50. The _____ is a tax that is assessed as a percentage of the value of the imported product. a. subsidy b. specific tariff c. ad valorem tariff d. export tariff 51. Which of the following is a characteristic of a bond? a. It refers to capital raised by selling corporate shares. b. It is a debt instrument on which dividends are paid. c. It refers to a debt security used to raise capital. d. It is a short-term loan from a commercial bank. 52. Governments impose offensive barriers to ____. a. protect domestic industries b. safeguard the interests of special interest groups c. pursue strategic or public policy objectives such as increasing employment d. promote national security 53. Which of the following is not a feature of a letter of credit? a. It is a contract between the banks of the importer and the exporter that secures the payment from the importer to the exporter upon receipt of an export shipment. b. It is risky from the buyer's side and may cause cash-flow problems. c. It protects the interests of both the buyer and the seller. d. It amounts to a substitution of each bank's name and credit for the name and credit of the buyer and the seller. 54. The International Monetary Fund stands ready to provide financial assistance in the form of loans and grants to support policy programs intended to correct macroeconomic problems. True False 55. Market forces and free trade are encouraged in totalitarian countries. True False 56. Which of the following statements is TRUE of trade surplus? a. It is a negative balance of trade. b. It occurs when a nation's imports are greater than its exports. c. It occurs when a nation's exports are greater than its imports. d. It occurs when there is a net outflow of domestic currency to foreign markets. 57. Outsourcing selected value-adding activities abroad can also be called: a. Internalizing b. Captive sourcing c. Offshoring d. Contract manufacturing 58. Which of the following is the underlying principle of socialism? a. Collective welfare of people outweighs the welfare of the individual. b. The state should protect itself from individuals and group interests. c. Capital and wealth should be vested in the hands of few and used primarily as a means of profit. d. The welfare of individuals far outweighs the welfare of society. 59. Which of the following is an example of a "buy-back agreement"? a. Pharmland company sells its pharmaceutical equipment to the government of the United Kingdom and receives half of the payment in cash and the other half in British merchandise. b. The Turkish company Alesta Gida signs a contract to sell pasta to Ukroliya company in Ukraine, on condition that a second contract will be signed in which Alesta Gida agrees to purchase sunflower oil from Ukroliya. c. The French company Belle France buys a machine for biscuit production from the Chinese company Xindu. Xindu is paid by receiving thousands of biscuit boxes from Belle France, which it then sells in world markets. d. Saudi Arabia trades its oil for airplanes and military weapons from the United States. 60. If the currency of Country A is depreciating against a currency of Country B, exports from Country A to Country B should decrease. True False 61. Which of the following statements is TRUE about currencies? a. Convertible currencies can be readily exchanged for other currencies. b. Hard currencies are highly unstable currencies. c. The British pound is an example of a nonconvertible currency. d. Currencies that are used for international transactions are called nonconvertible. 62. Which of the following is most likely to occur if a U.S. firm outsources some of its business operations to a Japanese company, and the Japanese yen strengthens against the dollar? a. The probability of intellectual property laws being enforced would significantly decrease in Japan. b. The U.S company will experience additional cost savings in using the services of the Japanese company. c. Outsourcing business operations to Japan would become less expensive. d. The U.S. company will experience higher costs in using the services of the Japanese company. 63. The purpose of the Bretton Woods Agreement was to govern the exchange rates of major international currencies. True False 64. The European Union is the world's most advanced and largest regional economic bloc. True False 65. Which of the following is a benefit of global sourcing? a. Minimal reliance on suppliers b. Access to qualified personnel abroad c. Elimination of competitors d. Bridging of the rich-poor divide 66. Which of the following, originally known as the International Bank for Reconstruction and Development, was founded to fund construction of Japan and Europe after World War II? a. The World Bank b. The International Monetary Fund c. Bank for International Settlements d. The Central Bank 67. Which of the following statements is most likely to be TRUE regarding a currency's price if the supply of the currency increases? a. The price of the currency decreases. b. The price of the currency increases. c. The price of the currency fluctuates randomly. d. The price of the currency remains constant. 68. Common law is more flexible than other legal systems. True False 69. Emerging markets are home to high-wage, high-quality labor for manufacturing and assembly operations. True False 70. Which of the following is an example of export control? a. The United States generally blocks exports of nuclear and military technology to countries it deems state sponsors of terrorism, such as Iran and Syria. b. France does not allow significant foreign ownership of its TV stations because of concerns about foreign influence on French culture. c. India's tariffs are relatively high, especially in agriculture, where the average rate is 33.5%. d. The U.S. government imposed duties of about $50 per ton on the import of Mexican cement after U.S. cement makers lobbied Congress. 71. Which of the following is an example of a currency risk? a. Purchasing products from a supplier in a country with depreciating currency b. Purchasing products from a supplier in a country whose currency is appreciating against yours c. Selling products to a customer in a country that has the same currency value as the exporter's d. Selling products to a customer in a country with appreciating currency 72. Which of the following is a characteristic of the fixed exchange rate system? a. The value of currency is set relative to the value of another. b. The rates are based on supply and demand forces. c. It is utilized by most advanced economies. d. It allows for monetary policy flexibility