Question 1

Globalization in trade is likely to be accelerated through increased regionalization.

Accepted Answer

Regionalization refers to the process of countries in a particular region coming together to form a trade bloc with reduced trade barriers. This can lead to increased trade among the member countries and create incentives for non-member countries to join the bloc. This, in turn, can lead to increased globalization in trade as more countries become integrated into the global economy through regional trade agreements.

Question 2

Direct foreign investment measures the degree of trade in goods between two nations.

Accepted Answer

Direct foreign investment refers to when a company or individual invests in businesses or assets in a foreign country. It is a measure of capital flow, rather than trade in goods.

Question 3

Private individuals may use the International Court of Justice to settle commercial disputes.

Accepted Answer

The International Court of Justice (ICJ) only handles disputes between states; it does not have jurisdiction to hear cases brought by private individuals or entities.

Question 4

Under U.S. law, treaties are not binding on state and local governments.

Accepted Answer

Under the Supremacy Clause of the U.S. Constitution, treaties made under the authority of the United States are considered the "supreme Law of the Land," and judges in every state are bound by them, regardless of state laws to the contrary. This means treaties are binding on state and local governments.

Question 5

Lex Mercatoria refers to the process by which day-to-day practices become codified into international customary law.

Accepted Answer

Lex Mercatoria refers to the body of customs and practices that have developed through international trade and commerce and are recognized as customary law. It is not a formal codified law but rather a system of rules and principles derived from common practices and traditions followed by merchants and traders across different countries.

Question 6

International harmonization in the area of contract law will have the effect of increasing costs in international contract formation.

Accepted Answer

International harmonization in the area of contract law aims to reduce costs and uncertainties in international trade by creating a unified legal framework. Therefore, it is expected to facilitate international contract formation and reduce costs rather than increase them.

Question 7

The United Nations Convention on Contracts for the International Sale of Goods (CISG) requires a written document as proof that a contract has been formed.

Accepted Answer

The CISG does not require a written document as proof of the formation of a contract. The contract can be formed through other means such as oral or implied conduct. However, it is recommended to have a written contract for evidentiary purposes.

Question 8

An Export Trading Company (ETC) is a type of Export Management Company (EMC) that takes title to a product.

Accepted Answer

An Export Trading Company (ETC) takes title to a product, whereas an Export Management Company (EMC) does not take title but instead helps facilitate export transactions on behalf of the manufacturer or exporter.

Question 9

Soft currency refers to the currency of a country that may be exchanged for the currency another country without restriction.

Accepted Answer

Soft currency refers to the currency of a country that is not widely accepted around the world and may face restrictions or limitations on exchange.

Question 10

Some countries block the repatriation of money earned or invested in their countries.

Accepted Answer

Some countries have strict regulations and restrictions on the repatriation of funds and investments made by foreign individuals or entities. This is usually done to protect their local economy and currency.

Question 11

A forward contract gives a party the right, but not the obligation, to buy or sell a currency at a fixed rate in the future.

Accepted Answer

A forward contract obligates both parties to buy or sell a currency at a fixed rate in the future, not just one party.

Question 12

In the area of sale of goods, the civil law concept of Nachfrist Notice dictates that contractual delivery dates should not be strictly enforced unless the non-breaching party can give a commercially viable reason for not granting the extension.

Accepted Answer

The Nachfrist Notice concept allows for a reasonable extension of delivery dates and requires the non-breaching party to provide a commercial justification for not granting the extension.

Question 13

Evergreen statutes limit an employer's ability to terminate an employee or agent.

Accepted Answer

Evergreen statutes are laws that prevent employers from terminating employees without just cause.

Question 14

Import quotas are a type of non-tariff trade barrier.

Accepted Answer

Import quotas limit the quantity of goods that can be imported into a country, and they are a form of non-tariff trade barrier.

Question 15

The threat of foreign governments nationalizing industries or expropriating a foreign company's assets has been the dominant trend over the past few decades.

Accepted Answer

Over the past few decades, the trend has been towards globalization and liberalization, with many countries encouraging foreign investment rather than nationalizing industries or expropriating foreign company assets.

Question 16

Political risk assessment is difficult because of the scarcity of research materials.

Accepted Answer

This statement is false. While political risk assessment can be challenging, there are a variety of research materials available such as government reports, news articles, and academic studies that can be used to evaluate political risks. However, interpreting and synthesizing this information effectively can still be a complex task.

Question 17

Countertrade often is used to overcome currency convertibility or repatriation problems.

Accepted Answer

Countertrade is a trade where goods or services are exchanged for other goods or services instead of currency. It is often used as a solution for countries facing currency convertibility or repatriation issues.

Question 18

Customs brokers act as the seller's or exporter's agent.

Accepted Answer

Customs brokers act as the agent for the importer, not the seller or exporter, facilitating the importation of goods.

Question 19

The four types of international business transactions are importing, exporting, trade in services, and countertrade.

Accepted Answer

The four main types of international business transactions typically include importing, exporting, foreign direct investment, and licensing/franchising, not countertrade. Countertrade can be a method of conducting international trade, but it is not commonly listed as one of the primary types of international business transactions.

Question 20

Trade in goods and direct foreign investment are good measures of globalization.

Accepted Answer

Trade in goods and direct foreign investment are often used as indicators of increased global interconnectedness and integration of countries into the global economy. Therefore, they are good measures of globalization.

Quiz 1: Introduction to International Business Transactions