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Exam 3: Doing Business in Global Markets

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Question 171

Multiple Choice

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One of the purposes of Export Assistance Centers is to:

A) help multinational corporations reach agreements with foreign governments.
B) provide subsidies to domestic firms hurt by dumping by foreign firms.
C) provide trade-finance support for small and medium-sized firms involved in direct exporting.
D) encourage domestic firms to become more competitive by forming keiretsu-like organizations, much like those found in Japan.

E) None of the above
F) A) and B)

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Question 172

True/False

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The U.S. government is reducing Export Assistance Centers due to businesses' lack of interest in their support.

A) True
B) False

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Question 173

Multiple Choice

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Hennessy Hardware, a U.S. retailer, buys much of its inventory from Asian countries. Hennessy Hardware would benefit if the value of the dollar ________ relative to the currencies of the countries from which Hennessy imports.

A fast-growing form of foreign direct investment is ______________, which are government-controlled investments in foreign companies.

A small Italian grocery store in a large city sells five different kinds of feta cheese: Bulgarian, French, Danish, Greek, and a domestic cheese from Oregon. The domestic cheese sells for less than $2.00 per pound, while all the international cheeses are priced at over $4.00 per pound. Clearly, there is an embargo on international food products.

The president of Auto Parts of America testified before Congress, urging them to limit the flow of imported automobile parts into the United States. He contended that these imports were priced lower than foreign producers were charging for them in their own countries. He believes foreign producers are:

A "second wave" of offshore outsourcing involves sizable numbers of skilled, well-educated, middle-income workers in service-sector jobs.

As a form of franchising, sovereign wealth funds are getting very little attention as a strategy for doing business in foreign markets.

Rosa's aunt was taking a cruise to Brazil. She suggested to Rosa that she would be glad to buy her some jewelry while in port in Rio de Janeiro because the exchange rate would be to her benefit. This means:

Only large firms have the resources needed to successfully compete in the global environment.

A firm may export everything it produces overseas and yet not be considered a multinational.

If you travel to Mexico and the exchange rate is 12 pesos for one U.S. dollar, the peso is said to have strength against the dollar because you can get so many more pesos than you can dollars.

Products made in Canada are sold in the U.S. because these two nations agree to eliminate economic and political barriers between nations. They participate in free trade.

Global trade is the exchange of goods and services between countries.

Absolute advantage is the basis for most global trade today.

Idle Time Gaming, Inc., needed silicon wafers that it knew could be mass-produced efficiently by Silicon City, Inc., a start-up firm in India. The Indian company needed MSG (metallurgical grade silicon) in order to make the wafers, which it knew it could get from a Chinese firm. The Chinese firm agreed to supply the silicon to the Indian company if it could get a certain quantity of gaming hardware from Idle Time. This beneficial exchange is described as:

____________ is the selling of products to another country.

The largest importer in the global market today is:

An example of a U.S. import would be the purchase of oil by U.S. companies from Saudi Arabia.

Export trading companies: