business 3

protectionism

national policies designed to restrict international trade, usually with the goal of protecting domestic businesses

absolute advantage

the benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources

foreign outsourcing

also contract manufacturing; contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production

strategic alliance

an agreement between two or more firms to jointly pursue a specific opportunity without actually merging their businesses. typically involves less form, less encompassing agreements than partnerships

world bank

an international cooperative of 188 member countries, working together to reduce poverty in the developing world

international monetary fund (IMF)

an international organization of 1889 member nations that promotes international economic cooperation and stable growth

importing

buying products domestically that have been produced or grown in foreign nations

north American free trade agreement (NAFTA)

the treaty among the US, Mexico, and Canada that eliminated trade barriers and investment restrictions over a fifteen year period starting in 1994

free trade

the unrestricted movement of goods and services across international borders

European Union (EU)

the world's largest common market composed on 28 European nations

joint ventures

when two or more companies join forces sharing resources, risks, and profits, but not actually merging companies to pursue specific opportunities

partnership

a voluntary agreement under which two or more people act as co-owners of a business for profit

balance of payments deficit

shortfall that occurs when more money flows out of a nation than into a nation

trade deficit

shortfall that occurs when the total value of a nation's imports is higher than the total value of its exports

benefits of international trade

access to factors of production, reduced risk, inflow of innovation

Henry and John decide to start a business venture together. They sign an agreement stating that the firm is owned by them and that all profits will be split equally and both are equally liable to the losses of the firm. This is an example of a _____. a. strategic alliance b. cooperative c. partnership d. joint venture

c

Which of the following reasons would demand the creation of trade restrictions? a. Increasing choices for consumers b. Reducing prices of goods c. Protecting national security interests d. Easing tension between nations

c

The access to factors of production due to international trade: a. offers companies an invaluable source of new ideas. b. stops economic meltdowns from spreading from one country to another. c. evens out some of the resource imbalances among nations. d. increases the dependence of international firms on a single economy.

c

The countries that have formed the largest trading bloc in the world are: a. Russia, Italy, and France. b. England, France, and Germany. c. The United States, Mexico, and Canada. d. The United States, Germany, and Russia.

c

The differences in the quality of infrastructure of different nations is a(n) _____. a. legal difference b. sociocultural difference c. economic difference d. political difference

c

A(n) _____ refers to the chance of giving up the second-best choice when making a decision. a. opportunity cost b. explicit cost c. historical cost d. prospective cost

a

Nontariff barriers tend to be fairly effective because: a. complaints about them can be hard to prove. b. they are generally more ethical. c. they can be modified often, with ease. d. the tariffs are expensive.

a

balance of trade

a basic measure of the difference in value between a nation's exports and imports, including both goods and services

embargo

a complete ban on international trade of a certain item, or a total halt in trade with a particular nation

infrastructure

a country's physical facilities that support economic activity

common market

a group of countries that have eliminated tariffs and harmonized trading rules to facilitate the free flow of goods among the member nations

trading bloc

a group of countries that have reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations

balance of payments

a measure of the total flow of money into or out of a country

exchange rate

a measurement of the value of one nation's currency relative to the currency of other nations

world trade organization (WTO)

a permanent global institution to promote international trade and to settle international trade disputes

exporting

selling products in foreign nations that have been produced or grown domestically

foreign franchising

a specialized type of foreign licensing in which a firm expands by offering businesses in other countries the right to produce and market its products according to specific operating requirements

general agreement on tariffs and trade (GATT)

an international trade treaty designed to encourage worldwide trade among its members

foreign licensing

authority granted by a domestic firm to a foreign firm for the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area

A balance of payments deficit is the shortfall that occurs when: a. a foreign currency obtains a greater value than a nation's currency. b. more money flows out of a nation than into that nation. c. the total debt of a company exceeds its incomes. d. the manufacturing cost of a product exceeds its buying cost.

b

A country adopts a law according to which its imports require red-tape-intensive licenses. In this scenario, which of the following types of trade restrictions has the country adopted? a. Tariff b. Nontariff barrier c. Quota d. Embargo

b

In western countries, eye contact is considered a sign of honesty. On the other hand, in some countries in Africa and Asia, eye contact is considered rude. This is an example of: a. political differences. b. sociocultural differences. c. economic differences

b

Which of the following is true of the debt relief program by the International Monetary Fund? a. It extended the deadline for the debts to be cleared by poor countries. b. It gave 100 percent debt forgiveness to a few poor countries. c. It provided monetary help at zero percent interest to poor countries. d. It helped the countries with huge debts by instructing the other member nations to invest in them.

b

Which of the following market development options represents the deepest level of global involvement and provides the highest amount of control over a business? a. Exporting b. Direct investment c. Franchising d. Foreign licensing

b

_____ is the overage that occurs when the total value of a nation's exports is higher than the total value of its imports. a. Consumer surplus b. Trade surplus c. Monopoly profit d. Price elasticity

b

_____ is the selling of a product that has been produced or grown domestically in a foreign nation. a. Importing b. Exporting c. Outsourcing d. Franchising

b

_____ refers to international trade that involves the barter of products for products rather than for currency. a. Absolute trade b. Countertrade c. Wholesale d. Comparative trade

b

As access to technology skyrockets and barriers to trade continue to fall, _____. a. the long-term potential for foreign firms has declined b. global economic crises are occurring more often c. individual economies have become more interdependent d. the global economic competition has declined

c

Helix Corp., a computer manufacturing firm, had its first manufacturing plant in Detroit. It built another manufacturing plant in Paris even though it required high capital. Which of the following market development options did Helix Corp. adopt? a. Foreign franchising b. Open market operations c. Foreign direct investment d. Foreign licensing

c

A _____ refers to a group of countries that have reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations. a. continental union b. joint venture c. strategic alliance d. trading bloc

d

A difference between foreign licensing and foreign franchising is that: a. a licensee assumes the identity of the licensor, whereas a franchisee does not assume the identity of the franchisor. b. a franchisee pays a start-up fee to the franchisor, whereas the licensee does not pay anything to the licensor. c. a licensee pays a start-up fee to the licensor, whereas a franchisee does not pay anything to the franchisor. d. a franchisee assumes the identity of the franchisor, whereas a licensee does not assume the identity of the licensor.

d

An embargo is: a. a limitation on the amount of a specific product that may be imported from certain countries during a given time period. b. a tax levied on certain imports. c. a limitation on the amount of specific products that one nation exports to another nation. d. a complete ban on trade of a certain item or a halt in trade with a particular nation.

d

Balance of payments is a measure of: a. the difference between a nation's exports and imports. b. the total services provided by a country to other countries. c. the difference between trade surplus and trade deficit. d. the total flow of money into or out of a country.

d

Consider an exchange rate situation wherein 1 Euro equals $0.60. Which of the following is true in this scenario? a. The operating cost for a European firm in the U.S. is lower. b. U.S. companies can manufacture products in Europe and import them for cheap. c. U.S. products are less expensive in the European market. d. A U.S. traveler can buy more goods and services in Europe.

d

The government of Brazil learns that low-priced electronic goods from Mexico are affecting the domestic electronics companies. They decide to increase the prices of the Mexican goods. Which of the following trade restrictions will help the Brazilian government? a. Embargo b. Quota c. Voluntary export restraint d. Tariff

d

Which of the following best describes a comparative advantage? a. It is the benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources. b. It is the benefit a country has in a given industry when the amount of tax levied on its products is lower than other nations producing the same product. c. It is the benefit a country has in a given industry when the amount of the products it exports exceeds the amount of alternate products it imports. d. It is the benefit a country has in a given industry when the products are manufactured at a lower opportunity cost than other countries.

d

Which of the following is true about foreign licensing? a. It results in a transfer of ownership to the licensee. b. The licensor provides the required finance to the licensee. c. The licensee assumes the identity of the licensor. d. The licensee pays a fee to the licensor.

d

_____ are limitations on the amount of specific products that may be imported from certain countries during a given time period. a. Tariffs b. Trade blocs c. Embargoes d. Quotas

d

_____ is also called contract manufacturing. a. Foreign direct investment b. Foreign franchising c. Foreign licensing d. Foreign outsourcing

d

_____ is the payment of money for favorable treatment. a. Corruption b. Scamming c. Piracy d. Bribery

d

_____ is the unrestricted movement of goods and services across international borders. a. Trade alliance b. Direct trade c. Counter trade d. Free trade

d

sociocultural differences

differences among cultures in language, attitudes, and values

countertrade

international trade that involves the barter of products for products rather than for currency

Which of the following functions is performed by the World Trade Organization? a. It monitors the provisions of the General Agreement on Tariffs and Trade (GATT) agreements. b. It settles international political disputes between countries. c. It provides technological advice to governments. d. It promotes the elevation of trade barriers among the member countries of General Agreement on Tariffs and Trade (GATT).

its not b, im guessing a or d

quotas

limitations on the amount of specific products that may be imported from certain countries during a given time period

voluntary export restraints (VER)

limitations on the amount of specific products that one nation will export to another nation

direct investment

or foreign direct investment; when firms either acquire foreign firms or develop new facilities from the group up in foreign countries

balance of payments surplus

overage that occurs when more money flows into a nation than out of that nation

trade surplus

overage that occurs when the total value of a nation's exports is higher than the total value of its imports

tariffs

taxes levied against imports

comparative advantage

the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries

opportunity cost

the opportunity of giving up the second best choice when making a decision