IB Final Exam 3-4
The role of the World Bank is
to provide low interest loans to developing countries
main argument about NAFTA
transfer of many US jobs to Mexico
NAFTA has harmed:
unskilled labor in the U.S.
NAFTA DOES NOT favor
unskilled labor in the US
negative aspect of the NAFTA deal
when a company from US or Canada moves to Mexico, the workers are fired
The free trade area known as MERCOSUR was originally composed by the following four countries:
Argentina, Brazil, Paraguay, and Uruguay
Which of these can be classified as an economic union?
EU
The integration of economic policies, in addition to the free movement of goods, services, and factors of production (capital and labor) across all borders of the members, is known as
Economic union
The most sophisticated and advanced example of regional integration occurring today is in_________.
Europe
Which one of the following is an attribute of a common market
Factors of production (capital and labor) are allowed to move freely between member nations
NAFTA can best be described as a(n)
Free Trade Area
Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated?
Free trade area, customs union, common market, economic union, and full political union
Local content mens labor has to be added in _________, and there are some companies that tried to cheat that
Mexico
Please choose the best statement that characterizes the issue of labor mobility in the EU
Most of the old members do not allow labor mobility from the eastern Europe members
_______ is not a benefit of globalization.
Slowing economic growth
Which of the following EU countries opted out of the transition to the euro?
Sweden
In a free trade area
barriers to the trade of goods and services among member nations are removed
economic union=
common market + same economic policies
3rd level of economic integration
common market, meaning customs union + mobility of capital and labor; EX: CARICOM
in terms of filling top positions (general managers and/or directors) of affiliates abroad, global companies are currently employing the following philosophy:
currently the polycentric approach is considered the best one for director's level
A ______ eliminates trade barriers between member countries and adopts a common external trade policy.
customs union
The European Union is currently a(n) _________.
economic union
which of the following best describes ISO 9000
firms must be certified ISO
In a theoretically ideal ____, no discriminatory tariffs, quotas are allowed to distort trade between member nations. Each country, however, is allowed to determine its own trade policies with regard to nonmembers.
free trade area
which of the following choices accurately depicts the levels of economic integration from least integrated to most integrated?
free trade area, customs union, common market, and economic union
types of trade agreements
free trade area, customs union, common market, economic union
A common market includes all of the following characteristics except
full economic integration
NAFTA products exported from Mexico to US
have to observe the local content requirements
trade creation
high cost domestic producer -> low cost trade partner; BENEFIT: the trade increases - instead of producing expensive products at home, buy them cheaper from your trade partner
economic integration demand: market size increase
larger production volumes drive to economy of scale: - lower production costs and lower prices; more countries have greater bargaining power in importing - lower import prices
two important objectives of manufacturing and materials management are to simultaneously
lower costs and increase quality
One likely short-term effect of NAFTA will be that many U.S. and Canadian firms will move some production to Mexico to take advantage of
lower labor costs
benefits of globalization are
lower prices for goods, raises the incomes of consumers, and helps create jobs in all the countries that choose to participate
for participating countries, a drawback of a single currency in Europe is that
national authorities will lose control over monetary policy.
trade diversion
new trade is not generated - trade is just switched from old business partners to trade agreement members; low cost (FOB) external supplier -> high cost (FOB) trade partner; cost, drawback; trade is just diverted (sometimes it decreases)
free trade area
no tariffs, no quotas, independent policies outside
customs union
no tariffs, no quotas, same trade policies outside
Euro
only 19 countries use ______
NAFTA formal agreement DOES
protect intellectual property rights of members
According to the textbook, by entering into ______, groups of countries aim to reduce trade barriers more rapidly than can be achieved under the WTO.
regional agreements
An agreement between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other is referred to as
regional economic union
Origin of regional economic integration
smaller groups, common objectives, similar cultures; easier agreements
suppose that a U.S. bank has agreed with a British bank to exchange dollars for pounds immediately. This is an example of a:
spot exchange
regional agreements were regarding
tariffs, quotas, mobility of capital and labor, economic issues, and political issues
FTAA is a trade agreement_________.
that has been proposed to include North and South America
All of the following are true of the European Union except_________.
the bloc is a common market
European union composition
- 15 founding fathers - 13 newcomers = 28 countries in EU - Northern Europe - Western Europe - Southern Europe - Mostly comes from former communist block
Economic integration effects
- Trade creation - Trade diversion - Economies of scale - Increased competition - Brain drain/capital evasion
Pre-requisites for acceptance into the EU
- started in late 90s - newcomers were accepted 10-15 years later - tough pre-requisites - they don't want barters, countries that have high debt or inflation
A global firm should adopt a centralization strategy towards magnification facilities' location when 1) trade barriers, 2) exchange rates 3) transportation costs are 1).....2).......3)....... respectively
1) low 2) stable 3) low
currently how many countries are members of the European Union
28
regional economic integration: between 1990-94
33 regional agreements
regional economic integration: between 1995-98
43 regional agreements
Which is correct about the euro
A country has to be a member of the EMU to be able to adopt the euro as a currency
In 1969 Bolivia, Chile, Ecuador, Columbia, and Peru decided to form a trade agreement, which was called:
Andean Pact
The following three countries implemented the North American Free Trade Agreement (NAFTA):
Canada, Mexico, and the United States
Which of the following limits itself to eliminating trade barriers between member countries and adopting common external tariffs?
Customs union
when working on adaptation of a global advertising campaign which one of the following issues matters LESS?
Distribution system of the product
No other attempt at regional integration comes close to (the) _____ in its boldness, integration or its potential implications for the world economy.
EU
The movement toward regional economic integration has been successful in _____________
Europe
Which of the following depicts the levels of economic integration from least integrated to most integrated
Free trade area, customs union, common market, economic union, and political union
in the early 1990s Mr. Adam Cowgill, was working for Dell Computer in Austin (TX). In 1992 he got an offer from Siemens (a German company) to work in Germany. Then, he accepted the offer, left Dell and moved to Germany to work for Siemens (and right now he still works at Siemens). A couple of days ago, Adam got an offer from Dell's German affiliate to work for Dell in Germany. Please mark the correct statement:
If Dell rehires Adam to work in Germany, he will not be considered an expatriate.
Main reason for the number of maquiladoras in Mexico in the mid 90s is that
In 1994, Mexico joined Canada and US to form a free trade agreement
please choose the correct statement about the European Union (EU)
In general terms we may say that EU is composed by two different blocks of countries
___ occurs when lower-cost external suppliers are replaced by higher cost supplier within the regional trade blocks
Trade diversion
An economic union is a group of countries
Whose highest level of integration is the common currency
Attempts at regional economic integration are motivated by
a desire to exploit the gains from free trade and investment
According to our textbook, the first year that NAFTA became a reality turned out to be
a largely positive experience for all three countries
Since the late 1980s two major trends have emerged in the political economies of many of the world's national states. These are:
a wave of democratic revolutions have swept the world and there has been a strong move away from centrally planned and mixed economies toward more free market economies.
Maquilladoras are companies in Mexico that
are very labor intensive, usually owned by foreigners
The lowering of ______ between countries is likely to lead in increased price competition throughout the EU and NAFTA.
barriers to trade
Which of the following is not an attribute of an economic union?
common legal system
Economic integration whereby countries remove all barriers to trade among themselves, but erect a common trade policy against nonmembers is called a(n) _________.
customs union
Which of the trade agreement eliminates trade barriers (tariffs and quotas) between member countries and adopts common external tariffs? Do not consider any arrangement that does more than that
customs union
common market=
customs union + labor and capital mobility
2nd level of economic integration
customs union, meaning free trade area + same tariffs and quotas outside the region; EX: MERCOSUR
Which of the following is not a goal of regional economic integration?
decreasing cross-boarder investment
Which of these refers to the economic integration whereby countries remove barriers to trade and the movement of labor and capital, erect a common trade policy against nonmembers and coordinate their economic policies?
economic union
4th level of economic union
economic union, meaning common market + common currency, tax rate, fiscal policy, and monetary policy; EX: EU
Economists, politicians, and business leaders believe that the _______ to international trade and investment are the twin engines driving the global economy toward greater prosperity.
falling
we spoke in class about different roles and responsibilities if Global and Local Human Resource Management. Please mark which of the following is NOT the responsibility of the Local Human Resource Management
firing expatriates
In a _________, theoretically, there are no discriminatory tariffs, quotas, subsidies, or administrative impediments allowed to distort trade between members.
free trade area
1st level of economic integration
free trade area, meaning no tariffs and quotas inside the region; EX: NAFTA
Which of these is the lowest extent of national integration?
free-trade area
According to our lectures, there is a huge debate why globalization is not welcome by so many people. Which from the following reasons is the most likely to be true?
global companies might threaten the environment
which of the following are INCORRECT regarding the pricing strategy in international market
governmental regulations in a country do not have any effect on pricing strategy of a global company
The main reason for the growth of production and number of "maquiladoras" in Mexico in the mid 90s is that
in 1994, Mexico joined Canada and the US to form a free trade agreement, the NAFTA
Economists argue that increased international trade and cross-border investments will
lower
The principle argument of those that opposed NAFTA centered around the fear that ratification would result in:
many U.S. jobs transferred to Mexico
The three factors that have the most important impact on future exchange rate movements in a country's currency include
market philosophy, price inflation, and interest rate
Globalization is not welcome by many people because people think global companies
might threaten the environment
The process whereby countries in a geographic region cooperate with one another to reduce or eliminate barriers to the international flow of products, people or capital is called_________.
regional economic integration
effects of economic integration: supply and demand
the effect of trade agreements is always positive
a manufacturing company will make product rather than buy product when
there are lower costs in-house, know-how protection is an issue, and scheduling is critical
effect of economic integration
trade creation, trade diversion, price level decrease, production efficiency increase, capital flows, job market profile change, and national sovereignty invasion
Maquiladoras
two thousand companies close to the border of US and Mexico, assembling of products requires cheap labors
After NAFTA, FDI went ______ in Canada, Mexico, and US
up
which of the following is correct regarding sending expatriates for managerial positions abroad?
upon the expatriates return back home before the end of their contracts, their re-edaptation in the company is not simple and easy
for participating countries, a drawback of a single currency in Europe is
National authorities will lose control over monetary policy of their countries
NAFTA
North American Free Trade Agreement
