A Marketer May Face Lower Costs by Shipping Unassembled Goods

question 52

Multiple Choice

A marketer may face lower costs by shipping unassembled goods to a free trade zone (FTZ) in an importing country because:

• A) locally produced components may not be used in production.
• B) wages may be lower in the importing country.
• C) FTZs levy higher taxes and surcharges on imported goods.
• D) ocean transportation rates may not be affected by the weight and volume of the components.
• E) duties may be assessed at a higher rate for unassembled goods.

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Definitions:

Net Unilateral Transfers

Financial transfers made by a country without expecting or receiving anything in return, often in the form of aid or remittances.

Balance On Capital Account

A measurement of the financial transactions that cause a change in the ownership of assets between residents and non-residents.

Current Account

A component of a country's balance of payments, relating to the trade balance, net primary income or factor income (earnings on foreign investments minus payments made to foreign investors) and net cash transfers, that has direct impact on currency exchange rates.

Foreign Exchange Market

A market in which currencies of different nations are bought and sold.