CHAPTER 3

Question 1

Economic Globalization

Answer 1

The increasing integration and interdependence of national economies around the world.

Question 2

Economies of scale

Answer 2

Savings from buying parts and materials, manufacturing, or marketing in large quantities.

Question 3

Balance of Trade

Answer 3

Total value of the products a nation exports minus the total value of the products it imports, over some period of time.

Question 4

Trade Surplus

Answer 4

A favorable trade balance created when a country exports more than it imports.

Question 5

Trade Deficit

Answer 5

An unfavorable trade balance created when a country imports more than it exports.

Question 6

Balance of Payments

Answer 6

The sum of all payments one nation receives from other nations minus the sum of all payments it makes to other nations, over some specified period of time.

Question 7

Exchange Rate

Answer 7

The rate at which the money of one country is traded for the money of another.

Question 8

Free Trade

Answer 8

International trade unencumbered by restrictive measures.

Question 9

Protectionism

Answer 9

Government policies aimed at shielding a country’s industries from foreign competition.

Question 10

Tariffs

Answer 10

Taxes levied on imports.

Question 11

Import Quotas

Answer 11

Limits placed on the quantity of imports a nation will allow for a specific product.

Question 12

Embargo

Answer 12

A total ban on trade with a particular nation (a sanction) or of a particular product.

Question 13

Export Subsidies

Answer 13

A form of financial assistance in which producers receive enough money from the government
to allow them to lower their prices in order to compete more effectively in the global market.

Question 14

Dumping

Answer 14

Charging less than the actual cost or less than the home-country price for goods sold in other countries.

Question 15

Trading Blocs

Answer 15

Organizations of nations that remove barriers to trade among their members and that establish uniform barriers to trade with nonmember nations.

Question 16

Culture

Answer 16

A shared system of symbols, beliefs, attitudes, values, expectations, and norms for behavior.

Question 17

Ethnocentrism

Answer 17

Judging all other groups according to the standards, behaviors, and customs of one’s own group.

Question 18

Stereotyping

Answer 18

Assigning a wide range of generalized and often false attributes to an individual based on his or her membership in a particular culture or social group.

Question 19

Cultural Pluralism

Answer 19

The practice of accepting multiple cultures on their own terms.

Question 20

Tax Haven

Answer 20

A country whose favorable banking laws and low tax rates give companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business.

Question 21

Importing

Answer 21

Purchasing goods or services from another country and bringing them into one’s own country.

Question 22

Exporting

Answer 22

Selling and shipping goods or services to another country.

Question 23

Licensing

Answer 23

Agreement to produce and market another company’s product in exchange for a royalty or fee.

Question 24

Foreign Direct Investment (FDI)

Answer 24

Investment of money by foreign companies in domestic business enterprises.

Question 25

Multinational Corporations (MNCs)

Answer 25

Companies with operations in more than one country.

Question 26

Multidomestic Strategy

Answer 26

A decentralized approach to international expansion in which a company creates highly independent operating units in each new country.

Question 27

Global Strategy

Answer 27

A highly centralized approach
to international expansion, with headquarters in the home country making all major decisions.

Question 28

Transnational Strategy

Answer 28

A hybrid approach that attempts to reap the benefits of international scale while being responsive to local market dynamics.

Question 29

Machine Translation

Answer 29

Any form of computer-based, automated language translation.