Test Bank For A Changing World 6Th Canadian Edition By O. C. Ferrell
Chapter 03
Business in a Borderless World
True / False Questions
1. Exporting is the purchase of products from another nation.FALSE
Exporting is the selling of goods and services to foreign markets.
Blooms: RememberDifficulty: EasyLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-04 Trade Between Countries
2. Falling political barriers and new technologies have made it increasingly difficult to trade with other nations.FALSE
New technologies and the collapse of old political barriers have facilitated international trade.
Blooms: RememberDifficulty: EasyLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-02 The Role of International Business
3. When a nation is importing more than it is exporting, it has a positive balance of trade.FALSE
When a nation is importing more than it is exporting, it has a trade deficit, or a negative balance of trade.
Blooms: RememberDifficulty: MediumLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-05 Balance of Trade
4. A balance of trade refers to the buying, selling, and trading of goods and services across national boundaries.FALSE
A nation’s balance of trade is the difference in value between its exports and imports.
Blooms: RememberDifficulty: EasyLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-05 Balance of Trade
5. Nations trade with other nations to obtain resources that would otherwise be unavailable to them.TRUE
Nations and businesses engage in international trade to obtain raw materials and goods that are otherwise unavailable to them or are available elsewhere at a lower price than that at which they themselves can produce.
Blooms: RememberDifficulty: MediumLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-03 Why Nations Trade
6. An absolute advantage exists when a country has a monopoly on a natural resource.TRUE
An absolute advantage, or monopoly, exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.
Blooms: RememberDifficulty: MediumLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-03 Why Nations Trade
7. De Beers Consolidated Mines, Ltd., has the largest deposits of diamonds in the world. As such, they are said to have a comparative advantage.FALSE
De Beers has an absolute advantage over the world’s diamond trade and uses its control to maintain high prices for gem-quality diamonds.
Blooms: RememberDifficulty: MediumLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-03 Why Nations Trade
8. Outsourcing refers to the transfer of manufacturing and other tasks to countries where labour and supplies are less expensive.TRUE
Outsourcing has become a controversial practice because many jobs have moved overseas where those tasks can be accomplished for lower costs.
Blooms: RememberDifficulty: EasyLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-03 Why Nations Trade
9. Canada’s top trading partner, in terms of both imports and exports, is China.FALSE
Canada’s top trading partner, in terms of export destinations and import sources, is the United States.
Blooms: RememberDifficulty: EasyLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-05 Balance of Trade
10. The trade deficit fluctuates according to such factors as the economic health of Canada and other countries, productivity, perceived quality, and exchange rates.TRUE
In 2014, Canada had a $4.9 billion trade surplus with the United States and a $14.9 billion trade deficit with China.
Blooms: UnderstandDifficulty: MediumLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-05 Balance of Trade
11. Trade surpluses are harmful because they can mean the failure of businesses, the loss of jobs, and a lowered standard of living.FALSE
Trade deficits are harmful because they can mean the failure of businesses, the loss of jobs, and a lowered standard of living.
Blooms: UnderstandDifficulty: MediumLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-05 Balance of Trade
12. A nation’s balance of trade is the difference in value between its exports and imports.TRUE
A trade surplus is a positive balance of trade and a trade deficit is a negative balance of trade.
Blooms: RememberDifficulty: EasyLearning Objective: 03-01 Explore some of the factors within the international trade environment that influence business.Topic: 03-05 Balance of Trade
13. Completely free trade always exists.FALSE
When a company decides to do business outside its own country, it will encounter a number of barriers to international trade.
Blooms: RememberDifficulty: MediumLearning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.Topic: 03-06 International Trade Barriers
14. Protective tariffs raise the price of foreign goods to allow competition with more expensive domestic goods.TRUE
Protective tariffs allow more expensive domestic goods to compete with foreign ones.
Blooms: RememberDifficulty: EasyLearning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.Topic: 03-08 Ethical, Legal, and Political Barriers
15. When the value of the Canadian dollar declines relative to other currencies, such as the euro, the price of imports becomes relatively less expensive for Canadian consumers.FALSE
When the value of the Canadian dollar declines relative to other currencies, such as the euro, the price of imports becomes relatively more expensive for Canadian consumers.
Blooms: RememberDifficulty: MediumLearning Objective: 03-02 Investigate some of the economic, legal-political, social, cultural, and technological barriers to international business.Topic: 03-07 Economic Barriers
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