Exam review Module 1

Question 1

Comparative Advantage

Answer 1

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

Question 2

Absolute Advantage

Answer 2

Absolute advantage means that a country has a monopoly on a certain product of can produce the product more efficiently than any other country.

Question 3

exporting

Answer 3

Selling goods to other countries. Importing = Buying goods from others countries.

Question 4

balance of trade

Answer 4

Relationship of imports to exports.

Question 5

balance of payments

Answer 5

Balance of trade + other money flows i.e: tourism, foreign aid.

Question 6

dumping

Answer 6

selling products for less in a foreign country.

Question 7

Ways of entering world trade:

Answer 7

licensing, exporting, franchising, contract-manufacturing, joint ventures, strategic alliances, FDI (foreign direct investment).

Question 8

Multinational corporation

Answer 8

manufacturing facilities or physical presence in different nations.

Question 9

forces in global business

Answer 9

sociocultural, economic, financial, legal.

Question 10

Forces that inhibit or aid global business

Answer 10

sociocultural i.e: religion, financial i.e: disposable income, legal i.e: country laws, environmental forces i.e: internet usage).

Question 11

Trade Protectionism

Answer 11

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

Question 12

TP allows

Answer 12

domestic producers to survive and grow, producing more jobs.

Question 13

key tools in TP

Answer 13

tariffs (import/export tax), import quotas, embargoes.

Question 14

tariff

Answer 14

Taxes on foreign products.

Question 15

types of tariffs

1- protective tariffs

Answer 15

used to raise the price of foreign products

Question 16

types of tariffs

2 - revenue tariffs

Answer 16

used to raise money for the government.

Question 17

Non-tariff barriers

Answer 17

= safety, health, labelling standards.

Question 18

WTO

Answer 18

world trade organization

replaced the general agreement on tariffs and trade (GATT)

• WTO mediates trade disputes among nations

Question 19

IMF

Answer 19

International Monetary Fund (IMF) is an international bank that makes short-term loans to countries experiencing problems with their balance of trade.

Question 20

World bank

Answer 20

The World Bank is a United Nations (UN) agency that borrows money from the more prosperous countries and lends it to less-developed countries to develop their infrastructures.

Question 21

common market

Answer 21

= regional group of countries that have a common external tariff, no internal tariff, and a coordination of laws to facilitate exchange.

Question 22

common market allows for

Answer 22

elimination of trade barriers within certain regions. ex: NAFTA, EU.

Question 23

future of Global business in Canada

Answer 23

The internet is expanding the potential for global business

Expanding markets for Canada: China, India, Brazil, Russia.