Introduction To Business: The Ultimate Practice Exam #2
Questions and Answers
- 1.
A ____________________ is a partnership in which companies from two different countries join to undertake a major project.
- A.
Multinational cooperative
- B.
Joint venture
- C.
Franchisee transfer
- D.
Recruit affiliation
Correct Answer
B. Joint ventureExplanation
A joint venture is a partnership in which companies from two different countries join to undertake a major project. This type of collaboration allows the companies to combine their resources, expertise, and market knowledge to achieve a common goal. It provides an opportunity for both companies to share risks, costs, and profits, while also benefiting from each other's strengths and capabilities. Joint ventures are commonly used in international business to access new markets, leverage local knowledge, and expand operations globally.Rate this question:
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- 2.
_______ involves the production of private-label goods by a foreign company to which a company then attaches its brand name or trademark.
- A.
Franchising
- B.
Contract manufacturing
- C.
Import trading
- D.
Export trading
Correct Answer
B. Contract manufacturingExplanation
Contract manufacturing involves the production of private-label goods by a foreign company, which are then branded with the company's name or trademark. This means that the company outsources the production of its goods to a foreign manufacturer, who produces the goods according to the company's specifications and attaches the company's brand name or trademark. This allows the company to benefit from the expertise and resources of the foreign manufacturer while maintaining control over the branding and marketing of the goods.Rate this question:
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- 3.
A ____________________ represents a long-term partnership between two or more companies established to help each firm build competitive market advantages.
- A.
Multinational values
- B.
Shared venture
- C.
Global franchise
- D.
Strategic alliance
Correct Answer
D. Strategic allianceExplanation
A strategic alliance represents a long-term partnership between two or more companies established to help each firm build competitive market advantages. This type of alliance allows companies to collaborate and leverage each other's strengths and resources to achieve mutual benefits and enhance their competitive position in the market. It involves sharing knowledge, technology, and resources to achieve common goals and gain a competitive edge in the industry.Rate this question:
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- 4.
A specialized organization that assists businesses in creating relationships with foreign customers and suppliers is known as a(n):
- A.
Export trading companies
- B.
International brokerage houses
- C.
Keiretsu
- D.
Global trade bank
Correct Answer
A. Export trading companiesExplanation
Export trading companies are specialized organizations that help businesses in establishing relationships with foreign customers and suppliers. These companies facilitate international trade by providing services such as market research, export documentation, logistics, and financing assistance. They act as intermediaries between exporters and importers, helping businesses navigate the complexities of international trade and expanding their global reach. Export trading companies play a crucial role in promoting cross-border business partnerships and facilitating the exchange of goods and services between countries.Rate this question:
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- 5.
Pillsbury is a firm that operated throughout the United States, even when it was wholly owned by a British company, Grand Metropolitan. Pillsbury was an example of a:
- A.
Licensed venture
- B.
Joint venture
- C.
Export trading company
- D.
Foreign subsidiary
Correct Answer
D. Foreign subsidiaryExplanation
Pillsbury being a firm that operated throughout the United States, even when it was owned by a British company, Grand Metropolitan, indicates that it is a foreign subsidiary. A foreign subsidiary is a company that is owned or controlled by a parent company located in a different country. In this case, Pillsbury, being owned by a British company, is considered a foreign subsidiary of Grand Metropolitan.Rate this question:
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- 6.
A risk unique to firms with direct investment in a foreign county is the potential takeover of the firm's assets by the government of that country. This takeover is called a(n):
- A.
Hostile takeover
- B.
Political bias
- C.
Unholy alliance
- D.
Expropriation
Correct Answer
D. ExpropriationExplanation
Expropriation refers to the potential takeover of a firm's assets by the government of a foreign country. This risk is unique to firms with direct investment in that country. Unlike a hostile takeover, which typically involves another company acquiring control of a firm, expropriation involves the government seizing the assets. Political bias and unholy alliance are unrelated to this specific risk.Rate this question:
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- 7.
Granting a foreign company the right to manufacture your product or to use your firm's trademark in return for a fee is called:
- A.
A joint venture
- B.
A foreign subsidiary
- C.
Licensing
- D.
Outsourcing
Correct Answer
C. LicensingExplanation
Licensing refers to the granting of rights to a foreign company to manufacture a product or use a firm's trademark in exchange for a fee. This allows the foreign company to produce and sell the product under the original company's brand name or trademark. Licensing is a common strategy for expanding business operations internationally without the need for significant investment or direct involvement in manufacturing and distribution. It allows the original company to earn revenue from the licensing fees while leveraging the foreign company's resources and market presence.Rate this question:
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- 8.
Which of the following assures exporters that they will receive prompt payment for their global market transactions?
- A.
A joint venture
- B.
A Letter of credit
- C.
An Export license agreement
- D.
An Import payment standard
Correct Answer
B. A Letter of creditExplanation
A letter of credit is a financial document issued by a bank that assures exporters that they will receive prompt payment for their global market transactions. It acts as a guarantee from the buyer's bank to the seller that payment will be made once the agreed-upon conditions are met. This provides a level of security for exporters, as the bank takes on the risk of non-payment. The letter of credit ensures that exporters can confidently engage in international trade, knowing that they will receive timely payment for their goods or services.Rate this question:
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- 9.
Which of the following strategies for reaching global markets involves the lowest risk and offers the lowest profit potential?
- A.
A joint venture
- B.
A foreign subsidiary
- C.
Contract manufacturing
- D.
Licensing
Correct Answer
D. LicensingExplanation
Licensing involves granting permission to a foreign company to use intellectual property, such as trademarks or patents, in exchange for royalties or fees. This strategy typically involves lower risk as the licensee takes on the majority of the operational and financial responsibilities. However, the profit potential is also lower compared to other strategies as the licensee retains a significant portion of the profits generated from the licensed product or technology.Rate this question:
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- 10.
A key feature of a(n) ____________________ is that it has manufacturing and marketing facilities in many different countries
- A.
Trade cartel
- B.
Import trading company
- C.
Export forwarding company
- D.
Multinational corporation
Correct Answer
D. Multinational corporationExplanation
A multinational corporation is a key feature that has manufacturing and marketing facilities in many different countries. This means that the company operates on a global scale, with operations and presence in multiple countries. This allows them to take advantage of different markets, resources, and labor pools, as well as diversify their operations and minimize risks. Multinational corporations often have a centralized management structure but decentralized operations, allowing them to adapt to local markets and regulations while maintaining a global presence.Rate this question:
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- 11.
The federal government created ___________ to help small and medium sized businesses get involved in exporting
- A.
The World Trade Organization
- B.
Federal Export Loan Banks
- C.
Export Assistance Centers
- D.
The Federal Trade Promotion Commission
Correct Answer
C. Export Assistance CentersExplanation
Export Assistance Centers were created by the federal government to help small and medium-sized businesses get involved in exporting. These centers provide guidance and support to businesses in navigating the complexities of international trade, such as market research, export financing, and export compliance. They aim to facilitate and promote the growth of exports, ultimately boosting the economy and creating jobs.Rate this question:
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- 12.
All of the following are recognized as being potential hurdles to be overcome in global trading except:
- A.
Different cultures
- B.
Different languages
- C.
Different money systems
- D.
Lack of market opportunities
Correct Answer
D. Lack of market opportunitiesExplanation
The correct answer is "lack of market opportunities." This means that lack of market opportunities is not recognized as a potential hurdle to be overcome in global trading. This suggests that there are sufficient market opportunities available for global trading and that other factors such as different cultures, languages, and money systems are more commonly recognized as potential obstacles in international trade.Rate this question:
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- 13.
____________ occurs when a country lowers the value of its currency relative to the currency of other nations
- A.
Devaluation
- B.
Extrapolation
- C.
Depreciation
- D.
Downward justification
Correct Answer
A. DevaluationExplanation
Devaluation refers to the deliberate action taken by a country to reduce the value of its currency in relation to other currencies. This is typically done by a country's central bank or government in order to boost exports and make domestic goods more competitive in international markets. Devaluation helps to make a country's exports cheaper and imports more expensive, which can stimulate economic growth and reduce trade deficits.Rate this question:
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- 14.
__________ is the exchange of merchandise or services for other merchandise or services without the exchange of money.
- A.
Exporting
- B.
Bartering
- C.
Importing
- D.
Factoring
Correct Answer
B. BarteringExplanation
Bartering is the exchange of merchandise or services for other merchandise or services without the exchange of money. It involves trading goods or services directly between two parties, where each party gives up something they have in exchange for something they need. This method was commonly used before the invention of money and is still practiced in some societies and communities today. Bartering allows individuals or businesses to obtain the goods or services they require without the need for cash transactions.Rate this question:
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- 15.
Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of:
- A.
Negotiated rate adjustments between the U.S. government and the World Trade Organization
- B.
Decisions by the Federal Reserve Board of Governors in order to implement monetary policy
- C.
Fluctuations in the world price of gold
- D.
Changes in the supply of and/or demand for dollars in the global currency market
Correct Answer
D. Changes in the supply of and/or demand for dollars in the global currency marketExplanation
Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of changes in the supply of and/or demand for dollars in the global currency market. This means that when the demand for dollars increases, its value relative to other currencies will also increase. Conversely, if the supply of dollars increases or the demand decreases, the value of the dollar will decrease compared to other currencies. This is because currency exchange rates are determined by the market forces of supply and demand.Rate this question:
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- 16.
____________ describes an attitude held by some American business people that our culture is superior to all others and that everyone else should adopt the American way of doing things.
- A.
Primary culture
- B.
Ethnocentricity
- C.
Cultural institutionalism
- D.
Social myopia
Correct Answer
B. EthnocentricityExplanation
Ethnocentricity refers to the belief held by some American business people that their own culture is superior to all others and that everyone else should adopt the American way of doing things. This attitude can lead to a lack of understanding and appreciation for other cultures, as well as a tendency to judge them based on American standards. It can hinder effective communication and collaboration in a global business environment.Rate this question:
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- 17.
Which of the following represents the value of one nation's currency relative to the currencies of another country?
- A.
Euro rate
- B.
Currency rate
- C.
Exchange rate
- D.
Standard of living
Correct Answer
C. Exchange rateExplanation
The exchange rate represents the value of one nation's currency relative to the currencies of another country. It determines how much of one currency can be exchanged for another. The exchange rate is influenced by various factors such as supply and demand, interest rates, inflation, and economic stability. It is an essential indicator for international trade, investment, and tourism, as it affects the cost of goods and services in different countries.Rate this question:
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- 18.
Which of the following terms describes the set of values, beliefs, rules, language, and institutions held by a specific group of people?
- A.
Culture
- B.
Ethnocentricity
- C.
Institutional society
- D.
Social myopia
Correct Answer
A. CultureExplanation
Culture is the correct answer because it encompasses all the elements mentioned in the question - values, beliefs, rules, language, and institutions - that are shared by a particular group of people. Culture shapes the way people think, behave, and interact within their society. It includes customs, traditions, arts, and other aspects that are passed down from generation to generation. Culture is a fundamental aspect of human society and plays a crucial role in shaping individual and collective identities.Rate this question:
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- 19.
Selling the same product in essentially the same way worldwide is known as:
- A.
Socio-cultural based marketing
- B.
Universal sales standards
- C.
Single-phase marketing
- D.
Global marketing
Correct Answer
D. Global marketingExplanation
Global marketing refers to the strategy of selling the same product in essentially the same way worldwide. This approach involves standardizing marketing efforts across different countries and regions, taking into account cultural, social, and economic factors. By adopting a global marketing approach, companies can benefit from economies of scale, consistent brand messaging, and increased market share. This strategy allows businesses to reach a larger customer base and capitalize on global trends and opportunities.Rate this question:
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- 20.
Which of the following describes a complex form of bartering involving several countries?
- A.
Counter trading
- B.
Counter industry
- C.
Counter intuitive
- D.
Geiger counter
Correct Answer
A. Counter tradingExplanation
Countertrading is a complex form of bartering that involves multiple countries. In this trade method, goods and services are exchanged between countries without the use of currency. It typically occurs when countries face difficulties in accessing foreign currency or when there are trade imbalances. It allows countries to overcome financial constraints and promote international trade. Countertrading can involve various forms such as barter, compensation, buyback, and offset. It is a strategic approach that helps countries maintain economic relationships and overcome trade barriers.Rate this question:
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- 21.
______________ is the economic theory advocating that a nation should try to sell more goods to other nations than it buys from them
- A.
Capitalism
- B.
Comparative advantage
- C.
Mercantilism
- D.
Inflation
Correct Answer
C. MercantilismExplanation
Mercantilism is the economic theory advocating that a nation should try to sell more goods to other nations than it buys from them. This theory believes that a country's wealth and power can be increased by accumulating precious metals through a favorable balance of trade. It emphasizes the importance of exports and discourages imports through various protectionist measures such as tariffs and subsidies. By maintaining a trade surplus, a nation can accumulate wealth and strengthen its economy.Rate this question:
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- 22.
Labor unions and businesses in the heavy equipment industry have asked the U.S. Congress to place a tax on imported equipment in order to make it more expensive. They hope that this will allow U.S. producers to be more competitive. The U.S. heavy equipment industry appears to be seeking a(n):
- A.
Injunction
- B.
Revenue tariff
- C.
Nontariff barrier
- D.
Protective tariff
Correct Answer
D. Protective tariffExplanation
The correct answer is a protective tariff. A protective tariff is a tax imposed on imported goods in order to make them more expensive and protect domestic industries from foreign competition. In this case, the labor unions and businesses in the heavy equipment industry are requesting a tax on imported equipment to make it more expensive, thereby making it more difficult for foreign producers to compete with U.S. producers. This would provide protection for the U.S. heavy equipment industry and potentially make it more competitive in the market.Rate this question:
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- 23.
The __________ represents the first attempt to establish a truly global mediation center to resolve international trade disputes
- A.
International Trade Court
- B.
World Trade Organization
- C.
Global Trade Commission
- D.
United Nations Arbitration Center
Correct Answer
B. World Trade OrganizationExplanation
The World Trade Organization (WTO) is the correct answer because it is an international organization that was established to promote and regulate international trade. It provides a platform for member countries to negotiate trade agreements, resolve trade disputes, and ensure the smooth flow of global trade. The WTO's Dispute Settlement Body acts as a mediation center to resolve international trade disputes, making it the first attempt to establish a truly global mediation center for this purpose. The other options mentioned, such as the International Trade Court, Global Trade Commission, and United Nations Arbitration Center, do not have the same global reach or mandate as the WTO.Rate this question:
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- 24.
___________ is the use of government regulations to limit the import of goods and services.
- A.
Trade protectionism
- B.
Fiscal policy
- C.
Countertrade policy
- D.
Monetary policy
Correct Answer
A. Trade protectionismExplanation
Trade protectionism refers to the use of government regulations to limit the import of goods and services. This can be done through various measures such as tariffs, quotas, and import restrictions. The purpose of trade protectionism is to protect domestic industries and jobs from foreign competition. By limiting imports, the government aims to create a more favorable environment for domestic producers, allowing them to compete more effectively in the domestic market. Trade protectionism can have both positive and negative effects, as it can help certain industries but may also lead to higher prices for consumers and retaliation from other countries.Rate this question:
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- 25.
A(n) __________ refers to a complete ban of the imports or exports of certain products from a specific country.
- A.
Absolute tariff
- B.
Health quarantine
- C.
Quota
- D.
Embargo
Correct Answer
D. EmbargoExplanation
An embargo refers to a complete ban of the imports or exports of certain products from a specific country. This means that no goods can be traded between the country imposing the embargo and the country affected by it. Embargoes are often used as a political or economic tool to put pressure on a specific country or government, and can have significant impacts on international trade and relations.Rate this question:
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- 26.
The three countries participating in NAFTA are:
- A.
Canada, Panama, and the United States
- B.
Mexico, Panama, and the United States
- C.
Canada, Nicaragua, and Mexico
- D.
Canada, Mexico, and the United States
Correct Answer
D. Canada, Mexico, and the United StatesExplanation
The correct answer is Canada, Mexico, and the United States. NAFTA, which stands for the North American Free Trade Agreement, is a trade agreement between these three countries. It was established in 1994 to eliminate trade barriers and promote economic cooperation among the participating nations.Rate this question:
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- 27.
The common market arrangement that groups Brazil, Argentina, Paraguay, Uruguay, Chile, and Bolivia is called the:
- A.
South American Six
- B.
World Trade Organization (WTO)
- C.
Latin Free Trade Zone
- D.
Mercosur
Correct Answer
D. MercosurExplanation
Mercosur is the correct answer because it is a common market arrangement that includes Brazil, Argentina, Paraguay, Uruguay, Chile, and Bolivia. Mercosur aims to promote free trade and economic integration among its member countries by eliminating tariffs and other trade barriers. It was established in 1991 and has since grown to become one of the largest trading blocs in the world.Rate this question:
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- 28.
________ tariffs are designed to raise money for the government
- A.
Regulatory
- B.
Revenue
- C.
Price
- D.
Profit
Correct Answer
B. RevenueExplanation
Revenue tariffs are designed to raise money for the government. Revenue tariffs are imposed on imported goods and are intended to generate income for the government by charging a tax on these goods. The purpose of revenue tariffs is not to protect domestic industries or regulate trade, but solely to generate revenue for the government.Rate this question:
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- 29.
At present, China has a comparative advantage over the United States in the production of aircraft.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
China does not currently have a comparative advantage over the United States in the production of aircraft. A comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. The United States has a long history and established expertise in aircraft manufacturing, with companies like Boeing leading the industry. China, on the other hand, has been rapidly expanding its aircraft production capabilities but still lags behind the United States in terms of technology, experience, and market share. Therefore, the statement is false.Rate this question:
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- 30.
At present, China has a comparative advantage over the United States in the production of clothing
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
China has a comparative advantage over the United States in the production of clothing because it has lower labor costs, a larger workforce, and a well-established manufacturing infrastructure. China's ability to produce clothing at a lower cost allows them to export it at a competitive price, making them the leading producer in the global market. The United States, on the other hand, has shifted its focus towards high-tech industries and has higher labor costs, making it less competitive in clothing production. Therefore, the statement is true.Rate this question:
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- 31.
The Theory of Comparative Advantage implies that only two-way flows of goods (one good for another) make the citizens of the trading nations better off. One-way flows of goods (with money coming the other way) do not
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The Theory of Comparative Advantage suggests that both two-way and one-way flows of goods can make citizens of trading nations better off. It states that countries should specialize in producing goods that they have a comparative advantage in, and then trade with other countries to obtain goods that they don't produce efficiently. This allows for a more efficient allocation of resources and promotes economic growth for all nations involved. Therefore, one-way flows of goods with money coming the other way can still benefit the citizens of trading nations.Rate this question:
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- 32.
One hundred percent of the goods exported to Japan from the United States in 2007 were in one of the following four product categories: nuclear reactors (and spare parts for them), aircraft, medical and industrial equipment, or cereal grains
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because it states that "One hundred percent of the goods exported to Japan from the United States in 2007 were in one of the following four product categories." This is an incorrect statement as there could have been other goods exported to Japan that were not included in these four categories.Rate this question:
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- 33.
The United States had a favorable balance of trade with Japan in 2007.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the United States had a negative balance of trade with Japan in 2007, meaning that it imported more goods from Japan than it exported to Japan. A favorable balance of trade occurs when a country exports more goods than it imports.Rate this question:
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- 34.
According to the story Mr. Lilly told, if the United States ran a trade deficit with Japan forever, Americans would become far wealthier than they are today
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The explanation for the answer being False is not available.Rate this question:
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- 35.
Chapter 3 is our one chapter on
- A.
Economics
- B.
Management
- C.
Marketing
- D.
international business
Correct Answer
D. international businessExplanation
Chapter 3 is focused on international business. This chapter likely covers topics related to conducting business across borders, such as global trade, international marketing, foreign investment, and cultural considerations. It may also explore the challenges and opportunities that arise when operating in a global marketplace.Rate this question:
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- 36.
Nations are trading with one another in
- A.
Slowly declining volumes
- B.
Approximately constant volumes
- C.
Ever-increasing volumes
Correct Answer
C. Ever-increasing volumesExplanation
The correct answer is ever-increasing volumes. This means that the trade between nations is continuously growing and expanding, with the volume of goods and services being exchanged increasing over time. This suggests that there is a positive trend in international trade, indicating economic growth and globalization.Rate this question:
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- 37.
In 1968, world trade (trade between all nations combined) was approximately _____________ dollars a year
- A.
$315 million
- B.
$31 billion
- C.
$315 billion
- D.
$31 trillion
Correct Answer
C. $315 billionExplanation
In 1968, world trade was approximately $315 billion dollars a year. This indicates the total value of trade between all nations combined during that year.Rate this question:
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- 38.
In 2007, world trade was ______________ dollars a year
- A.
$315 billion
- B.
$630 billion
- C.
$1.3 trillion
- D.
$13.25 trillion
- E.
$17.5 trillion
Correct Answer
E. $17.5 trillionExplanation
In 2007, world trade reached a total value of $17.5 trillion. This indicates the total amount of money that was exchanged between countries through imports and exports during that year.Rate this question:
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- 39.
Between 1968 and 2007, world trade
- A.
Tripled
- B.
Quadrupled
- C.
Increased 12-fold
- D.
increased 55-fold
Correct Answer
D. increased 55-foldExplanation
Between 1968 and 2007, world trade increased 55-fold. This means that the volume of global trade grew by a factor of 55 during this period. This significant increase highlights the tremendous growth and expansion of international trade over the span of almost four decades.Rate this question:
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- 40.
In 1968, world trade was about ____ percent of world gross domestic product
- A.
2
- B.
4
- C.
6
- D.
8
Correct Answer
A. 2Explanation
In 1968, world trade was about 2 percent of world gross domestic product. This indicates that the value of goods and services traded internationally accounted for a small portion of the overall global economic output during that time.Rate this question:
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- 41.
In 2007, world trade was about ____ percent of world gross domestic product
- A.
21
- B.
23
- C.
25
- D.
27
Correct Answer
D. 27Explanation
In 2007, world trade accounted for approximately 27% of the world's gross domestic product. This indicates that a significant portion of the global economy was driven by international trade during that year.Rate this question:
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- 42.
Why has world trade increased so much since 1968?
- A.
One reason: mutual reductions of import tariffs by countries
- B.
Two reasons: mutual reductions of import tariffs by countries, and steady reductions of transportation costs
- C.
Three reasons: mutual reductions of import tariffs by countries, steady reductions of transportation costs, and the increasing debt loads carried by third world countries.
- D.
Four reasons: mutual reductions of import tariffs by countries, steady reductions of transportation costs, the increasing debt loads carried by third world countries, and a concerted effort by developed nations to ensnare developing nations on a treadmill of ever-increasing exports.
Correct Answer
B. Two reasons: mutual reductions of import tariffs by countries, and steady reductions of transportation costsExplanation
Since 1968, world trade has increased significantly due to two main reasons. Firstly, countries have mutually reduced import tariffs, making it easier and more affordable for goods to be traded between nations. Secondly, transportation costs have steadily decreased over time, making it more efficient and cost-effective to transport goods across long distances. These two factors have contributed to the growth of international trade and have allowed for greater economic integration and globalization.Rate this question:
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- 43.
In 1947, the average tariff on industrial goods was
- A.
4%.
- B.
14%
- C.
40%.
- D.
400%.
Correct Answer
C. 40%.Explanation
In 1947, the average tariff on industrial goods was 40%. This means that on average, industrial goods imported during that time were subject to a tariff rate of 40% of their value. Tariffs are taxes imposed on imported goods to protect domestic industries and generate revenue for the government. A 40% tariff rate indicates that the government aimed to restrict the import of industrial goods and promote domestic production by making imported goods more expensive.Rate this question:
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- 44.
Today, the average tariff on industrial goods is less than
- A.
4%.
- B.
14%.
- C.
40%.
- D.
400%.
Correct Answer
A. 4%.Explanation
The correct answer is 4% because the question states that the average tariff on industrial goods is less than a certain percentage. Out of the given options, 4% is the only answer that is less than the stated percentage.Rate this question:
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- 45.
When you eliminate import tariffs, what you're essentially saying is
- A.
Price doesn't matter
- B.
May the best (most efficient) company win.
- C.
These tariffs are too expensive to collect
- D.
All of the above
- E.
None of the above
Correct Answer
B. May the best (most efficient) company win.Explanation
When you eliminate import tariffs, you are essentially saying that the best and most efficient company should be the winner. This is because without tariffs, companies from different countries can compete on an equal playing field, and the company that can produce goods at the lowest cost and highest quality will have a competitive advantage and succeed in the market.Rate this question:
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- 46.
In 1817, English economist David Ricardo published a book in which he explained
- A.
The Theory of Natural Selection
- B.
The Theory of Moral Sentiments
- C.
The Theory of Comparative Advantage
- D.
The Theory of Competitive Advantage
Correct Answer
C. The Theory of Comparative AdvantageExplanation
In 1817, English economist David Ricardo published a book in which he explained the Theory of Comparative Advantage. This theory states that countries should specialize in producing goods or services in which they have a lower opportunity cost compared to other countries. By specializing and trading with other countries, all countries involved can benefit and increase their overall economic welfare. This theory has had a significant impact on international trade and has been widely accepted by economists as a fundamental principle in understanding the benefits of specialization and trade between countries.Rate this question:
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- 47.
For the purposes of determining which nations have a comparative advantage over other nations in the production of a given good, efficiency is measure in units of
- A.
Output (in either units or dollars) per labor hour
- B.
Output (in either units or dollars) per pound of input
- C.
Output (in either units or dollars) per dollar of input
- D.
All of the above
- E.
None of the above
Correct Answer
C. Output (in either units or dollars) per dollar of inputExplanation
Efficiency in determining comparative advantage is measured by output (in either units or dollars) per dollar of input. This means that the focus is on how much output can be generated for each dollar of input invested, which allows for a comparison between nations in terms of their productivity and cost-effectiveness. This measure takes into account both the quantity and value of the output produced in relation to the amount of input used, providing a comprehensive assessment of efficiency in production.Rate this question:
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- 48.
Your nation will have a favorable balance of trade with other nations if it
- A.
Imports more than it exports
- B.
Exports more than it imports
- C.
Spends more than it collects from taxes
- D.
Collects more from taxes than it spends
- E.
None of the above
Correct Answer
B. Exports more than it importsExplanation
A nation will have a favorable balance of trade with other nations if it exports more than it imports. This means that the country is selling more goods and services to other countries than it is buying from them. This can lead to an increase in revenue and economic growth for the nation, as it is able to earn more from its exports.Rate this question:
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- 49.
Technically, to look at the balance of trade between the U.S. and Japan (in a given year,) I should look at the trade in
- A.
Goods only
- B.
Services only
- C.
Both goods and services
Correct Answer
C. Both goods and servicesExplanation
To accurately assess the balance of trade between the U.S. and Japan in a given year, it is necessary to consider both goods and services. This is because trade involves not only the exchange of physical goods but also the provision of services. By considering both aspects, we can have a comprehensive understanding of the total value of trade between the two countries and evaluate the overall balance.Rate this question:
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- 50.
The United States has run a trade ____________ with Japan for at least the last ______ years
- A.
Surplus; five
- B.
Deficit; 25
- C.
Surplus; 25
- D.
None of the above
Correct Answer
B. Deficit; 25Explanation
The correct answer is "deficit; 25". This means that the United States has had a trade deficit with Japan for the past 25 years. A trade deficit occurs when a country imports more goods and services than it exports, resulting in a negative balance of trade. This suggests that the United States has been buying more from Japan than it has been selling to them for the past 25 years.Rate this question:
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Current Version
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Dec 20, 2023Quiz Edited by
ProProfs Editorial Team -
Jun 12, 2009Quiz Created by
Marcosbarrera
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