Midterm Review

Question 1

How can a Business be International?

Answer 1

1. Importing goods from other countries
2. Exporting goods to other countries
3. Investing in foreign firms
4. Expanding operations into other countries

Question 2

What is interdependence?

Answer 2

The reliance of people on each other for goods, services or ideas. Eg: US tech company( apple) and china manufacturer

Question 3

What is trade surplus?

Answer 3

When a country export more than they import

Question 4

What is trade deficit?

Answer 4

When a country imports more than they export

Question 5

Comparative Advantage

Answer 5

when a country naturally already has a lot of a certain resource they tend to embrace this industry. Eg canada trades maple syrup bc of maple trees

Question 6

What are the advantages of International Trade?

Answer 6

1. Variety of goods, services, ideas
2. Lower prices ( due to reduced labour cost or increased competition)
3. New markets ( new customers)

Question 7

What are the two main avenues for foreign investment in a country?

Answer 7

1.Foreign Direct Investment (FDI):
Involves direct control, such as opening a factory or buying a local company.
Long-term investment with active management.
2.Portfolio Investment:
Involves buying financial assets like stocks, bonds, or shares.
No direct control over businesses; usually short-term and easily sold.

Question 8

What are the types of portfolios?

Answer 8

1.Conservative( low risk, low reward)
2. Aggressive ( high risk, high reward)
3. Income ( growth contributes to regular income withdrawals)
4. Socially responsible ( investments support worthy causes)

Question 9

What is a portfolio?

Answer 9

A collection of financial investments in foreign markets, such as stocks, bonds, or mutual funds

Question 10

What are some disadvantages of international trade?

Answer 10

1. Job Loss ( parent firms tend to eliminate foreign jobs when downsizing)
2. Reduced exports ( local labour + resources are used but not for local benefit)
3. Research and Development Challenges (R&D)
4. Economic Destabilization ( economic activities that disturb others- eg planting invasive crop that kills local plant life)

Question 11

What is Globalization?

Answer 11

The process by which firms develop international influence or start operating on an international scale

Question 12

What is populism?

Answer 12

An ideology that prioritizes common citizens. Many governments that embrace populism impose protectionist acts and regulations to put the domestic economy first

Question 13

What are Tariffs?

Answer 13

Taxes imposed on imported goods/services. Serves to generate revenue and protect domestic industries by making imports more expensive.

Question 14

What are Trade Barriers?

Answer 14

Tariffs, Trade Quotas, Trade Embargo, Trade Sanctions, Time zones and countries having different standards

Question 15

What are trade quotas?

Answer 15

Government imposed limits on how much a country can import.

Question 16

What are trade embargo?

Answer 16

When trade is prohibited entirely between two countries.

Question 17

What are trade sanctions?

Answer 17

The limit on the type and quantity of goods that two countries are allowed to trade