Pre Assessment Flashcards
Which negative outcome on political systems comes from globalization?
Increase in the number of laws
Increase in the amount of taxes
Creation of isolationist policies
Creation of translation problems
Creation of isolationist policies
Which factor results in a higher rate of globalization?
Reduced trade barriers
Lower cross-border migration
Higher costs of doing business
Decreased direct foreign investment
Reduced trade barriers
What are the four factors in Ghemawat’s CAGE analysis?
Culture, administration, government, environment
Culture, agriculture, government, economy
Culture, agriculture, geography, environment
Culture, administration, geography, economy
Culture, administration, geography, economy
What is a major drawback to the home country when companies outsource manufacturing jobs to countries with lower worker wages?
Higher taxes
Loss of manufacturing jobs
Increased manufacturing costs
Decreased focus on research and development
Loss of manufacturing jobs
A country has a characteristic traditional economic system with poor infrastructure and limited economic opportunity.
What is the impact of this system on the process of globalization?
The globalization process is unaffected as the system does not hinder the process.
The globalization process has shortcomings as there are conflicts with other countries.
The globalization process is at a disadvantage as the country has a lower standard of living.
The globalization process is steady as the country is not vulnerable to the impact of globalization.
The globalization process is at a disadvantage as the country has a lower standard of living.
What is a characteristic of a market economy?
Government regulation is abundant.
Production is based on traditions.
Goods and services are publicly owned.
Firms seek to maximize profits.
Firms seek to maximize profits.
Which impact does Islamic law directly have on businesses?
It forbids charging interest.
It commercializes the legal system.
It prohibits sale-buyback of businesses.
It limits the globalization of business.
It forbids charging interest.
Which institution helps to maintain availability of global financing to solve trade deficit issues?
The World Bank
The Federal Reserve
International Monetary Fund
International Finance Corporation
International Monetary Fund
What is the current focus of the World Bank?
Maximizing profitability
Improving quality of life
Supporting structural development
Maintaining equity between developing economies
Improving quality of life
For which concern has the World Trade Organization been criticized?
Adoption of labor standards protecting labor rights
Impact of tariffs set by developing nations
Impact of high tariffs on agricultural products
Influence of free trade policies on human trafficking
Adoption of labor standards protecting labor rights
How is the Special Drawing Right of the International Monetary Fund (IMF) valued?
It is based on the value of gold.
It is based on the U.S. dollar.
It is based on all members’ currencies.
It is based on the value of the five most significant members’ currencies.
It is based on the value of the five most significant members’ currencies.
Two countries agree to open their borders to international business transactions with one another without tariffs.
How does this affect global business?
It imposes import restrictions on competing nations.
It leads to developing free trade policies with strategic partners.
It provides subsidies and protects a critical industry.
It creates a trade surplus for the national economy.
It leads to developing free trade policies with strategic partners.
A country uses its established technology infrastructure to produce a good.
What is the impact of this infrastructure on trade?
It will improve supply and demand.
It will create barriers to entry for other nations.
It will decrease economies of scale.
It will decrease natural resources.
It will create barriers to entry for other nations.
What was the economic impact of the North American Free Trade Agreement (NAFTA)?
the reduction of economic output as measured by gross domestic product (GDP)
The overall loss of jobs and higher unemployment
The shift of jobs away from low comparative advantage industries
The increase of low-skilled worker employment in the United States
The shift of jobs away from low comparative advantage industries
A company that is located in Country A would like to sell products in Country B. The government of Country B is pushing for a tariff-based international trade agreement on the product.
What is the reasoning behind Country B’s decision?
Country B wants Country A to divert trade to another country to help Country A’s economy.
Country B seeks to protect its economy and give it the opportunity for long-term expansion.
Country B prefers to divert trade to another country to enhance its product industry.
Country B wants to expand its export to Country A in the product industry.
Country B seeks to protect its economy and give it the opportunity for long-term expansion.
Countries A and B participate in trade agreements that allow free trade among participant countries. However, Country A imposed quotas on several imported products to protect its domestic products.
What is the effect, if any, on the domestic prices of these products?
Increases
Decreases
Stays the same
Cannot be determined
Increases
Two countries decide to open up trade with each other.
What is likely to happen when trade opens up?
Economies of scale in comparative advantage industries will decrease.
Jobs will increase in non-comparative advantage industries.
Jobs will increase in comparative advantage industries.
Productivity in comparative and non-comparative advantage industries will decrease.
Jobs will increase in comparative advantage industries.
What is a purpose of a country implementing trade protectionism?
To increase dumping
To protect an infant industry
To increase competition
To protect against import subsidies
To protect an infant industry
Country A and Country B are trying to mend their relationship. A company from Country A would like to invest in a company in Country B.
Which action by Country B will help these two countries meet their goal?
Provide tax exemptions
Increase trade tariffs
Limit privatization policies
Create protectionist policies
Provide tax exemptions
Which level of regional economic integration is a key feature of a Customs Union?
Unified trading policies with non-members
Removal of all barriers to economic integration
Control of capital closed within each member country
Unified political policies within each member country
Unified trading policies with non-members
What is a drawback of creating regional trade agreements?
They discourage trade with less efficient producers.
They push cultural diversity between member countries.
They maintain tariff protection for small firms.
They shift employment opportunities.
They shift employment opportunities.
The United States-Mexico- Canada Agreement (USMCA), a modification of the North American FreeTrade Agreement (NAFTA), broadened the scope of free trade between member nations and tightened restrictions in the region.
Which regulation was established by this new agreement?
Almost half of all automobile parts must be made by a labor force that earns a minimum of $16 per hour by 2023.
100% of all automobile parts must be manufactured within the regions of Mexico, Canada, and the United States.
All dairy products produced in Canada, Mexico, or the United States must be traded with no tariffs.
Member countries may negotiate with foreign exporters to lower tariffs on their imports.
Almost half of all automobile parts must be made by a labor force that earns a minimum of $16 per hour by 2023.
A U.S. capital investment firm is researching new markets to enter to diversify its portfolio. The director of foreign investments presented a pitch to the board of directors encouraging entry into the Costa Rican telecommunications market by investing in local companies in the region through acquisition.
Which alliance supports this director’s suggestion?
Free Trade Area of the Americas
Central America Free Trade Agreement
Canada-Costa Rica Free Trade Agreement
International Monetary Fund
Central America Free Trade Agreement
A firm based in Country A manufactures its products in Country B and pays the manufacturing employees in the currency in which they are located.
Which currency situation will result in the maximum profit for the firm?
The currency in Country A is weak relative to the currency of Country B.
The currency in Country A is strong relative to the currency in Country B.
The value of the currency in both countries decrease.
The value of the currency in both countries stays the same.
The currency in Country A is strong relative to the currency in Country B.
Which drawback is associated with regional economic integration?
Lower prices for consumer products
Greater movement of labor
Increased exclusive internal trade
Specialization based on comparative advantage
Increased exclusive internal trade
Which factor contributes to the creation of a monopoly?
Control of natural resources
Strong prime interest rates
Highly educated employees
Vertically integrated organizations
Control of natural resources
Which convention provides gap fillers for terms that may not be expressly stated in agreements between two companies?
The Common Law
Uniform Commercial Code
Contracts for the International Sale of Goods
International treaties between the home countries of the companies
Contracts for the International Sale of Goods
Which laws are violated by practices such as price-fixing, price discrimination, restraints, and monopolization?
Production
Anti-trust
Contract
Intellectual property
Anti-trust
