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Business: Flash Card Exam Review > Unit 1: Chapter 2 - Trade in the Modern World > Flashcards

Unit 1: Chapter 2 - Trade in the Modern World Flashcards

1
Q

What is Foreign Portfolio Investment?

A

Investment in businesses located outside of Canada through stocks and bonds

It allows Canadians to spread out their investments, which is less risky.

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2
Q

Why do Canadians and Canadian businesses invest outside of Canada?

A

To spread out investments, provide greater choice and opportunity

Investing in just one area is riskier.

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3
Q

What are stocks?

A

Ownership stake in the company, paid back in dividends

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4
Q

What are bonds?

A

Promise to pay back money with interest

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5
Q

What is B2B in the context of importing?

A

Businesses import finished goods for resale or may import equipment, raw materials, and services

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6
Q

What is B2C in the context of importing?

A

Consumers import products directly

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7
Q

What is global sourcing?

A

Buying equipment, capital goods, raw materials, or services from around the world

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8
Q

What is an example of a service that can be imported?

A

Canadian Businesses may import calling center services from other countries

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9
Q

What are some of Canada’s top imported goods?

A

Motor Vehicle and Parts, Industrial Machinery, and Electrical Machinery

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10
Q

Who are Canada’s top import partners?

A

US, China, Mexico

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11
Q

What are Canada’s top exported goods?

A

Oil & Mineral Fuels, Motor Vehicle and Parts, and Industrial Machinery

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12
Q

Who are Canada’s top export partners?

A

US, China, UK

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13
Q

What is a licensing agreement?

A

Grants permission to use a product, service, brand name, or patent in exchange for a fee or royalty

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14
Q

What are exclusive distribution rights?

A

A form of licensing agreement that grants a company the right to be the only distributor of a product in a specific area

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15
Q

What is a franchise?

A

An agreement to use a company’s name, services, products, and marketing for a fee

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16
Q

What support does a franchisor provide to the franchisee?

A

Support in financing, operations, human resources, marketing, advertising, and quality control

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17
Q

What is a joint venture?

A

A new company with shared ownership formed by two businesses

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18
Q

What are the benefits of a joint venture?

A

Access to markets, products, customers, shared expertise, financing, and technology

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19
Q

What is a strategic alliance?

A

Two companies work together but do not create a separate entity

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20
Q

What are foreign subsidiaries?

A

A branch of a company run as an independent entity in another country

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21
Q

How do parent companies interact with foreign subsidiaries?

A

Set financial targets and allow subsidiaries to manage day-to-day operations

22
Q

What are trade barriers?

A

Measures that governments implement to control the amount of trade across their borders

Trade barriers include tariffs, quotas, embargoes, and sanctions.

23
Q

What is a trade embargo?

A

A government-imposed ban on trade with a specific country

Embargoes are often declared to pressure foreign governments to change their policies.

24
Q

What is a trade sanction?

A

Partial trade embargoes that are short term and economic in nature

An example includes sanctions against North Korea.

25
Q

What laws govern specific industries in Canada regarding foreign investment?

A

Transportation, Broadcasting Act, Telecommunications Act

Each industry may have its own regulations related to foreign investment.

26
Q

Why are standards important in international trade?

A

Different countries have different standards for manufacturing processes

The ISO (International Organization for Standardization) sets quality restrictions.

27
Q

What is protectionism?

A

Aims to restrict imports through tariffs, quotas, and regulations to boost domestic industry

Protectionism shields domestic industries from foreign competition.

28
Q

What are trade barriers?

A

Measures that governments implement to control the amount of trade across their borders

Trade barriers include tariffs, quotas, embargoes, and sanctions.

29
Q

What is a tariff?

A

Taxes or duties on imports and exports

Tariffs make locally manufactured goods relatively cheaper.

30
Q

Define trade quota.

A

A government-imposed limit on the amount of product that can be imported in a certain period of time

Quotas restrict the volume of imports to protect domestic industries.

31
Q

What is a trade embargo?

A

A government-imposed ban on trade with a specific country

Embargoes are often declared to pressure foreign governments to change their policies.

32
Q

What is a trade sanction?

A

Partial trade embargoes that are short term and economic in nature

An example includes sanctions against North Korea.

33
Q

What are foreign investment restrictions?

A

Limits on the type and amount of international investment allowed

Governed by the Investments Canada Act, focusing on benefits for Canadians.

34
Q

What is the exchange rate?

A

The amount of one country’s currency in relation to the currency of another country.

35
Q

Why is the Canadian dollar often quoted against the U.S. dollar?

A

Because the two countries are the largest trading partners in the world.

36
Q

What are the winners of a low Canadian dollar?

A

1) Exporters
2) Canadian Tourism
3) Major Sports Teams

37
Q

What are the losers of a low Canadian dollar?

A

1) Importers
2) Canadian Travellers
3) Canadian Retail

38
Q

Define floating rate.

A

An exchange rate that is not fixed in relation to other currencies; price fluctuates according to supply & demand.

39
Q

Define fixed rate.

A

Currency value is fixed against another currency rate; helps to stabilize currency.

40
Q

What is currency revaluation?

A

The increase in value of a currency.

41
Q

What is currency devaluation?

A

Decrease in value of a currency.

42
Q

What economic condition leads to a higher value of the Canadian dollar?

A

Stable or rising GDP.

43
Q

How do interest rates affect the Canadian dollar?

A

Increased interest rates lead to a higher value of the Canadian dollar.

44
Q

What is the impact of political instability on currency demand?

A

Political tension and instability decrease the demand for currency.

45
Q

What are hard currencies?

A

Stable currencies that are easily converted to other currencies.

46
Q

What are soft currencies?

A

Unstable currencies that are difficult to convert into other currencies.

47
Q

How does currency supply and demand affect its value?

A

Currency Revaluation: Demand > Supply
Currency Devaluation: Supply > Demand

48
Q

What is demand in the context of supply and demand?

A

How much of a product or service is desired by buyers

Demand reflects consumer interest and willingness to purchase a product.

49
Q

What is supply in the context of supply and demand?

A

How much of a product is currently offered in the market

Supply indicates the availability of a product for sale.

50
Q

What happens to the value of Canadian currency when demand exceeds supply?

A

The Canadian currency becomes more valuable

This can lead to a currency revaluation.

51
Q

What happens to the value of Canadian currency when supply exceeds demand?

A

The Canadian currency becomes less valuable

This can lead to a currency devaluation.

Business: Flash Card Exam Review (5 decks)

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