Chapter 3 Competing in the Global Marketplace

Question 1

A(n) ___________ is the ability to recognize and react to international business opportunities, be aware of threats from foreign competition, and effectively use international distribution networks to obtain raw materials and move finished products to customers.

Answer 1

global vision

Question 2

_______ are goods and services produced in one country and sold to other countries.

Answer 2

exports

Question 3

_________ are goods and services that are bought from other countries.

Answer 3

imports

Question 4

The difference between the value of a country’s exports and the value of its imports during a specific time is the _______________.

Answer 4

balance of trade

Question 5

A(n) ___________ is a favorable balance of trade that occurs when a country exports more than it imports.

Answer 5

trade surplus

Question 6

An unfavorable balance of trade that occurs when a country imports more than it exports is a(n) ______________.

Answer 6

trade deficit

Question 7

A summary of a country’s international financial transactions showing the difference between the country’s total payments to and its total receipts from other countries is the ____________.

Answer 7

balance of payments

Question 8

A system in which prices of currencies move up and down based upon the demand for and supply of the various currencies are called _________.

Answer 8

floating exchange rates

Question 9

A(n) ___________ is a lowering of the value of a nation’s currency relative to other currencies.

Answer 9

devaluation

Question 10

A(n) ______________ is a situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product.

Answer 10

absolute advantage

Question 11

The _________________ is the concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.

Answer 11

principle of comparative advantage

Question 12

The policy of permitting the people and businesses of a country to buy and sell where they please without restrictions is called ____________.

Answer 12

free trade

Question 13

___________ is the policy of protecting home industries from outside competition by establishing artificial barriers such as tariffs and quotas.

Answer 13

protectionism

Question 14

Sending work functions to another country, resulting in domestic workers losing their jobs is called _________________-.

Answer 14

outsourcing

Question 15

________ refers to the informal group that brings together 19 countries and the European Union—the 20 leading economies in the world.

Answer 15

G20

Question 16

What is a tax imposed on imported goods?

Answer 16

tariff

Question 17

Tariffs that are imposed in order to make imports less attractive to buyers than domestic products are called __________-.

Answer 17

protective tariffs

Question 18

A limit on the quantity of a certain good that can be imported is called a(n) _____________.

Answer 18

import quota

Question 19

A(n) ______ is a total ban on imports or exports of a product.

Answer 19

embargo

Question 20

Government rules that give special privileges to domestic manufacturers and retailers are called ________________.

Answer 20

buy-national regulations

Question 21

Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank, are called _________.

Answer 21

exchange controls

Question 22

This practice of charging a lower price for a product in foreign markets than in the firm’s home market is called what?

Answer 22

dumping

Question 23

The 1994 agreement, ________________, was originally signed by 117 nations to lower trade barriers worldwide.

Answer 23

Uruguay Round

Question 24

The __________________ is an organization established by the Uruguay Round in 1994 to oversee international trade, reduce trade barriers, and resolve disputes among member nations.

Answer 24

World Trade Organization (WTO)

Question 25

The ________________ is an international bank that offers low-interest loans, as well as advice and information, to developing nations.

Answer 25

World Bank

Question 26

The ____________________ is an international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender of last resort for troubled nations.

Answer 26

International Monetary Fund (IMF)

Question 27

A tariff that is lower for some nations than for others is a(n) ______________.

Answer 27

preferential tariff

Question 28

In a(n) ___________________, the nations allow free, or almost free, trade among each other while imposing tariffs on goods of nations outside the zone.

Answer 28

free-trade zone

Question 29

The 1993 agreement, ________________________, created a free-trade zone including Canada, Mexico, and the United States.

Answer 29

North American Free Trade Agreement (NAFTA)

Question 30

The trade agreement between Peru, Brazil, Argentina, Uruguay, and Paraguay is called _________.

Answer 30

Mercosur

Question 31

The trade agreement among 28 European nations is called the ____________.

Answer 31

European Union

Question 32

The delegation of limited sovereignty by European Union member states to the EU so that common laws and policies can be created at the European level is called ______________.

Answer 32

European integration

Question 33

The practice of selling domestically produced goods to buyers in another country is known as _____________.

Answer 33

exporting

Question 34

The legal process whereby a firm agrees to allow another firm to use a manufacturing process, trademark, patent, trade secret, or other proprietary knowledge in exchange for the payment of a royalty is called _______________.

Answer 34

licensing

Question 35

____________ is the practice in which a foreign firm manufactures private-label goods under a domestic firm’s brand name.

Answer 35

contract manufacturing

Question 36

A(n) _______________ is an agreement in which a domestic firm buys part of a foreign firm or joins with a foreign firm to create a new entity.

Answer 36

joint venture

Question 37

Active ownership of a foreign company or of manufacturing or marketing facilities in a foreign country is ____________________.

Answer 37

direct foreign investment

Question 38

A form of international trade in which part or all of the payment for goods or services is in the form of other goods and services is called?

Answer 38

countertrade

Question 39

_____________ is a sense of national consciousness that boosts the culture and interests of one country over those of all other countries.

Answer 39

nationalism

Question 40

____________ is the basic institutions and public facilities upon which an economy’s development depends.

Answer 40

infrastructure

Question 41

Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located are called _____________.

Answer 41

multinational corporations