Author Question: A foreign trade zone a. always increases the prices for goods sold in the importing country. b. ... (Read 111 times)

vicky · **on:** Jun 29, 2018

A foreign trade zone
a. always increases the prices for goods sold in the importing country.
b. raises the insurance expense for a company.
c. may promote a favorable country-of-origin effect.
d. typically creates entry barriers for foreign firms.

Question 2

Which type of countertrade is the only type of exchange that does not involve monetary exchange?
a. Barter c. Switch Trading
b. Clearing Agreements d. Counterpurchase

karlss · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C
Foreign trade zones are a way for foreign firms to avoid some entry barriers. This may result in lower costs of good which may be passed on as lower prices for goods sold in the importing country. Because foreign trade zones are very secure, insurance expenses are typically lower. Because products may be assembled in within the foreign trade zone, a favorable country-of-origin effect may be induced.

Answer to Question 2

A
Barter can be traced for centuries as a form of exchange. It involves a simple, non-monetized exchange of goods and/or services between two parties. While no money is involved in the exchange, the parties calculate the value of the goods in a particular currency and attempt to achieve value parity for the exchanged goods.