Question 1

A disadvantage of foreign outsourcing is higher wages.

Accepted Answer

Foreign outsourcing typically involves hiring workers from countries with lower wages, so the disadvantage would actually be lower wages for domestic workers.

Question 2

When the total value of a nation's exports is higher than the total value of its imports, that country has a(n)_____.
A)absolute advantage
B)trade surplus
C)trade deficit
D)comparative advantage

Accepted Answer

When a country's total value of exports is higher than its total value of imports, it has a trade surplus. This means that the country is earning more from selling goods and services to other countries than it is spending on imports, and its balance of trade is positive.

Question 3

Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.

Accepted Answer

China and India have the two largest populations in the world, and are predicted to grow in economic power and influence in the coming years. As such, they represent massive opportunities for business and investment.

Question 4

Compared to the U.S., China and India have:
A)smaller market size.
B)higher GDP growth rates.
C)higher per capita GDPs.
D)limited market potential.

Accepted Answer

China and India both have higher GDP growth rates compared to the U.S. In recent years, China has consistently maintained a GDP growth rate of around 6-7%, while India's growth rate has been around 7-8%. On the other hand, the U.S. has had an average GDP growth rate of around 2-3%.

Question 5

Balance of payments deficit means that:
A)foreign borrowing and lending are excluded from calculating the balance of payments.
B)more money flows in than out.
C)more money flows out than in.
D)foreign payments and receipts are excluded from calculating the balance of payments.

Accepted Answer

A balance of payments deficit occurs when a country's expenditures on imports, foreign aid, and other foreign payments exceed its receipts from exports, foreign investments, and other foreign receipts. This means that more money is flowing out of the country than in, leading to a negative balance.

Question 6

Alice, the global marketing director of a multinational electronics manufacturing firm, is assigned the task of expanding her firm in growing new markets. She learns that the labor is expensive and that the technical equipment required for production is unavailable in the international market. In this case, which of the following is most likely affecting the global trade of Alice's firm?​
A)Lack of innovative ideas
B)Economic dependence in the international market
C)Limited access to factors of production
D)Absence of plentiful capital

Accepted Answer

Limited access to factors of production, such as expensive labor and unavailable technical equipment, can hinder a firm's ability to expand in new markets and participate in global trade.

Question 7

Balance of payments includes foreign borrowing and lending, foreign aid payments and receipts, and foreign investments.

Accepted Answer

Balance of payments is a record of all financial transactions made between individuals, businesses, and the government of a country with the rest of the world. It includes foreign borrowing and lending, foreign aid payments and receipts, and foreign investments as well as trade in goods and services.

Question 8

Identify a true statement about comparative advantage.
A)It is the tendency of a country to choose goods that have a higher opportunity cost compared to other countries.
B)It stays the same regardless of the changes in the technology or workforce in a country.
C)It is affected by major trade barriers to international trade.
D)It always remains static for developing countries.

Accepted Answer

Comparative advantage can be influenced by trade barriers, as they can affect the relative costs and benefits of producing certain goods in different countries.

Question 9

Sloimekia is able to produce more of a particular variety of cloth than its neighboring countries. Sloimekia and its neighboring countries have the same amount of resources for producing this particular cloth. In this case, which of the following is definitely true of Sloimekia?
A)Sloimekia has a higher trade surplus than its neighboring countries.
B)Sloimekia enjoys an absolute advantage in producing this particular cloth.
C)Sloimekia enjoys the highest balance of trade among its neighboring countries.
D)Sloimekia has a lower balance of payments and a lower trade deficit.

Accepted Answer

Sloimekia's ability to produce more cloth than its neighboring countries with the same resources means that it has an absolute advantage. This is the only option that is definitely true based on the given information. Options A, C, and D are not necessarily true or cannot be concluded based on the information provided.

Question 10

International trade helps even out some of the resource imbalances among nations.

Accepted Answer

International trade allows countries to specialize in goods and services they can produce more efficiently, while importing goods and services they cannot produce as efficiently. This allows for a more efficient allocation of resources globally, which can help to even out some of the imbalances among nations.

Question 11

Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.

Accepted Answer

A large trade deficit can lead to a strain on a country's balance of payments and could weaken its currency, making imports more expensive and potentially leading to inflation. It can also cause concern for foreign investors, affecting the country's ability to attract investment and potentially leading to a slowdown in economic growth.

Question 12

A balance of payments surplus means that more money flows out than in.

Accepted Answer

A balance of payments surplus means that a country exports more goods and services than it imports, which leads to more money flowing into the country than out of it. Therefore, the statement in the question is incorrect.

Question 13

In the context of international trade, countries with the highest trade barriers often have the least competition.

Accepted Answer

Countries with high trade barriers make it difficult for foreign companies to enter their market, limiting competition and protecting domestic businesses.

Question 14

Identify a true statement about balance of payments.
A)Balance of payments includes foreign borrowing and lending.
B)Balance of payments surplus indicates more money flowing out than in.
C)Balance of payments excludes overseas investments.
D)Balance of payments deficit indicates more money flowing in than out.

Accepted Answer

Balance of payments refers to all the economic transactions that occur between a country's residents and those in the rest of the world. This includes not only the flow of goods and services, but also capital movements such as foreign borrowing and lending, as well as investment in overseas markets. Option A accurately identifies this aspect of balance of payments. Option B is incorrect as surplus indicates more money flowing in than out, not the other way around. Option C is also incorrect as overseas investments are included in balance of payments.

Question 15

As access to technology rises and barriers to trade fall, individual economies around the world have become more independent than ever before.

Accepted Answer

The statement is incorrect. As access to technology rises and barriers to trade fall, individual economies have become more interdependent, not independent.

Question 16

Imported products carry the brand name of the importer.

Accepted Answer

Imported products carry the brand name of the manufacturer or company who made them, not the importer. However, the importer may add their own branding or labeling to the product.

Question 17

Which of the following statements is true about the markets around the world?
A)India's subscriber base for cell phones has grown explosively over the past five years.
B)China has lower gross domestic product (GDP) growth rate than the U.S.
C)China and India have a smaller opportunity to attract investments because of to their economic growth.
D)Most of the developing countries remain ahead of the United States in terms of development and prosperity.

Accepted Answer

The statement about India's subscriber base for cell phones growing explosively over the past five years is true. This suggests that the market for cell phone services in India is growing rapidly.

Answer: None of the other statements are true.
 China actually has a higher GDP growth rate than the U.S. and both China and India are seen as having a large potential for attracting investment due to their economic growth. Additionally, while some developing countries may be ahead of the U.S. in certain areas, it is generally not true that they are ahead in terms of overall development and prosperity.

Question 18

Identify a true statement about global trade.
A)It increases a firm's dependence on its domestic economy.
B)It offers companies an invaluable source of new ideas.
C)It increases the economic risk of multinational companies.
D)It reduces a firm's opportunity to tap into growing new markets.

Accepted Answer

Global trade allows companies to access new markets, which can expose them to new ideas and technologies. Option A is false because global trade reduces a firm's dependence on its domestic economy. Option C is partially true but not a complete statement as trade can also reduce economic risk by spreading it over different markets. Option D is false as global trade opens up new market opportunities.

Question 19

One of the major reasons India, China, and the Philippines attract multibillion-dollar investments is that:
A)they are more developed than any other developed country in the world.
B)they have a large cohort of technically skilled university graduates who work for about one-fifth the pay of comparable American workers.
C)the value of Euros is lower in the Asian market than in the American market.
D)the level of prosperity in these countries is the highest in the world, ahead of the United States and Europe.

Accepted Answer

One of the major reasons why India, China, and the Philippines attract multibillion-dollar investments is because they have a large pool of technically skilled university graduates who work for about one-fifth the pay of comparable American workers, making them an attractive location for outsourcing and offshoring business processes. This enables multinational corporations to reduce costs while maintaining or improving quality, increasing their profitability.

Question 20

Companies that choose to export products to a foreign country spend more to enter that market than companies that choose to build their own factories.

Accepted Answer

The answer of Companies that choose to export products to...

Quiz 3: The World Marketplace: Business Without Borders

A disadvantage of foreign outsourcing is higher wages.

When the total value of a nation's exports is higher than the total value of its imports, that country has a(n) _____.

Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.

Compared to the U.S., China and India have:

Balance of payments deficit means that:

Balance of payments includes foreign borrowing and lending, foreign aid payments and receipts, and foreign investments.

Identify a true statement about comparative advantage.

Sloimekia is able to produce more of a particular variety of cloth than its neighboring countries. Sloimekia and its neighboring countries have the same amount of resources for producing this particular cloth. In this case, which of the following is definitely true of Sloimekia?

International trade helps even out some of the resource imbalances among nations.

Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.

A balance of payments surplus means that more money flows out than in.

In the context of international trade, countries with the highest trade barriers often have the least competition.

Identify a true statement about balance of payments.

As access to technology rises and barriers to trade fall, individual economies around the world have become more independent than ever before.

Imported products carry the brand name of the importer.

Which of the following statements is true about the markets around the world?

Identify a true statement about global trade.

One of the major reasons India, China, and the Philippines attract multibillion-dollar investments is that:

Companies that choose to export products to a foreign country spend more to enter that market than companies that choose to build their own factories.