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21. Free trade agreements result in trade creation and diversion as barriers drop for member countries but remain higher for nonmembers.

TRUE

FALSE

22. Offshoring refers to the transferring of production abroad.

TRUE

FALSE

23. Trade diversion occurs when the supply of products shifts from countries that are members of an economic bloc to those that are nonmembers.

TRUE

FALSE

24. Cultural change may take place as a result of choice or imposition.

TRUE

FALSE

25. The born-global perspective holds that companies step straight onto the world stage, engaging international trade from inception.

TRUE

FALSE

26. International business is an ongoing process that deepens and broadens interdependence among countries.

TRUE

FALSE

27. Isolation from other groups, especially because of language, tends to destabilize culture.

TRUE

FALSE

28. Managers devise strategies to engage international markets in ways that that fortify their companies' competitiveness, boost their profitability, and sustain their growth.

TRUE

FALSE

29. A company can engage in international business only through exporting and importing merchandise and services.

TRUE

FALSE

30. Culture includes norms based on learned attitudes, values, and beliefs.

TRUE

FALSE

31. Trade controls that indirectly affect quantity and directly affect price include quotas, VERs, "buy local" legislation, arbitrary standards, licensing arrangements, foreign-exchange controls, administrative delays, and reciprocal requirements.

TRUE

FALSE

32. Despite the documented benefits of free trade, no country permits an unregulated flow of goods and services across its borders.

TRUE

FALSE

33. A mixed economy endorses the doctrine of socialism, its principle of the partly visible hand of an activist government that commands and controls some factors of production, and the goal of regulating economic freedom.

TRUE

FALSE

34. Managers use several indicators to assess the performance and potential of an economy, including inflation, unemployment, debt, income distribution, poverty, and the balance of payments.

TRUE

FALSE

35. Intellectual property is the creative ideas, innovative expertise, or tangible insights that give an individual, company, or country a competitive advantage.

TRUE

FALSE

36. The infant-industry argument for protection holds that governmental prevention of import competition is necessary to help certain industries evolve from high-cost to low-cost production.

TRUE

FALSE

37. Once protection is eliminated among member countries, trade creation disallows MNEs to specialize and trade based on comparative advantage.

TRUE

FALSE

38. Trade controls to improve economic relations with other countries include objectives of improving the balance of payments, raising prices to foreign consumers, gaining comparable access to foreign markets, preventing foreign monopoly prices, assuring that domestic consumers get low prices, and shifting revenue from foreign producers to domestic tax receipts.

TRUE

FALSE

39. Economically free countries tend to have lower per capita income, standards of living, and social stability than do less-free or repressed countries.

TRUE

FALSE

40. The World Trade Organization (WTO) replaced GATT in 1995 as a continuing means of trade negotiations that aspires to foster the principle of trade without discrimination and to provide a better means of mediating trade disputes and of enforcing agreements.

TRUE

FALSE