Chapter 05 - test bank PDF

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Business Essentials, Canadian Edition, 9e (Ebert) Chapter 5 The Global Context of Business5 Multiple Choice Questions Imports are A) services that are created in Canada and sold abroad. B) products that are made or grown abroad and sold in Canada; services cannot be imported. C) goods and services t...

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Business Essentials, Canadian Edition, 9e (Ebert) Chapter 5 The Global Context of Business 5.1 Multiple Choice Questions 1) Imports are A) services that are created in Canada and sold abroad. B) products that are made or grown abroad and sold in Canada; services cannot be imported. C) goods and services that are made or grown in Canada and sold abroad. D) products that are made or grown in Canada and sold abroad; services cannot be imported. E) goods and services that are made or grown abroad and sold in Canada. Answer: E Diff: 2 Type: MC Page Ref: 88 Skill: Comprehension Objective: 5.1 2) Exports are A) services that are created in Canada and sold abroad. B) goods and services that are made or grown abroad and sold in Canada. C) products that are made or grown in Canada and sold abroad; services cannot be exported. D) goods and services that are made or grown in Canada and sold abroad. E) products that are made or grown abroad and sold in Canada; services cannot be exported. Answer: D Diff: 2 Type: MC Page Ref: 88 Skill: Comprehension Objective: 5.1 3) Susie lives in Vancouver and has noticed that there seems to be a rising interest in goods from the Chinese culture. To take advantage of this she should explore A) subsidies. B) exporting. C) a trade deficit. D) foreign exchange. E) importing. Answer: E Diff: 1 Type: MC Page Ref: 88 Skill: Comprehension Objective: 5.1

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4) Which of the following constitutes the best evidence for globalization? A) Diamonds that are mined in Country X are sold on the diamond market in Country Y, and the money is used to fund a rebel group trying to overthrow the government in Country X. B) A flood in country X causes factories to shut down temporarily, and they cannot deliver computer chips to foreign buyers. Company Y (in another country) has to reduce its output, and it also raises the price of its products. C) Farmers in Country X lose most of their wheat crops because of a drought. The price of wheat triples and the government of country X reimburses farmers for some of their losses. D) Country X has almost exhausted all its available natural energy sources. The government has been investing in alternative energy research for many years and has developed an efficient synthetic energy source. E) Country X has raised the tax on gasoline and, as a result, more of its citizens are taking public transportation and cutting back on car travel. Answer: B Diff: 3 Type: MC Page Ref: 88 Skill: Analysis Objective: 5.1 5) Farmer Sal grows strawberries. The berries are shipped to a local manufacturing plant where they are made into jam, labeled "Country Recipe Strawberry Jam," and boxed for shipment overseas. This product of Ontario is also referred to as a(n) A) export. B) import. C) trade product. D) absolute product. E) competitive advantage. Answer: A Diff: 2 Type: MC Page Ref: 88 Skill: Comprehension Objective: 5.1 6) Which of the following is an example of importing a service? A) A Canadian purchases a ticket to see a performance by a Spanish singer. B) A Toronto taxi driver takes an American from Pearson airport to a downtown Toronto hotel. C) A Canadian engineer designs a bridge to be built in Australia. D) An accountant does financial statements for a Mexican company. E) A Canadian lawyer goes to California to work on a litigation case. Answer: A Diff: 3 Type: MC Page Ref: 88 Skill: Comprehension Objective: 5.1

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7) The annual volume of world trade is about A) $100 billion. B) $3 trillion. C) $875 billion. D) $17 trillion. E) $8 trillion. Answer: D Diff: 2 Type: MC Page Ref: 88 Skill: Knowledge Objective: 5.1 8) According to the World Bank, high income countries include all of the following except A) Japan. B) the United States. C) Canada. D) South Korea. E) China. Answer: E Diff: 2 Type: MC Page Ref: 89 Skill: Knowledge Objective: 5.1 9) According to the World Bank, ________ is considered an upper middle-income country. A) Singapore B) Hong Kong C) South Korea D) Argentina E) United Arab Emirates Answer: D Diff: 3 Type: MC Page Ref: 89 Skill: Knowledge Objective: 5.1 10) According to the World Bank, lower middle-income countries are defined as A) those with per capita income between US$4126 and US$12 366. B) those with per capita income between US$5210 and US$8210. C) those with per capita income between US$1006 and US$21 345. D) those with per capita income between US$3956 and US$12 235. E) those with per capita income between US$1006 and US$3955. Answer: E Diff: 3 Type: MC Page Ref: 89 Skill: Knowledge Objective: 5.1

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11) According to the World Bank, ________ are high-income countries, while ________ are upper middle-income countries. A) Australia, Japan, and Israel; China, Argentina, and South Africa B) China, Colombia, and Lebanon; Armenia, Guatemala, and Vietnam C) Argentina and South Africa; Colombia, Lebanon, and Turkey D) Colombia, Lebanon, and Turkey; Australia, Japan, South Korea; E) Canada, the United States, and most countries in Europe; Kuwait, the United Arab Emirates and Oman. Answer: A Diff: 3 Type: MC Page Ref: 89 Skill: Knowledge Objective: 5.1 12) The major reasons why Mexico has recently become a major manufacturing centre are A) cheap labour and low transportation costs. B) elimination of quotas and tariffs and low tax rates. C) low tax rates and cheap labour. D) cheap labour and elimination of quotas and tariffs. E) low transportation costs and low tax rates. Answer: A Diff: 2 Type: MC Page Ref: 90 Skill: Comprehension Objective: 5.1 13) The country that has economically dominated Western Europe is A) Germany. B) Russia. C) Finland. D) Poland. E) Sweden Answer: A Diff: 2 Type: MC Page Ref: 90 Skill: Knowledge Objective: 5.1 14) Which areas represent the three major market places for international business? A) North America, South America, and Asia-Pacific B) North America, Europe, and Asia-Pacific C) South America, Africa, and Asia-Pacific D) South America, Europe, and Africa E) Asia-Pacific, Europe, and Africa Answer: B Diff: 2 Type: MC Page Ref: 90 Skill: Knowledge Objective: 5.1

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15) With regard to the BRICS nations, it is correct to say that A) they all emphasize the export of raw materials. B) they all have a low level of industrialization at the moment but are progressing rapidly. C) Russia is the strongest in terms of manufacturing. D) Brazil is strong in agriculture and commodities. E) All of these statements are correct. Answer: D Diff: 3 Type: MC Page Ref: 90 Skill: Comprehension Objective: 5.2 16) Which of the following is correct with respect to the BRICS countries? A) Russia is the dominant country in the group. B) There is very little coordination between the BRICS countries, and they do not act like a unit. C) All of the BRICS countries put a heavy emphasis on exporting commodities. D) India is a leading service provider. E) Brazil is the most corrupt of the BRICS nations. Answer: D Diff: 2 Type: MC Page Ref: 90 Skill: Comprehension Objective: 5.2 17) The BRICS nations are a group of five powerful emerging markets in global trade; they include: Brazil, Russia, India, China and ________. A) Singapore B) South Korea C) Sri Lanka D) South Africa E) Saudi Arabia Answer: D Diff: 2 Type: MC Page Ref: 90 Skill: Comprehension Objective: 5.2 18) The absolute advantage form of competitive advantage means A) that a country does not belong to any free trade agreements. B) that a country can produce everything better or more cheaply than any other country. C) that a country can produce some products better or more cheaply than it can others. D) that a country is the sole supplier of a product or service. E) that a country can produce something better or more cheaply than any other country. Answer: E Diff: 2 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3

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19) Country Z can produce pig iron (an intermediate product in the iron industry which is also called crude iron) more efficiently than any other product. Which type of advantage in pig iron does Country Z have? A) Absolute advantage B) National competitive advantage C) Comparative advantage D) Trade balance advantage E) Resource advantage Answer: C Diff: 2 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3 20) Country Z can produce pig iron (an intermediate product in the iron industry which is also called crude iron) more efficiently than any other country. Which type of advantage in pig iron does Country Z have? A) Absolute advantage B) National competitive advantage C) Comparative advantage D) Trade balance advantage E) Resource advantage Answer: A Diff: 2 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3 21) Which of the following is correct with respect to absolute and comparative advantage? A) Brazilian coffee beans are a good example of comparative advantage. B) Absolute advantage exists when a country can produce something more cheaply and/or of higher quality than the next three most efficient countries. C) A country has a comparative advantage when it can produce a product more efficiently or better than most (but not all) other countries. D) All countries have a comparative advantage in some products. E) All of these are correct. Answer: D Diff: 3 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3

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22) The comparative advantage form of competitive advantage means A) that a country does not belong to any free trade agreements. B) that a country is the sole supplier of a product or service. C) that a country can produce everything better or more cheaply than any other country. D) that a country can produce some products better or more cheaply than it can other products. E) that a country can produce something better or more cheaply than any other country. Answer: D Diff: 2 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3 23) Canada has a(n) ________ in farming due to its fertile land, while South Korea has a(n) ________ in electronics manufacturing. A) absolute advantage; absolute advantage B) absolute advantage; comparative advantage C) comparative advantage: absolute advantage D) comparative advantage; comparative advantage E) none of these Answer: D Diff: 2 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3 24) Which of the following best explains why a nation like Canada or Japan would export a particular product or service? A) That nation has multinational companies. B) That nation has an absolute advantage. C) That nation has a positive balance of trade. D) That nation has a negative balance of trade. E) All of these Answer: B Diff: 1 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3 25) The difference between absolute and comparative advantages is that absolute advantage is relative to ________, while comparative advantage is relative to ________. A) other nations; activity inside the country B) similar industries; dissimilar industries C) similar products; dissimilar products D) activity inside the country; other nations E) dissimilar products; similar products Answer: A Diff: 2 Type: MC Page Ref: 92 Skill: Comprehension Objective: 5.3 7 Copyright © 2020 Pearson Canada Inc.

26) According to the World Economic Forum's global competitiveness ranking, the top three countries in 2018 were A) China, India, and Ireland. B) Switzerland, Singapore, and the United States. C) the United States, Canada, and Australia. D) Ireland, Iceland, and Sweden. E) China, Singapore, and Japan. Answer: B Diff: 3 Type: MC Page Ref: 93 Skill: Knowledge Objective: 5.3 27) In the World Economic Forum's 2018 global competitiveness ranking, Canada ranked A) first. B) second. C) fourth. D) sixth. E) fifteenth. Answer: E Diff: 3 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 28) The theory of national competitive advantage comes from all of the following conditions except A) demand conditions. B) supply conditions. C) strategies, structures, and rivalries. D) related and supporting industries. E) factor conditions. Answer: B Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 29) All of the following are included in the balance of payments except A) money paid for imports. B) money paid by domestic corporations for taxes. C) money spent by tourists. D) money spent on foreign aid. E) money paid for exports. Answer: B Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3

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30) As the value of a country's currency rises, A) domestic companies will have a harder time selling their products in foreign markets. B) foreign companies will find it harder to sell their products in local markets. C) imports and exports will remain relatively constant. D) domestic companies will shift from the production of consumer goods to the production of industrial goods. E) all of these will happen. Answer: A Diff: 3 Type: MC Page Ref: 94 Skill: Comprehension Objective: 5.3 31) As the value of a country's currency falls, its balance of trade should A) decline. B) remain the same. C) improve. D) either increase or decrease. E) none of these. Answer: C Diff: 3 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 32) A nation's balance of trade is A) the relative difference between money flowing into and out of a country. B) the difference in value between a country's total exports and its total imports. C) the relative difference in value between a country's total exports and its total imports. D) the difference between money flowing into and out of a country. E) the difference in exchange rates between two countries. Answer: B Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 33) Which of the following best describes a positive trade balance? A) The economic condition in which a country's exports exceed its imports B) The economic condition in which a country's imports exceed its exports C) The economic condition in which a country's inflow of money exceeds its outflow D) The economic condition in which a country's outflow of money exceeds its inflow E) The economic condition in which a country's natural resources exceed its human resources Answer: A Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3

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34) Which of the following is correct with regard to Canada's balance of trade? A) Canada had a trade surplus of $23.9 billion in 2017. B) The United Kingdom is Canada's largest trading partner. C) Canada's generally favourable trade balance over the years has occurred because our unfavourable balance of trade with the United States is offset by our favourable balance of trade with most other countries. D) Canada has generally had an unfavourable balance of trade. E) None of these. Answer: A Diff: 3 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 35) The balance of trade that Canada has experienced has been A) evenly split between favourable and unfavourable with about a seven-year cycle for the past fifty years. B) unfavourable since Confederation. C) favourable for most of the last four decades but in the past few years significant deficits and smaller surpluses have been recorded. D) unfavourable for the last 30 years. E) favourable since Confederation. Answer: C Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 36) The Congo imported $150 billion worth of goods and services while exporting $175 billion to other countries. It has a A) negative balance of payments. B) comparative advantage. C) positive balance of payments. D) trade surplus. E) trade deficit. Answer: D Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3

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37) If Japan's total exports are $700 billion and total imports are $650 billion, then this is called A) a trade deficit. B) a positive balance of trade. C) an absolute advantage. D) a negative balance of payments. E) negative capital mobility. Answer: B Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 38) The balance of payments refers to A) the relative difference between money flowing into and out of a country. B) the difference in value between a country's total exports and its total imports. C) the relative difference in value between a country's total exports and its total imports. D) the difference between money flowing into and out of a country as a result of trade and other transactions. E) the difference in exchange rates between two countries. Answer: D Diff: 2 Type: MC Page Ref: 93-94 Skill: Comprehension Objective: 5.3 39) If there is a favourable balance of payments, it means that A) a country exports manufactured goods and imports raw materials. B) a country imports more than it exports for each country with which it trades. C) a country exports more than it imports for each country with which it trades. D) the country has more money flowing into it than out as a result of trade and other transactions. E) a country exports raw materials and imports manufactured goods. Answer: D Diff: 3 Type: MC Page Ref: 93 Skill: Application Objective: 5.3 40) If the Canadian dollar becomes weak compared to the Japanese yen, which of the following is likely to occur? A) Demand for goods would be unaffected by currency changes. B) Japanese products would become cheaper in Canada. C) It would take fewer dollars to buy the same number of yen. D) Canadian products would become less expensive in Japan. E) Japanese demand for goods from Canada would fall. Answer: D Diff: 3 Type: MC Page Ref: 94 Skill: Comprehension Objective: 5.3 11 Copyright © 2020 Pearson Canada Inc.

41) Which of the following is correct with regard to the balance of trade and the balance of payments? A) If a country has a favourable balance of trade, it will also have a favourable balance of payments. B) The balance of payments is computed by dividing the value of a country's currency by the number of currency transactions that took place in the previous year. C) A country that imports more than it exports has a favourable balance of trade. D) Countries used to strive to have a favourable balance of trade, but governments no longer worry about that issue because of globalization. E) Canada has generally had a favourable balance of trade during the last few decades. Answer: E Diff: 3 Type: MC Page Ref: 94 Skill: Comprehension Objective: 5.3 42) Which of the following items is least likely to impact a nation's balance of payments? A) Gains or losses in exchanges of international currencies B) An increase in the GDP C) Money spent by tourists D) Trade deficits or surpluses E) Foreign aid programs Answer: B Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 43) The balance of payments that Canada has experienced has been A) unfavourable for many years. B) favourable since Confederation. C) changing between favourable and unfavourable with about a seven-year cycle. D) favourable for the last 30 years. E) unfavourable since Confederation. Answer: A Diff: 2 Type: MC Page Ref: 93 Skill: Comprehension Objective: 5.3 44) When the value of the Canadian dollar drops, A) both our imports and our exports become more expensive. B) our imports become cheaper and our exports become more expensive. C) our imports become more expensive and our exports become cheaper. D) both our imports and our exports become cheaper. E) there is no change in the price of our imports and our exports. Answer: C Diff: 3 Type: MC Page Ref: 94 Skill: Comprehension Objective: 5.3 12 Copyright © 2020 Pearson Canada Inc.

45) When the value of the Canadian dollar rises, A) both our imports and our exports become more expensive. B) there is no change in the price of our imports and our exports. C) our imports become more expensive and our exports become cheaper. D) our imports become cheaper and our exports become more expensive. E) both our imports and our exports become cheaper. Answer: D Diff: 3 Type: MC Page Ref: 94 Skill: Comprehension Objective: 5.3 46) What is an expected result when a nation devalues its currency? A) Export sales of its products decline. B) The nu...