Business Management Chapter 3

Question 1

Establishing facilities with developing economic regions enables companies to

Answer 1

• Operate closer to emerging markets
• Create a stronger affiliation to their brands
• React quickly to market opportunities and trends

Question 2

True or false: Establishing facilities within developing economic regions allows companies to strengthen their brand by developing stronger affiliations.

Answer 2

True

Question 3

Which of the following is the primary concern of the world bank

Answer 3

Developing infrastructure in less-developed countries

Question 4

Which of the following are commitments necessary from a government adhering to the fundamentals of fair trade

Answer 4

• A commitment to environmental standards
• Enforcing intellectual and patent property rights of companies
• Adhering to generally accepted labour practices

Question 5

Canada experienced high levels of national debt during

Answer 5

the 1980s

Question 6

The total value of a nation’s exports compared to its imports measured over a particular period is the definition of:

Answer 6

The balance of trade

Question 7

When the value of a country’s exports exceeds that of its imports, the country is said to have a

Answer 7

Trade Surplus

Question 8

When the value of a country’s imports is more than its exports, the country is said to have

Answer 8

a trade deficit

Question 9

Since 1978, economic growth in the People’s Republic of China has grown approximately ____ annually

Answer 9

10%

Question 10

The current account is a measure of

Answer 10

A countries net:

• Transfer payments to and from the rest of the world
• Earnings from interest and investments
• A country’s net trade in goods and services

Question 11

Typical currencies held for the purpose of foreign exchange reserves include

Answer 11

• The Euro
• The U.S. dollar
• The Japanese Yan

Question 12

The World Bank:

Answer 12

• Its primary function is to develop infrastructure in less-developed countries
• It provides both financial and technical assistance

Question 13

Restrained __ during the mid-1990s brought Canada’s debt position back under control

Answer 13

Fiscal Spending

Question 14

A trade __, also called a favourable balance of trade, occurs when the value of a country’s exports exceeds that of its imports.

Answer 14

Surplus

Question 15

A trade ___, also called an unfavourable balance of trade, occurs when the value of a country’s exports is less than its imports

Answer 15

Deficit

Question 16

Which country is particularly interesting to Canada because of the potential associated with their size and economic transformation?

Answer 16

China

Question 17

Foreign exchange ____ are assets held by central banks which are used to back the country’s liabilities

Answer 17

reserves

Question 18

A stable company that is able to meet its ongoing debt obligations and fund future growth opportunities is said to be ___

Answer 18

Solvent

Question 19

_____ is when a company contracts out a portion of its business system (for example, advertising or accounting) to another firm for the purpose of reducing costs, improving efficiency, or developing a competitive advantage

Answer 19

Outsourcing

Question 20

Out of France, Canada, India and Germany, which is the most likely to need financial support from the World Bank to get economic activity off of the ground

Answer 20

India

Question 21

The core elements of an open economy include:

Answer 21

• The law of supply and demand
• Encouragement of entrepreneurship and wealth creation
• Support of private ownership

Question 22

Trade ____ is the use of government regulations to protect or improve domestic industries limiting the import of goods and services through the use of import tariffs and quotas

Answer 22

Protectionism

Question 23

Economies of ___ refers to the reductions in the cost base of an organization as a result of greater size, process standardization, or enhanced operational efficiencies

Answer 23

Scale

Question 24

If a firm has the ability to quickly convert existing assets into cash it is said to be

Answer 24

liquid

Question 25

Sovereign debt refers to the debt issued by a ___ government

Answer 25

national

Question 26

The ____ ____ organization was established to mediate trade disputes among nations, oversee cross-boarder trade issues, and global business practices

Answer 26

World Trade

Question 27

Which of the following sectors have been especially susceptible to the development of black markets?
Agriculture, software, consumer electronics, entertainment

Answer 27

Software

Consumer electronics Entertainment

Question 28

What are the functions of the World Trade Organization

Answer 28

To oversee cross-boarder trade issues

To mediate trade disputes among nations

Question 29

A currency ___ rate is the value of one nation’s currency relative to the currencies of other nations

Answer 29

Exchange

Question 30

Which country is Canada’s top trading partner

Answer 30

The United States

Question 31

Deflation refers to

Answer 31

falling prices

Question 32

Organizations seeking to generate competitive advantage will locate in countries where

Answer 32

• Occupational skills are high

- Labour costs are low

Question 33

___ debt refers to the debt issued by a national government

Answer 33

Sovereign

Question 34

___ is when a company transfers a component of its business system to another country for the purpose of reducing costs, improving efficiency, or developing a competitive advantage

Answer 34

Offshoring

Question 35

___ trade agreements facilitate the movement of goods and services among nations without political or economic barriers.

Answer 35

Free-trade

Question 36

There is significant interest from foreign firms in acquiring ownership of Canada’s

Answer 36

Natural energy resources

Question 37

An ___ ___ is a partnership between two or more companies established to help each company build competitive market advantages, although they do no share costs, profits or management.

Answer 37

Strategic Alliance

Question 38

Basic objectives of the IMF

Answer 38

To promote exchange stability
The issuance of short - term loans to countries with balance-of-trade imbalances
The lending of credit facilities to low income countries

Question 39

The technological revolution has led to new ways of communicating, organizing, and working which have opened up opportunities for ___ (urban/remote) societies to become players on the global economic stage

Answer 39

remote

Question 40

The development of the ____ (global/domestic) side of the economy must be pursued in order to minimize reliance of external buying sources

Answer 40

Domestic

Question 41

What is considered to be “foreign exchange rate influencers”

Answer 41

• Consumer price movements
• Government budgets
• Trade Balance
• Movement in domestic income levels
• Capital mobility

Question 42

__ occurs when the demand for a particular currency falls

Answer 42

Depreciation

Question 43

Sovereign ___ funds, such as the China Investment Corporation or Kuwait Investment Authority, are organizations that focus on developing investment interest in support of economic activities in their countries.

Answer 43

Wealth

Question 44

Why is the U.S. currency considered the benchmark global currency

Answer 44

• Its position as the predominant purchaser of goods and services worldwide
• Its historical strong economic growth
• Its political flexibility
• The size of the U.S. economy

Question 45

What term describes the separation of tasks within a system

Answer 45

Specialization

Question 46

___ is defined as the value of one nation’s currency relative to the currencies of other countries

Answer 46

A currency exchange rate

Question 47

To maintain control over economic growth, some countries will __ the rate of their currency in relationship to a trading partner

Answer 47

peg