Chapter 3

Question 1

Globalization

Answer 1

a shift toward a more integrated world economy in which culture, ideas, and beliefs are exchanged in addition to goods, services, and resources.

Question 2

Absolute Advantage

Answer 2

(1) It is the only source of a particular product, good, or service.
(2) An entity is also considered to have an absolute advantage if it is able to produce more of something than another entity while using the same amount of resources (factors of production)

Question 3

Comparative Advantage

Answer 3

it can produce the good or service at a lower relative opportunity cost.

Question 4

Balance of Trade

Answer 4

Exports - Imports

Question 5

Trade Deficit

Answer 5

Imports > Exports

Question 6

Trade Surplus

Answer 6

Exports > Imports

Question 7

Countertrade

Answer 7

a system of exchange in which goods and services are used as payment rather than money
Barter
Switch Trade
Counterpurchase
Buyback
Offset

Question 8

Outsourcing

Answer 8

contracts out a business process to another party

Question 9

Offshoring

Answer 9

the actual relocation of a business process from one country to another

Question 10

Joint Venture

Answer 10

a new business that is jointly owned by two or more otherwise independent businesses

Question 11

Strategic Alliance

Answer 11

agreement between two or more corporations, each based in their home country, for a specified period of time

Question 12

Licensing

Answer 12

The licensor agrees to let someone else (the licensee) use the property of the licensor in exchange for a fee

Question 13

Franchising

Answer 13

A party (franchisee) acquires access to the knowledge, processes, and trademarks of a business (the franchisor) in order to sell a product or service under the business’s (franchise’s) name

Question 14

A Foreign Direct Investment

Answer 14

an investment in the form of a controlling ownership in a business enterprise in one country by an entity based in another country.

Greenfield Venture: Plants/Factories
Merger/Acquisition

Question 15

Global Trade Forces

Answer 15

Society’s sociocultural, Political, Economic, Legal, Physical, Environmental factors that influence business

Question 16

Trade Restrictions

Answer 16

Import Tariff: Tax on imports
Import Quotas: Limit Quantity of imports
Embargo: Ban of imports from a country

Question 17

World Trade Organization

Answer 17

Nations agreed to work together to promote free trade

Question 18

World Bank

Answer 18

End extreme poverty

Promote shared prosperity by fostering the income growth of the bottom 40 percent in every country

Support Developing Nations

Question 19

International Monetary Fund

Answer 19

Foster global growth and economic stability by providing policy, advice, and financing to its members

Question 20

General Agreement on Tariffs and Trade

Answer 20

Global trade agreement WTO uses to promote free trade

Question 21

Foreign Corrupt Practices Act

Answer 21

Criminalized bribery of foreign public officials by American business enterprises.

Question 22

Sweatshop

Answer 22

a factory that is guilty of some sort of labor abuse or violation,