Quiz Over Business In The Global Economy
Questions and Answers
- 1.
Domestic business refers to business activities needed fro creating, shipping, and selling goods across national borders.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The given statement is incorrect. Domestic business refers to business activities that take place within a single country's borders, involving the creation, shipping, and selling of goods within that country. It does not involve crossing national borders.Rate this question:
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- 2.
Without foreign trade, many things you buy would cost more or not be available.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Foreign trade allows countries to access a wider range of goods and services at competitive prices. It enables countries to specialize in producing goods and services that they have a comparative advantage in, while importing goods that they are less efficient at producing. This leads to increased efficiency, lower costs, and a greater variety of products available to consumers. Without foreign trade, countries would have to rely solely on domestic production, which may result in higher prices and limited choices for consumers. Therefore, it is true that without foreign trade, many things you buy would cost more or not be available.Rate this question:
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- 3.
If a country exports more than it imports , it has a trade surplus.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
If a country exports more than it imports, it means that it is selling more goods and services to other countries than it is buying from them. This results in a trade surplus, as the country is earning more money from its exports than it is spending on imports.Rate this question:
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- 4.
The value of currency in one country compared with the value in another is called the interest rate.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The value of currency in one country compared with the value in another is not called the interest rate. The correct term for this comparison is the exchange rate. The interest rate refers to the cost of borrowing money or the return on investment.Rate this question:
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- 5.
An economy that is largely involved in agriculture is generally unable to provide its citizens with a large number of high quality products.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
An economy that is largely involved in agriculture tends to have limited diversification and relies heavily on the production and export of agricultural goods. This focus on agriculture often means that there is less investment and development in other sectors of the economy, such as manufacturing or technology. As a result, the economy may struggle to provide its citizens with a wide range of high-quality products beyond agricultural goods.Rate this question:
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- 6.
A countrys culture, traditions, and religion can sometimes act as informal trade barriers.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Culture, traditions, and religion can act as informal trade barriers because they can influence consumer preferences and behaviors. For example, certain cultural or religious beliefs may prohibit the consumption of certain products or services, making it difficult for businesses to sell those goods in a particular country. Additionally, cultural norms and traditions can shape the way business is conducted, such as preferred negotiation styles or business etiquette, which may pose challenges for foreign companies trying to enter a market. These informal barriers can hinder trade and require businesses to adapt their strategies to align with the cultural, traditional, and religious values of the country.Rate this question:
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- 7.
With a free trade zone, member countries agree to remove duties and trade barriers on products traded among them
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A free trade zone is an agreement among member countries to eliminate or reduce trade barriers such as tariffs and duties on goods traded between them. This promotes the flow of goods and services between member countries, encourages international trade, and boosts economic growth. Therefore, the statement is true as member countries in a free trade zone indeed agree to remove duties and trade barriers on products traded among them.Rate this question:
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- 8.
MNC's sometimes control a country's political power.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Multinational corporations (MNCs) often have significant economic influence and resources, which can allow them to exert control over a country's political power. This can occur through lobbying, campaign financing, and other means of influencing political decisions. MNCs may also have close relationships with government officials or hold key positions in regulatory bodies, further consolidating their control over political power. However, it is important to note that not all MNCs have this level of influence, and the extent of their control can vary depending on the specific country and context.Rate this question:
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- 9.
Franchising is selling the right to use a trademark or brand name for a fee or royalty.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Franchising is not about selling the right to use a trademark or brand name, but rather about granting the right to operate a business under an established brand and business model. The franchisor provides support and guidance to the franchisee in exchange for fees or royalties.Rate this question:
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- 10.
One goal of the World Trade Organization is to eliminate import quotas
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The World Trade Organization aims to eliminate import quotas. Import quotas are restrictions imposed by governments on the quantity or value of goods that can be imported into a country. By eliminating import quotas, the WTO promotes free trade and ensures that countries do not unfairly restrict imports, which can hinder economic growth and limit consumer choices. This allows for a more open and competitive global market, benefiting both businesses and consumers.Rate this question:
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- 11.
Which of the following represents an absolute advantage?
- A.
Saudi Arabia in fresh fish production
- B.
Honduras in banana production
- C.
Canada in rice production
- D.
Norway in orange and pineapple production
Correct Answer
B. Honduras in banana productionExplanation
Honduras has an absolute advantage in banana production because it is able to produce bananas more efficiently and at a lower cost compared to other countries. This could be due to factors such as favorable climate conditions, abundant natural resources, advanced farming techniques, or a well-developed banana industry. As a result, Honduras can produce a larger quantity of bananas in a given period of time, making it the most efficient and competitive producer in this specific industry.Rate this question:
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- 12.
Which of the following products in NOT imported to the United States in any great quantity?
- A.
Milk
- B.
Oil
- C.
Coffee
- D.
Silk
Correct Answer
A. MilkExplanation
Milk is not imported to the United States in any great quantity because the United States is one of the largest producers of milk in the world. The country has a strong dairy industry and produces enough milk to meet its domestic demand. Therefore, there is no significant need to import large quantities of milk from other countries.Rate this question:
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- 13.
The amount a country owes to other countries is
- A.
National debt
- B.
Foreign debt
- C.
Trade deficit
- D.
Balance of payments
Correct Answer
B. Foreign debtExplanation
Foreign debt refers to the amount of money that a country owes to other countries. It represents the total outstanding debt that a country has borrowed from foreign entities, such as governments, banks, or international organizations. This debt can be in the form of loans, bonds, or other financial instruments. Foreign debt is an important economic indicator as it reflects a country's ability to repay its obligations and manage its financial resources. It can have significant implications for a country's fiscal health and economic stability.Rate this question:
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- 14.
Which fo the following would likely cause the value of the dollar to RISE?
- A.
An increased US trade deficit
- B.
Higher US interest rates
- C.
Lower US inflation
- D.
Saudi Arabia doubles the price of the oil it sells the US
Correct Answer
C. Lower US inflationExplanation
Lower US inflation would likely cause the value of the dollar to rise because it indicates that the purchasing power of the currency is increasing. When inflation is low, it means that the prices of goods and services are not rising rapidly, and therefore, the currency becomes more attractive to investors and foreign buyers. This increased demand for the dollar leads to an appreciation in its value.Rate this question:
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- 15.
Dainielle's company is expanding into Korea and has asked her to research the language, customs and values of the Korean people. Which aspect of the interantional business environment is Danielle investigating?
- A.
Geography
- B.
Economic development
- C.
Political and legal concerns
- D.
Cultural influences
Correct Answer
D. Cultural influencesExplanation
Danielle is investigating cultural influences in the international business environment. This involves researching the language, customs, and values of the Korean people, which are all aspects of culture. Understanding cultural influences is crucial for businesses expanding into new markets as it helps them adapt their products, services, and marketing strategies to meet the preferences and expectations of the target audience.Rate this question:
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- 16.
Infrastructure refers to a country's
- A.
Educational system
- B.
System of local government
- C.
Transportation, communications, utility systems
- D.
Legal system
Correct Answer
C. Transportation, communications, utility systemsExplanation
Infrastructure refers to the basic physical and organizational structures and facilities needed for the operation of a society or enterprise. In the context of a country, infrastructure includes transportation systems like roads, railways, and airports, as well as communication systems like telecommunication networks and internet connectivity. Additionally, it encompasses utility systems such as water supply, electricity, and waste management. These are essential components that support economic and social activities, enabling the smooth functioning of a country and facilitating its development and growth. The legal system, although important, is not directly considered a part of a country's infrastructure.Rate this question:
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- 17.
Which of the following tends to discourage international trade?
- A.
An embargo
- B.
A free trade zone
- C.
Free trade agreement
- D.
A common market
Correct Answer
A. An embargoExplanation
An embargo tends to discourage international trade because it is a government-imposed restriction on trade with a specific country, usually as a result of political or economic disagreements. It involves banning or limiting the import or export of certain goods or services, which can significantly hinder trade between countries. This restriction creates barriers and reduces the flow of goods and services, discouraging international trade.Rate this question:
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- 18.
Which of the following is an example of a global strategy?
- A.
Pizza Hut restaurants in Japan sell pizza with squid toppings
- B.
The formula for Coke is the same no matter where in the world its sold
- C.
Advertising for womens underwear does not feature live models in Muslim countries to avoid offending religious sensibilities
- D.
All of the above are global strategies
Correct Answer
C. Advertising for womens underwear does not feature live models in Muslim countries to avoid offending religious sensibilitiesExplanation
This answer is correct because it demonstrates a global strategy by adapting the advertising approach in Muslim countries to respect and accommodate religious sensitivities. This strategy recognizes the cultural differences and adjusts the marketing tactics accordingly, indicating a global perspective in catering to diverse markets.Rate this question:
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- 19.
An agreement between two or more companies to share a business project is called
- A.
Licensing
- B.
Franchising
- C.
Proprietorship
- D.
Joint venture
Correct Answer
D. Joint ventureExplanation
A joint venture is an agreement between two or more companies to collaborate and share resources, expertise, and risks to undertake a specific business project. It involves the formation of a separate legal entity where each company contributes capital, assets, and knowledge to achieve a common goal. Unlike licensing, which involves granting permission to use intellectual property, franchising, which involves the licensing of a business model, or proprietorship, which refers to a business owned and operated by a single individual, a joint venture is a partnership formed by multiple companies for a specific project or venture.Rate this question:
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- 20.
This group helps maintain an orderly system of world exchange rates.
- A.
International Monetary Fund - IMF
- B.
World Trade Organizations -WTO
- C.
World Bank
- D.
European Union
Correct Answer
A. International Monetary Fund - IMFExplanation
The International Monetary Fund (IMF) is an organization that helps maintain an orderly system of world exchange rates. It provides financial assistance to member countries, promotes international monetary cooperation, and facilitates the stability of the global financial system. The IMF plays a crucial role in monitoring and managing exchange rates, ensuring that they remain stable and balanced among member countries. Therefore, the IMF is the correct answer for the given question.Rate this question:
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- 21.
Items bought from other countries
- A.
Imports
- B.
Exports
- C.
Deports
- D.
Quotas
Correct Answer
A. ImportsExplanation
Imports refer to items that are bought from other countries and brought into a country for consumption or resale. This can include goods, services, or even capital. Imports are an essential part of international trade and allow countries to access goods and services that may not be available domestically or may be more cost-effective to obtain from other countries.Rate this question:
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- 22.
A tax that a government places on certain imported products
- A.
Quota
- B.
Tariff
- C.
Embargo
- D.
Deficit
Correct Answer
B. TariffExplanation
A tariff is a tax that a government imposes on certain imported products. It is a means for the government to protect domestic industries by making imported goods more expensive and less competitive in the local market. Tariffs are often used to regulate trade, generate revenue, and promote economic growth. They can also be used as a tool for diplomacy and negotiation in international trade relations.Rate this question:
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- 23.
Occurs when a country sells more than it buys
- A.
Trade deficit
- B.
Trade surplus
- C.
Embargo
- D.
Interest rates
Correct Answer
B. Trade surplusExplanation
A trade surplus occurs when a country sells more goods and services to other countries than it buys from them. This means that the value of exports exceeds the value of imports, resulting in a positive balance of trade. A trade surplus is seen as favorable for a country as it indicates competitiveness and the ability to generate revenue from exports. It can lead to increased economic growth, job creation, and a stronger currency.Rate this question:
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- 24.
A limit on the quantity of a product that may be imported or exported
- A.
Quota
- B.
Tariff
- C.
Commparative advantage
- D.
Export
Correct Answer
A. QuotaExplanation
A quota refers to a restriction or limit imposed on the quantity of a product that can be imported or exported. It is a government-imposed measure that aims to control the flow of goods across borders. Quotas are often implemented to protect domestic industries, manage trade imbalances, or regulate the availability of certain goods in the market. By setting a maximum quantity that can be imported or exported, quotas can affect supply and demand dynamics, prices, and trade relationships between countries.Rate this question:
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- 25.
Exists when a country can produce a good or service at a lower cost than other countries.
- A.
Absolute advantage
- B.
Comparative advantage
- C.
Quota
- D.
Embargo
Correct Answer
A. Absolute advantageExplanation
Absolute advantage exists when a country can produce a good or service at a lower cost than other countries. This means that the country can produce more of the good or service with the same amount of resources or produce the same amount with fewer resources compared to other countries. It is a competitive advantage that allows the country to specialize in producing the good or service in which it has the absolute advantage, leading to increased efficiency and economic benefits.Rate this question:
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- 26.
The cost of using someone elses money
- A.
Interest rate
- B.
Import
- C.
Absolute advantage
- D.
Comparative advantage
Correct Answer
A. Interest rateExplanation
The term "interest rate" refers to the cost of borrowing money or the return on investment for lending money. It is the percentage charged or earned on the principal amount. When individuals or businesses borrow money, they are required to pay interest on the loan, which is essentially the cost of using someone else's money. The interest rate is determined by various factors such as inflation, supply and demand for credit, and the risk associated with the borrower. Higher interest rates make borrowing more expensive, while lower interest rates make it more affordable.Rate this question:
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- 27.
Completely prohibiting the import or export of a product
- A.
Embargo
- B.
Quota
- C.
Tariff
- D.
Trade deficit
Correct Answer
A. EmbargoExplanation
An embargo refers to the complete prohibition of importing or exporting a product. It is a trade restriction imposed by a country on another country, usually for political or economic reasons. This measure is often used as a form of punishment or to exert pressure on a nation. It can have significant impacts on the affected countries' economies and trade relationships.Rate this question:
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- 28.
Items sold to other countries
- A.
Exports
- B.
Imports
- C.
Tariffs
- D.
Trade balances
Correct Answer
A. ExportsExplanation
Exports refer to items that are sold to other countries. This involves the sale of goods or services produced within a country to foreign markets. It is an essential component of international trade and plays a significant role in a country's economy. Exports contribute to generating income, creating jobs, and stimulating economic growth. By selling products or services abroad, countries can diversify their markets, increase their competitiveness, and earn foreign exchange.Rate this question:
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- 29.
Exists when a country specializes in the production of a good or service at which it is relatively more efficient
- A.
Absolute advantage
- B.
Comparative advantage
- C.
Trade deficit
- D.
Trade surplus
Correct Answer
B. Comparative advantageExplanation
Comparative advantage refers to a situation where a country specializes in producing a good or service in which it is relatively more efficient compared to other countries. This means that the country can produce the good or service at a lower opportunity cost. By focusing on producing what it can produce most efficiently, the country can trade with other countries and benefit from the differences in relative efficiencies. This concept allows for mutually beneficial trade and can lead to increased overall productivity and economic growth.Rate this question:
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- 30.
Occurs when a country buys more than it sells
- A.
Trade surplus
- B.
Trade deficit
- C.
Quota
- D.
Tariff
Correct Answer
B. Trade deficitExplanation
A trade deficit occurs when a country imports more goods and services than it exports. This means that the country is buying more than it is selling to other nations. As a result, the country's imports exceed its exports, leading to a negative balance of trade. A trade deficit can have various causes, such as a lack of competitiveness in domestic industries, high consumer demand for imported goods, or currency exchange rates. It can have both positive and negative impacts on the economy, including affecting employment, domestic industries, and overall economic growth.Rate this question:
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Mar 21, 2023Quiz Edited by
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Apr 05, 2013Quiz Created by
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