Chapters 3 & 4

Question 1

buying products from another country

Answer 1

importing

Question 2

selling products to another country

Answer 2

exporting

Question 3

the movement of goods and services among nations without political or economic barriers

Answer 3

free trade

Question 4

theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce that it cannot produce as effectively or efficiently

Answer 4

comparative advantage theory

Question 5

the advantage that exists when a country produces a specific product more efficiently than all other countries

Answer 5

absolute advantage

Question 6

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

Answer 6

balance of trade

Question 7

a favorable balance of trade; occurs when the value of a country’s exports exceeds that of its imports

Answer 7

trade surplus

Question 8

an unfavorable balance of trade; occurs when the values of a country’s imports exceeds that of its exports

Answer 8

trade deficit

Question 9

the difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment

Answer 9

balance of payments

Question 10

selling products in a foreign country at lower prices than those charged in the producing country

Answer 10

dumping

Question 11

a global strategy in which a firm (the licensor) allows a foreign company (the licenses) to produce its product in exchange for a fee (a royalty)

Answer 11

licensing

Question 12

a foreign company’s production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing

Answer 12

contract manufacturing

Question 13

a partnership in which two or more companies (often from different countries) join to undertake a major project

Answer 13

joint venture

Question 14

a long-term partnership between two or more companies established to help each company build competitive market advantages

Answer 14

strategic alliance

Question 15

the buying of permanent properly and businesses in foreign nations

Answer 15

foreign direct investment (FDI)

Question 16

a company owned in a foreign country by another company called the “parent company”

Answer 16

foreign subsidiary

Question 17

an organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management

Answer 17

multinational corporation

Question 18

investment funds controlled by governments holding investment stakes in foreign companies

Answer 18

sovereign wealth funds (SWFs)

Question 19

the value of one nation’s currency relative to the currencies of other countries

Answer 19

exchange rate

Question 20

lowering the value of a nation’s currency relative to other currencies

Answer 20

devaluation

Question 21

a complex of bartering in which several countries may be involved, each trading goods for goods or services for services

Answer 21

countertrading

Question 22

the use of government regulations to limit the import of goods and services

Answer 22

trade protection

Question 23

a tax imposed on imports

Answer 23

tariff

Question 24

a limit on the number of products in certain categories that a nation can import

Answer 24

import quota

Question 25

a complete ban on the import or export of a certain product, or the stopping of all trade with a particular country

Answer 25

embargo

Question 26

a 1948 agreement that established and international forum for negotiation mutual reductions in trade reductions

Answer 26

General Agreement on Tariffs and Trade (GATT)

Question 27

the international organization that replaced the General Agreement on Tariffs and Trade and was assigned the duty to mediate trade disputes among nations

Answer 27

World Trade Organization (WTO)

Question 28

a regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a "trading bloc." An example is the European Union

Answer 28

common market

Question 29

agreement that created a free-trade area among the United Stated, Canada, and Mexico

Answer 29

North American Free Trade Agreement (NAFTA)

Question 30

standards of moral behavior, that is, behavior accepted by society as right versus wrong

Answer 30

ethics

Question 31

ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers

Answer 31

compliance-based ethics codes

Question 32

ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among emplyees

Answer 32

integrity-bases ethics codes

Question 33

insiders who report illegal or unethical behavior

Answer 33

whistleblowers

Question 34

a business's concern for the welfare of society

Answer 34

corporate social responsibility (CSR)

Question 35

the dimension of social responsibility that includes charitable donations

Answer 35

corporate philanthropy

Question 36

enhanced forms of corporate philanthropy directly related to the company's competencies

Answer 36

corporate social initiatives

Question 37

the dimension of social responsibility that includes everything from hiring minority workers to making safe products

Answer 37

corporate responsibility

Question 38

the dimension of social responsibility that refers to the position a form takes on social and political issues

Answer 38

corporate policy

Question 39

an unethical activity in which insiders use private company information to further their own fortunes of those of their family and friends

Answer 39

insider trading

Question 40

a systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs

Answer 40

social audit

Question 41

Why should nations trade with other nations?

Answer 41

1. No country in self-sufficient 2. Other ocuntries need products thatbprosperous countries produce 3. natiral resources and technological skills are not disturbited evenly around the world

Question 42

What is the theory of comparative adavantage?

Answer 42

The theory of comparative advantage contends that a country should make and then sell those products it produces most efficiently but buy those it cannot produce as efficiently

Question 43

What is absolute adavntage?

Answer 43

Absolute advantage exists if a country produces a specific product more efficiently than any other country. There are few examples of absolute advantage in the global market today

Question 44

What kinda of products can be imported and exported?

Answer 44

Through it is not necessarily easy, just about any product can be imported or exported

Question 45

What terms are important in understanding world trade?

Answer 45

Exporting is selling products to other countries. Importing is buying products from other countries. The balance of trade is the relationship of exports to imports. The balance of payments is the balance of trade plus other money. •tourism •dumping •etcn