BEC MCQ 6.3

Question 1

Globalization

Answer 1

Is described as a distribution of industrial and service activities across a increasing number of nations.
It is measured by world trade as a percentage of GDP

Question 2

Economic systems

Answer 2

Centrally planned Economies, market economies, Conglomerates.

Question 3

IMF

Answer 3

Do not regulate currency values

Question 4

Global Economic balance of power

Answer 4

A distribution of power and influence that ensures that no one nation or group of nations will dominate or interfere with the activities of others

Question 5

Three basic Risk preferences

Answer 5

Risk indifferent- Increase int he level of risk does not result in an increase in the managements required rate of return
Risk-averse- Increase in the level of risk results in an increase in management’s required rate of return
Risk seeing behavior- Increase in level of risk results in the decrease in managements required rate of return

Question 6

Diversifiable risk(Unique)

Answer 6

Non market, Unsystamatic or firm specific risk

Non diversable risk- Market or systematic risk

Question 7

NAFTA offers trading partners operating its boundaries reductions in tariffs on products in exchange for compliance with limits on imported labor and materials

Answer 7

are known as sourcing requirement

Question 8

Foreign trade zone

Answer 8

contemplates a physical location in which tariffs are waived on imported products until they leave a zone.

Question 9

Value added tax

Answer 9

is an incremental tax, not a reduction in tarriffs

Question 10

The concentration of power in one country

Answer 10

is referred to as unipolar.

Question 11

Unilateral

Answer 11

The action taken by single nation acting on its own is referred to as unilateral . The distribution of power is a separate issue

Question 12

Multilateral

Answer 12

refers to power that is not only distributed but shared cooperatively among nation

Question 13

Bric Nations

Answer 13

Brazil, Russia, India and China whose overall economic activity represents an increasing components of world GDP and gradual shift in economic balance of power

Question 14

Global Sourcing complication

Answer 14

Global sourcing is the use of world wide supply chain. The reduced production in US factories as a result of natural disaster in Japan is an example of the complications that come from global sourcing

Question 15

Transaction risk

Answer 15

Transaction risk is the risk that the settlement of a specific transaction in a foreign currency will result in transactional loss

Question 16

Economic Risk

Answer 16

Is the risk that the fluctuations in the exchange rate could have a negative impact on a company that either consistently sells to foreign customers or consistently buys from foreign vendors

Question 17

Shift in the balance of economic power

Answer 17

releate to the shared and changing ability of countries to impact the world wide economy