Chapter 10: Business in a Global Economy
Chapter Practice Review Quiz
1.. What is international trade? 5. Which is NOT true about specialization? A) the development of economies in the third A) To specialize means to focus on one area, world activity, or good.
B) the exchange of goods and services between B) Countries that specialize trade their particular countries product for every other good.
C) the placing by a company of offices and C) Specialization is bad for a country's economy facilities in several countries or standard of living.
D) the fluctuating exchange rate between D) Countries that specialize have a comparative currencies of different countries advantage.
2. Which is NOT a reason for importing an 6. Which country is NOT matched with its agricultural crop? standard currency?
A) The crop can be produced in your own country A) Japan - yen
more cheaply. B) Canada - dollar
B) Your country does not have the right climate to C) India - rupee
grow the crop successfully. D) Mexico – dolare
C) Shipping is no longer prohibitively expensive.
7. Which is a way you pay for goods and D) A higher quality crop can be produced outside
your country. services?
3. Which types of products do other countries B) exchange rate
mostly buy from the U.S.? C) currency
A) fuels D) specialization
8. Which is true of currency trading? C) toys
D) agricultural A) Currency is bought and sold on the foreign
4. What is a balance of trade? B) When a currency's value falls, it appreciates. A) a trade surplus C) Rates stay the same almost all the time. B) a trade deficit D) All currencies are about equal in value.
C) importing or exporting the services of
professionals 9. How can you compare exchange rates? D) the difference in value of a country's imports A) If a country's currency is higher than another's, and exports it has more buying power.
B) If a country's currency is higher than another's,
it has less buying power.
C) It is impossible to compare the value of two
D) Look at the number amount to compare two
10. Which is a benefit of countries competing in 15. Which is NOT a country involved in NAFTA?
the same market? A) United States A) Competition often leads to trade disputes. B) Mexico
B) Competition forces businesses to become C) Dominican Republic more efficient, innovative, and productive. D) Canada
C) Cheap labor overseas can threaten jobs at home
D) A country can become too dependent on another country for a certain product.
11. Which is NOT true of countries with protectionist policies?
A) Foreign trade of any kind is prohibited.
B) National defense programs are more secure. C) Jobs at home are more secure.
D) Domestic businesses are sheltered from unfair foreign competition.
12. Which term refers to a tax placed on imported goods?
13. Which is a disadvantage to free trade? A) Countries can raise their standard of living.
B) Consumers have more choices.
C) Cultural understanding and cooperation among countries improves.
D) Foreign markets can threaten domestic markets.
14. Which is NOT true of forming trade alliances? A) Trade alliances stimulate growth.
B) Everyone agrees that making alliances is a positive thing.
C) Making alliances has significantly increased trade between nations.
D) Alliances are made in order to eliminate trade barriers.
countries. Answer Keys:
1. B 12. C
Feedback: International trade is the exchange Feedback: A tariff is a tax placed on an import
of goods and services between countries. in order to increase its price and protect the
domestic market. 2. A
Feedback: If your own country produces a 13. D
good more cheaply, there may be no reason Feedback: If a foreign market produces a
to buy it from another country. product for less, importing the product in a
free trade market could seriously threaten the 3. D
Feedback: The U.S. exports agricultural future of the domestic market.
products more than anything else. 14. B
Feedback: The formation of some trade 4. D
Feedback: The difference in value of exports alliances has been controversial, but has
and imports is measured over time for the proven beneficial. balance to be seen as favorable or 15. C
unfavorable. Feedback: The Dominican Republic is
involved in a separate alliance with the United 5. C
Feedback: Generally, specialization is good States and a number of other countries. for a country's people and their standard of living.
Feedback: The name for the standard
currency in Mexico is the peso.
Feedback: Currency is another word for money. Every country has a different kind of money.
Feedback: Currencies from different
countries are exchanged on the foreign exchange market because their values are always changing.
Feedback: When a country's currency is higher than another's, it has more buying power. The number amount has nothing to do with the rate.
Feedback: Competition between countries forces companies to become more efficient, innovative, and productive.
Feedback: In this global economy, no country could thrive without trading with other