raise money for the government.

Restrictive standards that detail exactly how a product must be sold in a country are examples of protective tariffs.

Leigh has created a technique for drying flowers that retains the vibrant color of certain flowering plants.Although out of style in the U.S. ,dried flower arrangements are still highly sought after in several European and Asian nations.It is difficult to preserve the ingredients that go into her formula for more than a month.She decides to partner with firms in other nations to make and sell the formula,but you suggest she license the formula to foreign companies,and agree to royalties when they create the formula and sell it.Your advice makes better sense. Often times,a small domestic business can expand its market by going abroad.By licensing her product to foreign firms,she can increase her market,and potentially her revenues and profits.

Although embargos are enacted upon both imports and exports,this form of trade protectionism is often the result of:

When Nestlé,a Swiss company,purchased Ralston Purina,a U.S.company,Ralston Purina became a foreign licensee. When one firm purchases another firm in a foreign country the purchased firm is called a foreign subsidiary.

A __________ is a partnership in which two or more companies (often from different countries) join together and share the risk and costs in order to undertake a major project.

A sociological challenge that must be overcome in order to be successful in the global market is:

In the past few decades,U.S.manufacturers shifted focus from manufacturing and assembling products,to the design and architecture of products.Now,a new shift: the offshore outsourcing of design and architecture is proving to be an even more serious disruption to the U.S.economy. As lower-level manufacturing became more simplified,U.S.companies shifted focus from assembling products to design and architecture.Soft goods companies like Levi-Strauss and Nike have outsourced manufacturing for several decades.A new,second wave of offshore outsourcing is causing more disruption to the U.S.economy due to loss of white collar jobs,as well as manufacturing jobs.

Which of the following statements describes laws and regulations in global markets?

____________ is the selling of products to another country.

The main goal of the General Agreement on Tariffs and Trade (GATT)was to reduce trade restrictions among world nations.

Many of the toy products sold in the United States are imported from Taiwan because the Taiwanese can produce these products more efficiently than U.S.companies.This is an example of:

One reason countries trade with other countries is that even technologically advanced nations cannot produce all the products their people want and need.

As a market for U.S.exports,China represents the only major business opportunity on the continent of Asia. Russia,India,Indonesia,Thailand,Singapore,and Korea are just a few of the emerging economies of Asia that have attracted the attention of American firms.

As a business strategy,the strategy behind "dumping" is to ___________.

The Tsingtao Brewing company pays a fee to Anheuser-Busch for the right to brew and distribute Budweiser in China.Tsingtao is the licensor and the fee paid is a royalty. In this licensing agreement,Tsingtao Brewing is the licensee and Anheuser-Busch is the licensor.The fee paid is indeed the royalty.