MGT unit 1

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Collectivism refers to a political system that

restricts an individual's right to do something on the grounds that it runs counter to the "good of society."

Which economist was a key figure in the early free trade movement in Great Britain?

ricardo

member nations hoped that the WTO would be a facilitator of future trade deals especially in the area of Blank______.

services

What are two responsibilities of The European Central Bank?

set interest rates set monetary policy

Free trade has the benefit of ______, which allows a country to manufacture and export in locations where they have a comparative advantage.

specialization

When the US government "bailed out" the automobile industry starting in 2009 by loaning money to keep General Motors and other automakers in business, it was an example of a(n) Blank______

subsidy

In a pure market economy, production of goods is determined by

supply and demand

Which instrument of trade policy has been in use the longest?

tarrifs

The main objective of GATT was to liberalize______ restrictions.

trade

Over the past two decades, there has been an increase in regional _____ that encourages regional economic integration.

trade blocs

What is the term for when high-cost domestic producers have been replaced by low-cost producers within a free trade zone?

trade creation

Krugman promoted the idea that if each country seeks to follow a strategic trade policy to protect its interests, this may lead to ___

trade war

Atag's attempts to market to the euro-consumer failed because consumer preferences across varied greatly across the nations.

true

Peruvian development economist Hernando de Soto argued for the importance of business and property rights in relationship to receiving the benefits of capitalism. T or F

true

True or false: The product life-cycle theory suggests that mature industries tend to shift production out of the United States and into low-cost assembly locations.

true

Once the British government gave formal notification of its exit from the EU, it was given B______ to negotiate the terms of the exit.

two years

What is one thing that the fastest-growing economies of China, South Korea, Taiwan, Singapore, and Hong Kong had in common at the start of their economic growth?

undemocratic governments

The eurozone is made up of the European Union members who Blank______.

use the euro as currency

What measure did many countries use to get around GATT regulations in the 1980s?

voluntary export restraints

Which organization is responsible for policing the rules of trade between nations and making sure countries adhere to the rules of trade treaties signed by member states

world trade organization

Which organization is responsible for policing the rules of trade between nations and making sure countries adhere to the rules of trade treaties signed by member states?

world trade organization

The ______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.

Internet

What is one concern voiced by critics of globalization?

An interdependent global economy shifts economic power away from national governments and toward organizations such as the United Nations.

In terms of conducting international business in China, it can be said that

China represents a large -- basically untapped -- market.

What are two basic factors of production as labeled by Porter?

Climate Natural resources

The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law.

Moores

Which statement accurately describes the global economy in the twenty-first century?

More nations are becoming part of the developed world.

What is an accurate depiction of Amartya Sen's arguments regarding development?

Development should focus on expanding the capabilities of and opportunities available to people.

the latest round of trade negotiations

Doha

One outcome of the globalization of markets is a decrease in the intensity of competition among companie T OR F

FALSE

Those who promote the idea of free trade say that one way for the world's poorest countries to improve their situation is to

adopt economic policies based on free market economies

True or False: While there are a large number of nations that are members of the WTO, these nations account for only a small portion of world trade. True false question.

FALSE

Which two of these attributes did Porter believe are MOST significant for competitive advantage?

Factor endowments Demand conditions

What issue might be raised at an antiglobalization demonstration?

Falling barriers to international trade result in job losses in those industries targeted by foreign competitors.

Identify the accurate statement regarding privatization.

For privatization to work, it must also be accompanied by a more general deregulation and opening of the economy.

______ is the opposite of economic isolationism.

Free trade

What was an attempt at regional economic integration for the United States?

North American Free Trade Agreement

What are three advantages of regional market integration that can result in cost savings to a business?

Simplified tax regimes Free movement of goods across borders Harmonized product standards

Which three nations are a part of ASEAN?

Singapore Philippines Indonesia

True or False: Supporters of globalization argue that bodies such as the World Trade Organization and the United Nations exist to serve the collective interests of member states, not to subvert those interests. True false question.

TRUE

Porter argues that _____ factors are the most significant when determining competitive advantage for a country.

advanced

The ASEAN Free Trade Area has cut tariffs on what two products to less than 5 percent?

agricultural and manufacturing

Tariff rates on _____ products are generally much higher than tariffs on manufactured products or services.

agriculture

what industry tends to benefit the most from subsidies in most countries?

agriculture

What is the objective of a pure command economy?

allotment of resources for the overall good of society

internet helps buyers and sellers

connect easier

Which form of returns to specialization means that the units of resources required to produce one unit are assumed to remain the same no matter where a country is on the production possibility frontier?

constant

Critics of globalization protest in order to

diminish the impact of the culture of multinational enterprises on the world

The globalization of markets and production implies that

domestic firms are facing intense competition from foreign firms.

When manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production, as a way to get rid of excess product, it is called____

dumping

Based on the theories of Ricardo and Smith, the consequences of free trade include Blank______ economic gains in terms of economic growth and wealth creation

dynamic

Gross domestic products provides a measure of _____ development.

economic

The cost reductions that comes from increased output of a product are known as

economies of scale

Under new trade theory, as the size of markets increase, companies may be able to develop better ______.

economies of scale

One way the GATT hoped to achieve its objective was by

eliminating tarrifs

The WTO is more successful than GATT because the WTO has ______ mechanisms that make it more effective

enforcement

Restrictions have been placed on new members to the EU to combat the potential problems associated with ______.

enlargement

What can a country use to counteract a country that uses subsidies to support an industry

establish anti-dumping regulations

The movement toward regional economic integration has been most ambitious in _____

europe

When considering free trade opportunities in Mexico, with access to cheap labor and diverse plant life, it makes sense for Mexico to ______ agricultural goods.

export

International trade occurs when a company

exports goods or services to consumers in another country.

Which of the four attributes identified by Porter would be evident in a country that has the necessary infrastructure to compete in a given industry

factor endowments

The Heckscher-Ohlin theory of international trade focuses on ______ when explaining what a country chooses to export.

factors of production

Influential economists, politicians, and business leaders who favor globalization argue that

falling barriers to international trade drive the economy toward greater prosperity.

True or False: Democracy is always considered to be the cause of initial economic progress.

false

True or False: The European Union is considered an optimal currency area.

false

True or False: Under the terms of the EU-UK Trade and Cooperation Agreement, there is a "full tariff, zero quota" regime in place.

false

True or False: Unlike the economic system of a country, the legal system is NOT influenced by the prevailing political system.

false

The Association of Southeast Asian Nations was formed with the intent to foster Blank______.

free trade

Country A specializes in the production of rice because it can do so efficiently, but it imports electronics because it is not able to produce them as efficiently as the country they import from. What is this an example of?

gains from trade

Individualism

giving priority to one's own goals over group goals and defining one's identity in terms of personal attributes rather than group identifications

Collectivism

giving priority to the goals of one's group and defining one's identity accordingly

Samuel wrote a screenplay and he is traveling to Los Angeles next week to pitch his idea to a movie studio. The screenplay is an example of______ property.

intellectual

Krugman argues that strategic trade policy should not be embraced because many times governments are influenced by politically important ______ to intervene in the economy.

interest groups

A(n) ______ business is any firm that engages in cross-border trade or investment.

international

Michael works at a lawnmower manufacturing company in St. Louis, Missouri, and his company imports component parts from Thailand and also ships final product to various countries. Michael's company is an example of a(n) ______ business

international

During the economic downturn of 2008-2009, the U.S. government "bailed out" AIG to prevent that financial institution from collapsing because it felt that if AIG collapsed, it would lead to serious consequences for the entire U.S. financial system. By helping out this troubled firm because it appeared vital to national interests, the U.S. government was acting as a ______ economy.

mixed

In a pure _____ economy, all productive activities are owned privately -- they are not owned by the state

market

Which economic system is considered the MOST conducive to innovation and entrepreneurial activity?

market economy

In international business, _______ risk is defined as loss due to poorly developed or executed business strategies, tactics, or procedures.

markets production

In a______ economy, both private enterprise and some state monopolies co-exist.

mixed

As a result of the Doha Round, ______ countries are entering into multilateral and bilateral trade agreements.

more

Leontief questioned the validity of the Heckscher-Ohlin theory based on his assumption that the US would be an exporter of ______.

more capital-intensive goods

CAFTA

The Central American Free Trade Agreement (otherwise known as DR-CAFTA) is a pending agreement that has been negotiated between the United States, five Central American countries and possibly the Dominican Republic.

Which round of GATT negotiations provided enhanced protection for intellectual property and significantly reduced barriers on trade in textiles?

The Uruguay Round

The European Union is a product of what two political factors?

The effects of two world wars on western Europe Europe's desire to be seen as a major player in world politics and economics

The text lists several reasons that stand out as the cause for economic stagnation in the world's poorest countries. What are three of those reasons?

Totalitarian governments Poor property rights protection Prolonged civil war

What is an accurate depiction of totalitarian states compared to democratic states?

Totalitarian states are detrimental to economic progress.

One of the global institutions that emerged over the past 75 years is GATT which stands for the General Agreement on Tariffs and

Trade

Half a century ago, which country dominated world foreign direct investment?

United States

Raymond Vernon's product life-cycle theory was based on the observation that for most of the 1900s the majority of the world's new products were developed in

United States

Friedrich von Hayek

Wanted no government intervention. Disbelieved in the use of Keynesian economics. Defended free market capitalism - system could fix itself. His ideology was not accepted initially, however many countries practice this now.

How would experts reply to the question, "Is Porter's theory correct?" Multiple choice question.

We do not know. It has not been subjected to empirical testing.

What is an accurate depiction of Latin America when considering international business?

While favorable economic trends have recently occurred, there is no guarantee that they will continue.

Which global institution is the successor to GATT?

World Trade Organization

A country has an absolute advantage when it is able to produce

a greater quantity of a product than its competitors, using the same amount of resources.

The development of the microprocessor has lead to

a reduction in the cost of global communications

deomcracy

a system of government by the whole population or all the eligible members of a state, typically through elected representatives.

common law

a system of law based on precedent and customs

______ is a theory of trade which advocates that a country should export more than it imports which would result in the accumulation of gold and silver and increased national wealth and power.

mercantilism

Moore's Law predicts that

microprocessor technology power will double approximately every 18 months.

In response to the apparent failure of the current Doha Round, many nations have implemented

multilateral trade agreements

A(n)______ is any business that has productive activities in two or more countries.

multinational enterprise

The World Trade Organization (WTO) principle of _____ requires a member to handle foreign companies and products in the same manner as its own domestic companies and products.

national treatment

Which trade theory explains why countries are trade partners when they are trading similar goods and services?

new trade

Originally, the Trans-Pacific Partnership was a trade agreement between the United States and countries in the Pacific Rim, including _____

new zealand

Economic progress can be characterized as

often leading to adoption of a democratic government.

A (n) _______ currency area, makes it possible to adopt a single currency and use a single exchange rate as a tool of macroeconomic policy.

optimal

The system of government in a nation is called the ______ system

political

African countries have attempted to form a continental trade agreement, but have been stymied by significant ______ turmoil.

poltiical

Economic theories point toward the idea that all participating countries will gain from regional integration. In other words, it is a ______-sum game.

positive

What are two impediments to establishing economic integration?

potential job losses concerns over national sovereignty

Two qualifications put on new members to join the EU were ______.

privatizing state assets deregulating markets

______ is one of the steps necessary for a country to shift toward a market-based economic system.

privitization

Under the new USMCA, in order to qualify for zero tariffs, automakers are required to ______.

produce 75% of a vehicle's content in North America

Photocopiers were initially exported from the United States. As more and more foreign competitors entered the market, the United States began to import photocopiers. This is an example of which theory?

product life cycle

Which theory was based on the belief that it was better to keep production facilities close to the market and to the firm's center of decision making, given the uncertainty and risks inherent in introducing new products?

product life-cycle

The globalization of ______ refers to the fact that producers can source goods and services from anywhere in the world to take advantage of cost savings.

production

Shondra's company developed a new method for sealing medication bottles and has decided to license their patented method to the leading drug manufacturers in the United States. Shondra's company has the legal right to do this based on the ______ rights they have for this method.

property

he legal rights regarding the use of a resource by a business or individual are known as ______ rights.

property

Rising pressures for ______ lead to ongoing GATT negotiations via the Uruguay Round.

protectionism

Import quotas are based on the ______ of a good.

quantity

The Central America Free Trade Agreement was designed to Blank______ between the member nations.

reduce trade barriers

According to Porter, when ______ industries invest in advanced factors of production, it can help an industry achieve a global competitive advantage. Multiple choice question.

related and supporting

The decline of the United States' standing as a dominant industrial power is considered a(n) ______ decline because it reflects the faster economic growth of other economies.

relative

In a(n) ______ democracy, elected officials represent the citizens and make decisions on behalf of the electorate

representative

At some point, rising income levels lead to demands for greater environmental protection and, as a result, pollution levels fall. A study by Grossman and Krueger found this generally occurred before per capita income levels reached

$8,000

Select the four facts that describe the demographics of the global economy a half a century ago.

- U.S. dominance in world foreign direct investment - Roughly half of the globe was off-limits to Western international business - The dominance of large, multinational U.S. firms in the international business scene - U.S. dominance in the world economy and world trade

in porter's theory of national competitive advantage [ select ] can be used by many industrial sectors, while [ select ] provide focused application opportunities.

1) generalized factors 2) specialized factors

Drivers of Globalization

1. Declining trade barriers 2. Technological change 3. advances in communication 4. internet

What are three sources of economies of scale?

1. Spreading fixed costs over a large volume of product 2. The ability of large-volume producers to use specialized equipment 3. The ability of large-volume producers to use effective, specialized employees

What are the two macro factors that underlie the trend toward greater globalization?

1. decline in trade barriers and 2. technological change

World Trade Organization (WTO)

1. negotiating forum 2. a set of rules for trade 3. a forum for settling disputes

If you were asked to provide a fact about a common law system, what should you say?

A common law system has a degree of flexibility that other legal systems lack.

Totalitarianism

A form of government in which the ruler is an absolute dictator (not restricted by a constitution or laws or opposition etc.)

civil law

A legal system based on a written code of laws

Socialism

A system in which society, usually in the form of the government, owns and controls the means of production.

command economy

An economic system in which the government controls a country's economy.

mixed economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

The international monetary fund and the world bank were created in 1944 at the

Bretton Woods Conference

In 2004, the US and six Central American countries formed a free trade agreement called _________

CAFTA

Which of these countries is benefitting through gains from trade? Country F imports component parts from Country G and uses them to build automobiles that it exports back to Country G. Country A exports small appliances but it imports cereal and dairy products from Country B because Country B produces them more efficiently. correct Country D and Country E share a border and trade between each other to avoid import fees. Country C exports all of its agricultural products at a high price and then imports those same products at a lesser cost.

Country A exports small appliances but it imports cereal and dairy products from Country B because Country B produces them more efficiently.

What is one of the steps that pave the way for a shift toward a market-based economic system?

Creation of a legal system to safeguard property rights

The most significant trading block in Europe in terms of numbers and economic influence is the ______.

EU

What is considered the most successful attempt at regional economic integration?

EU

market economy

Economic decisions are made by individuals or the open market.

John Maynard Keynes

English economist who advocated the use of government monetary and fiscal policy to maintain full employment without inflation (1883-1946)

What is the name of the financial institution established in the EU to ensure price stability and is intended to be independent from political pressure?

European Central Bank

What are the two major trading blocks in Europe?

European Union and European Free Trade Association

In the 1960s, when a customer in the United States purchased a television, that television had been manufactured in the United States. Today, thanks to the fall of international trade barriers, televisions purchased in the United States might be manufactured in China or South Korea. This change has occurred as the result of______

Globalization

fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

monetary policy

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

Which country was the first to officially follow a policy of free trade in the mid 1800s?

Great Britain

With regard to strategic trade policy, what are two actions governments take in response to pressure from business firms?

Increased protectionism Push for more open markets and freer trade

Identify the TRUE statement about legal systems in various countries throughout the world.

Institutional weaknesses can subvert contract enforcement.

What statement BEST describes a totalitarian system?

It is a form of government in which the state recognizes no limits to its authority and strives to regulate all aspects of public and private life.

What are two drawbacks of government intervention in free trade?

It protects inefficient industries. It invites retaliation and trade wars.

According to the Heckscher-Ohlin theory, it is expected that the US would export capital-intensive goods and import labor-intensive goods, but the opposite was found to be true. This became known as the

Leontief paradox.

What is likely to happen in the absence of a multilateral agreement in the international trading system?

Less innovation in the world economy

What are two factors that support the idea for political integration of nations through trade?

Making nations interdependent can decrease the potential for violent conflict Countries can enhance their political weight in the world

What is Hernando de Soto's main concern with regard to property rights?

The inability of property owners to establish legal title to their property

What happened to the Trans-Pacific Partnership after the United States withdrew from the agreement?

The remaining members continued to work together to create a new agreement.

What is an accurate description of microprocessors?

They provide a low-cost way to process large amounts of information.

What are two ways trade barriers hamper a firm's productive activities?

They raise the cost of exporting products. Quotas limit the ability to serve a country from outside locales.

What are two proposals associated with the Single European Act?

apply principles of mutual recognition lift barriers to competition in retail banking

Mercosur is a free trade pact started in 1988 by which two South American countries?

argentina and brazil

During the 1970s, Congress did not allow US industries to export crude oil production. This action is an example of an export ____

ban

In 1969, which countries created the Andean Pact that was modeled on the EU, but was not as successful in achieving regional groups objectives?

bolivia, chile, colombia, ecuador, and peru

What is the best description of the globalization of markets?

bringing traditionally separate national markets into one cohesive marketplace

One of the changes proposed by the Single European Act was to abolish the restrictions placed on foreign truckers who pick up and deliver goods within another member's state borders. This hauling process is known as

cabotage

Who are the three members of the North American Free Trade agreement?

canada mexico USA

Which environmental concern has been found to rise steadily with higher-income levels?

carbon dioxide emmisions

Current trends indicate that, due to the emerging economies, the world is moving ______ an economic system that is more favorable for international business.

closer to

______ refers to a political system that values the needs of society over that of an individual.

collectivism

A government plans the quantity of goods and services produced as well as the prices at which they are sold in a pure ___ economy.

command

The three broad types of economic systems include a market economy, a mixed economy and a(n) ______ economy.

command

In international business, ________ risk is defined as a loss due to poorly developed executed business strategies, tactics, or procedures

commercial

EU legislation is proposed by the European ______ which is also responsible for making sure member states follow EU laws.

commission

The European Parliament must approve all members of the European Blank______ before this body can begin its work.

commission

A country that bases its laws on the traditions within the country's legal history operates under a _____ law legal system.

common

The Maastricht Treaty was established in order to bring ______ to the European Union.

common currency

A(n) ______ is a document that specifies the conditions under which an exchange is to occur, detailing the rights and obligations of the involved parties.

contract

The body of law that governs oral and written agreements associated with the exchange of goods, services, money, and property is known as _____ law.

contract

New trade theory implies that the first mover's ability to benefit from increasing returns ______ for other firms.

creates a barrier to entry

indicate type of transaction: import of goods

current

indicate type of transaction: export of services

current

indicate type of transaction: investment income

current

The protection of intellectual property has becoming increasingly important to the WTO. The basis for this is that without this protection, the incentive for innovation would____ and economies would suffer.

decrease

Porter states that firms are typically most sensitive to the needs of their closest customers. He called this______ conditions.

demand

in Porter's Theory of National Competitive Advantage, _______ refers to the nature of home-market demand for an industry's product or service.

demand conditions

what refers to a political system in which the citizens exercise power directly or elect representatives to form a governing body.

democracy

Opponents of globalization are concerned that manufacturing jobs will be moved to more

developing countries

Amartya Sen would agree that

development should address basic health care and education needs.

True or false: Porter would agree that there is a weak association between vigorous domestic rivalry and the creation of competitive advantage.

false Porter would disagree with this as he believed there was a strong association between vigorous domestic rivalry and the creation of competitive advantage.

indicate type of transaction: purchase of assets

financial

indicate type of transaction: stocks and bonds

financial

indicate type of transaction: foreign direct investment

financial

Carl's company was able to gain economic advantage over all of its competition when it premiered the digital camera into South America before them. This is an example of a ______

first-mover advantage

Preempting demand, gaining volume cost advantages, building the brand, and establishing a long-term competitive advantage are associated with

first-mover advantages

Renata's US-based lifestyle company decides to invest in a company based in France that specializes in health and wellness. This would be an example of

foreign direct investment

______ occurs when a firm invests resources in business activities outside its home country

foreign direct investment

The political reasons for regional economic integration have been an important factor in several attempts to establish ______ trade areas and customs unions.

free

When the government does not use quotas, taxes or other means to restrict what its citizens can buy from or sell to another country, it is called _______ trade.

free

A country that does not implement quotas on imported products and does not limit what its citizens can produce and sell to another country is practicing

free trade

Ricardo's theory encourages _____ because it suggests that trade is a positive-sum game

free trade

______ refers to the shift toward international economic integration.

globalization

Historically, national markets were distinct and separate entities. Today, these separate national markets have merged. This process is known as ______

globalization of markets

Hanson Housewares Inc., based in Tennessee, sources goods from Southeast Asia to take advantage of labor cost savings. This is an example of

globalization of production

According to mercantilism, ______ were the mainstays of national wealth and were essential to business activity.

gold and silver

Porter states that Blank______ can influence each of the four components of the diamond through subsidies, education policies, and policies toward capital markets.

government

What provides a measure of the total monetary or market value of all the finished goods and services produced within a country's borders during a specified period of time?

gross domestic product

What are three main instruments of trade policy?

import quotas subsidies voluntary export restraints

Tariff is a tax levied on

imports or exports

Initially, Mercosur provided a(n) ________- (increase or decrease?) in trade between Brazil and Argentina.

increase

The outward stock of foreign direct investment has ______ for the world as a whole since 1995.

increased

The oldest argument for government intervention in trade where developing nations must protect their domestic industries until they are ready to compete globally is the ______ argument.

infant industry

The development of new products, new processes, new organizations, new management practices and new strategies is called ______.

innovation

A company is involved in foreign direct investment when it

invests in business activities outside of its home country.

According to Adam Smith, a country has an absolute advantage in the production of a product when it ______.

is more efficient than any other country at producing it

In the early 1960s, the U.S. was the world's dominant industrial power. How does the U.S. position compare today?

it has diminished in power

The economic success of ______ put a strain on the world trading system in the 1980s and promoted protectionism measures.

japan

Which country is pointed to as the master of administrative trade policies? Multiple choice question.

japan

Politicians on both sides of the table in the United States claim that NAFTA is responsible for significant ______ in the US and as a result, it has now been renegotiated to the USMCA.

job losses

According to Heckscher and Ohlin, each country has certain factor endowments. What are two examples of these? Multiple select question.

land and labor

Those who support globalization argue that increasing globalization will

lead to reduced prices for goods and services.

The ______ system of a country refers to the rules, or laws, that regulate behavior along with the system that enforces them.

legal

Theocratic Law

legal system based on religious teachings

One argument explaining the difficulty of establishing trade areas in Africa is that these countries have ______ and therefore need to be "protected" by tariff barriers from unfair foreign competition

less developed economies

Product ______ is the area of law that holds a firm and its officers responsible for injuries caused by their product.

liability

In order to win a contract from Mexico, QVB Autos Manufacturing must make 65% of the component parts for their automobiles in Mexico. This is an example of a ______.

local content requirement

Trade creation takes place when ______-cost producers replace other types of producers already within the free trade area.

low

A key impediment to economic integration is that although a majority of citizens may benefit from free trade, certain groups may lose their jobs to low-cost and low-skilled labor in other countries as was the experience of some US and Canadian workers in the ______ industry following the establishment of NAFTA.

textile

The Andean Community, while not as successful at meeting the goals it set, was based on the model established by ______.

the european union

There has been two notable trends in the demographics of multinational enterprises in the last 50 years. These include

the growth of mini-multinationals. the rise of non-U.S. multinationals.

federal funds rate

the interest rate at which banks make overnight loans to one another

discount rate

the minimum interest rate set by the Federal Reserve for lending to other banks.

According to David Ricardo's theory of comparative advantage, a country should focus on ______.

the production of goods it produces most efficiently

The outward stock of foreign direct investment refers to the _____ of foreign investments by firms domiciled in a nation outside of that nation's borders.

total cumulative value


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