Unit 1: Chapter 1 - What is trade?

Question 1

What is the definition of business?

Answer 1

The manufacturing and/or sale of goods and/or services to satisfy the wants and needs of consumers to make a profit.

Question 2

What are the two main categories of business offerings?

Answer 2

Goods and Services

Question 3

What defines a domestic company?

Answer 3

Owned by Canadians, relies on Canadian products and services, sells products and services to Canadians.

Question 4

What is an international company?

Answer 4

Does not meet the ‘domestic’ criteria.

Question 5

What is a domestic transaction?

Answer 5

A transaction that occurs within the same country.

Question 6

What is an international transaction?

Answer 6

A transaction that occurs between businesses located in different countries.

Question 7

What is international business?

Answer 7

The economic system of transactions conducted between businesses located in different countries.

Question 8

What is a domestic market?

Answer 8

The customers (or potential customers) of a business who live in the country where the business operates.

Question 9

What is a foreign market?

Answer 9

The customers (or potential customers) of a business who live in a different country than the one where the business operates.

Question 10

Can a foreign market become a domestic market?

Answer 10

Yes.

Question 11

What are ways a company can be considered ‘international’?

Answer 11

1. Own a retail or distribution outlet in another country
2. Own a manufacturing plant in another country
3. Export to businesses in another country
4. Import from businesses in another country
5. Invest in businesses in another country

Question 12

When is another country considered to be a ‘trading partner’ with Canada?

Answer 12

When a business in Canada develops a relationship with a business in another country.

Question 13

True or False: International trade takes place between countries.

Answer 13

False. It takes place between businesses, not countries.

Question 14

True or False: Governments are essential to developing international trade.

Answer 14

True

Question 15

What is the difference between an import and an export?

Answer 15

Import: products brought in from another country
Export: products sent to another country

The difference is based on the direction of trade.

Question 16

What is a trade surplus?

Answer 16

Exports > Imports

A trade surplus occurs when a country sells more goods and services than it buys.

Question 17

What is a trade deficit?

Answer 17

Imports > Exports

A trade deficit occurs when a country buys more goods and services than it sells.

Question 18

What is a tariff?

Answer 18

A tax or duty to be paid on a particular class of imports or exports

Tariffs are often used to regulate foreign trade.

Question 19

What is a trade agreement?

Answer 19

Negotiation of tariffs on imports and exports between two or more countries

Trade agreements aim to facilitate trade by reducing barriers.

Question 20

What is Globalization?

Answer 20

Globalization is the process whereby national or regional economies and cultures become integrated through:
1) new global communication technologies
2) international trade
3) immigration
4) flow of money

Textbook definition of globalization.

Question 21

When did the history of Globalization begin?

Answer 21

After WWII, with the start of the United Nations and beginning of trade relations between countries.

This period marked the strengthening of economic ties, negotiation of tax treaties, and abolition of tariffs.

Question 22

What new developments contributed to Globalization?

Answer 22

New technology transforming the globe into one market

Advances in communication and transportation technologies played a significant role.

Question 23

List positives of Globalization.

Answer 23

1) Outsourcing
2) Lower Prices
3) Innovation
4) Optimal use of resources
5) Increased capital flow
6) Increased economic growth
7) Access to a wider variety of goods and services
8) Enhanced technological transfer
9) Cultural exchange
10) Job creation in developing countries

These factors contribute to economic growth and efficiency.

Question 24

What are some negative effects of globalization?

Answer 24

1) Lost jobs and fears of job loss
2) Loss of Canadian productivity
3) Exploitation of cheap labour
4) Increased pollution
5) Spread of disease
6) Job losses in developed countries
7) Exploitation of labor in developing countries
8) Environmental degradation
9) Increased income inequality
10) Cultural homogenization

These negative effects can lead to social and economic challenges.

Question 25

What is protectionism?

Answer 25

Economic policy that aims to restrict imports through tariffs, quotas, and regulations in an effort to boost domestic industry

Protectionism is often debated in the context of globalization.

Question 26

What is protectionism?

Answer 26

The economic policy of restraining trade between nations through tariffs, quotas, and regulations.

Protectionism aims to protect domestic industries from foreign competition.

Question 27

How is protectionism different from globalization?

Answer 27

Protectionism restricts international trade, while globalization promotes free trade and economic interdependence among countries.

They represent opposing approaches to trade policy.

Question 28

What is interdependence?

Answer 28

Reliance of two or more nations (or businesses) on each other for products or services.

Interdependence can enhance trade relationships and economic stability.

Question 29

What are the three main areas of interdependence?

Answer 29

1) Primary
2) Secondary
3) Tertiary

Each area corresponds to different sectors of the economy.

Question 30

What is a Primary Industry?

Answer 30

The sector of the economy characterized by the extraction of natural resources from the earth or sea.

Primary industries are foundational for economic development.

Question 31

What are the six major primary industries?

Answer 31

1) Agriculture
2) Fishing, hunting, and trapping
3) Forestry and logging
4) Energy
5) Mining
6) Water (sometimes)

These industries are crucial for providing raw materials.

Question 32

How do Primary Industries contribute to interdependence?

Answer 32

They add value to products and many countries depend on Canada for natural resources.

Most Canadian exports are in the primary sector like oil, gas, and agricultural products.

Question 33

What is a secondary industry?

Answer 33

Industries that create a finished usable product from raw materials.

Secondary industries are essential for manufacturing and production.

Question 34

What is the difference between Primary and Secondary Manufacturing?

Answer 34

Primary Manufacturing: processes raw materials (e.g. Lumber into pulp)
Secondary Manufacturing: creates finished goods (e.g. clothing, machinery)

Understanding this distinction is important for analyzing economic sectors.

Question 35

What is a Branch Plant?

Answer 35

A factory owned by a company based in another country.

Canada has a branch-plant economy primarily from foreign-owned businesses.

Question 36

What are the pros of Branch Plants?

Answer 36

1) Employ Canadian Workers
2) Pay Canadian Taxes

Branch plants can stimulate local economies.

Question 37

What are the cons of Branch Plants?

Answer 37

1) Most R&D and upper management takes place in the home country
2) Little innovation
3) Use of non-Canadian materials
4) Branch plants normally don’t export

These downsides can limit local economic benefits.

Question 38

What is a Tertiary industry?

Answer 38

Industries that provide necessary services to consumers and other businesses without making a product or extracting resources.

Examples include banking, transportation, and retail.

Question 39

Give examples of Tertiary industries.

Answer 39

1) Banking
2) Construction
3) Communications
4) Transportation
5) Retail sales

Tertiary industries play a vital role in the economy by supporting other sectors.