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Exporting and Importing quiz #1

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  • What is a positive balance of trade for a country?
    A positive balance of trade occurs when a country's exports exceed its imports, resulting in a trade surplus.
  • What are two benefits to suppliers of exporting?
    Suppliers benefit from exporting by accessing larger markets and increasing their sales and profits.
  • What is a benefit for U.S. businesses that choose to export?
    U.S. businesses that export can increase their producer surplus and overall profits by selling goods at higher world prices.
  • When does a trade deficit occur?
    A trade deficit occurs when a country's imports exceed its exports.
  • What would decrease the United States' net exports to South Korea?
    An increase in U.S. imports from South Korea would decrease the United States' net exports to South Korea.
  • What is not a huge barrier to exporting for small and medium-sized firms?
    Having access to the internet is not a huge barrier to exporting for small and medium-sized firms.
  • Why do companies decide to enter a foreign market?
    Companies enter foreign markets to access new customers, increase sales, and take advantage of comparative advantage.
  • Which scenario best demonstrates foreign direct investment?
    A U.S. company builds and operates a factory in another country, such as Mexico.
  • What is a risk associated with importing goods?
    Importing goods can expose businesses to supply chain disruptions and changes in foreign regulations.
  • What was one result of the COVID-19 pandemic on international business?
    The COVID-19 pandemic disrupted global supply chains and international trade flows.
  • What is true about the trade imbalance in the United States?
    The United States often runs a trade deficit, importing more than it exports.
  • What will increase the United States trade deficit?
    An increase in imports without a corresponding increase in exports will increase the U.S. trade deficit.
  • What happens when purchasing foreign goods?
    Purchasing foreign goods increases a country's imports.
  • What type of tax is levied by a nation on goods imported into the country?
    A tariff is a tax levied on imported goods.
  • What type of trade barrier completely prohibits imports once a certain limit has been reached?
    A quota is a trade barrier that prohibits imports after a certain limit is reached.
  • What is an advantage of direct exports?
    Direct exports allow businesses to reach new markets and increase sales without establishing foreign operations.
  • What term describes a ban or restriction on trade with another country?
    An embargo is a ban or restriction on trade with another country.
  • How can a nation benefit from effectively exporting its goods?
    A nation benefits from exporting by increasing producer surplus and overall national welfare.
  • What is the difference between global trade and domestic trade?
    Global trade involves exchanging goods and services between countries, while domestic trade occurs within a single country.
  • What is importing?
    Importing is the act of purchasing goods produced in other countries and bringing them into one's own country.
  • How do exports and imports help the economy of a country?
    Exports and imports increase national welfare by allowing countries to specialize and benefit from comparative advantage.
  • What is exporting?
    Exporting is selling domestically produced goods to buyers in other countries.
  • What economic theory would be most likely to make a person oppose taxing imports?
    The theory of comparative advantage opposes taxing imports, as it supports free trade for mutual benefit.
  • How do bananas represent the effects of international trade?
    Bananas, often imported from countries with suitable climates, show how trade allows consumers access to goods not produced domestically.
  • What is the exchange ratio at which two countries trade their products?
    The exchange ratio is called the terms of trade.
  • How would a nation most likely try to limit inexpensive cars from being imported?
    A nation could impose tariffs or quotas to limit the import of inexpensive cars.
  • Climate and natural resources are two predictors of trade patterns. Which country exports coffee?
    Countries like Brazil, with suitable climate and resources, export coffee.
  • Which are examples of devices countries use to exert trade protectionism?
    Countries use tariffs, quotas, and embargoes to exert trade protectionism.
  • What kinds of goods are typically exported by developed countries?
    Developed countries typically export high-value goods such as machinery, technology, and pharmaceuticals.
  • What occurs when one country refuses to buy goods from another country?
    This is called an embargo.
  • Which is an example of how trade barriers can affect you as an American consumer?
    Trade barriers can increase the price of imported goods, making them more expensive for consumers.
  • What is an example of a country that makes use of another nation’s currency?
    Ecuador uses the U.S. dollar as its official currency.
  • Which is an advantage of international trade agreements?
    International trade agreements reduce barriers and promote increased trade between member countries.
  • What is the biggest attraction for businesses considering engaging in international business?
    The biggest attraction is access to larger markets and increased sales opportunities.
  • What is the term for efforts to punish another nation by imposing trade barriers?
    Such efforts are called economic sanctions.
  • What is true of price quotations for international sale?
    Price quotations for international sales are typically based on the world price.
  • What are imports and exports? What powers are denied the states in these matters?
    Imports are goods brought into a country; exports are goods sold abroad. U.S. states cannot regulate international trade; this power is reserved for the federal government.
  • According to economists, international trade among countries _____ .
    According to economists, international trade among countries increases overall national welfare.
  • Is exporting one of the easiest ways to go international?
    Yes, exporting is often considered one of the easiest ways for businesses to enter international markets.