Deck 17: The World Marketplace: Business Without Borders

Question 1

Many Canadian firms locate facilities in foreign markets in order to attract quality employees at bargain prices.

Answer 1

True

Question 2

Global trade provides opportunity for new markets.

Answer 2

True

Question 3

One of the factors limiting the economic development of nations like China and India is that they are tied down by old technologies like conventional landline telephone networks.

Answer 3

False

Question 4

Of the world's five most populous nations,the United States currently has the largest per capita GDP by a wide margin.

Question 5

In the 21st century,individual economies are becoming more isolated as they pursue increasingly protectionist methods to save domestic jobs and incomes.

Question 6

International trade stimulates competition as it encourages innovation and creativity for new products.

Question 7

When resources are limited,producing more of one good means producing less of something else.The opportunity cost of producing more of a good is the value given up by not producing the second-best choice.

Question 8

While technology and the workforce evolve,comparative advantage will remain constant.

Question 9

The Canadian economy lags behind other highly populated countries because a lower population in Canada puts a drag on economic growth.

Question 10

One drawback of global trade is that it increases the risk to firms who must do business in many different countries.

Question 11

The markets in China and India are attractive to Canadian firms both because of the huge populations of these nations and because both nations are experiencing rapid economic growth.

Question 12

Businesses that are actively involved in foreign markets often discover leading-edge trends that can give them a jump on the competition.

Question 13

In recent years the rate of economic growth for both India and China has lagged well behind that of Canada.

Question 14

Underdeveloped nations can invest in creating stronger infrastructures and institutions of higher education in an effort to build comparative advantage.

Question 15

The most attractive foreign opportunities for Canadian firms are found in the nations of Europe and North America.

Question 16

Individual economies around the world have become more interdependent than ever before.

Question 17

With a given amount of labour and other resources,producers in the nation of Alphania can produce either 100 widgets or 50 wackets.Thus,two widgets must be given up to produce each wacket.Using the same amount of labour and resources,producers in Betania can produce 40 widgets or 40 wackets-so one widget must be given up for each wacket produced.Based on this information,Betania has a comparative advantage in the production of wackets.

Question 18

Despite their huge populations,China and India offer very limited market opportunities to foreign producers because they refuse to open their economies to foreign investment.

Question 19

A nation has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost than other nations.

Question 20

In the context of international markets,industries in areas where their country has an absolute advantage tend to be more successful than industries in areas where their nation has a comparative advantage.

Question 21

The only practical way for small businesses to compete globally is through directly investing in foreign production facilities.

Question 22

As much as 20% of international commerce involves trading products for products rather than trading currency for products.

Question 23

Balance of payments includes foreign borrowing and lending,foreign aid,and investments.

Question 24

The exchange rate expresses the price of one nation's currency in terms of another nation's currency.

Question 25

Profit opportunity and risk do not affect global trade.

Question 26

The balance of trade includes the value of services as well as the value of goods.

Question 27

When the total value of exports is higher than the total value of imports,the trading nation loses leverage in the global market.

Question 28

In 2008 Canada experienced a trade deficit for the first time since 1999.

Question 29

During the Christmas season of 2007,many Europeans flew to New York and Boston to shop for gifts,claiming that their money seemed to go much further in the United States than it did in their own countries.This suggests that the U.S.dollar was weak relative to the euro in late 2007.

Question 30

A country experiences a trade surplus when the total value of exports is higher than the total value of imports.

Question 31

A nation's balance of trade is a major component of its balance of payments.

Question 32

When the total value of imports is higher than the total value of exports there is a trade surplus.

Question 33

When competing in global markets,businesses have a variety of ways to reach new customers.

Question 34

When the total value of imports is higher than the total value of exports,the country experiences a trade deficit.

Question 35

Global competition can keep prices low,which restrains the impact of inflation.

Question 36

Canada has been running a trade surplus for the last 20 years.

Question 37

Foreign outsourcing can cut production costs to a fraction of the cost of domestic production.

Question 38

A strong dollar makes it easier for Canadian firms to export their goods to foreign countries.

Question 39

Contracting with foreign suppliers to manufacture products at lower costs than domestic production discourages global competition.

Question 40

The exchange rate measures the value of one nation's currency as it relates to the value of another nation's currency.

Question 41

International companies must comply with international legal standards,but not the laws of their host country.

Question 42

Exporting involves shipping goods abroad that have been produced domestically.

Question 43

The licensee is the company buying the right to produce or market a product abroad.

Question 44

A key difference between franchising and licensing is that franchisees use the identity of the franchisor.

Question 45

Foreign licensing involves a domestic firm granting an overseas business the rights to produce and market a product or use a trademark in a defined geographic area.

Question 46

Joint ventures tend to be most useful in countries that require local political and cultural knowledge in order to successfully do business.

Question 47

Foreign licensing and franchising is one way to engage small business in global competition.

Question 48

Foreign direct investment tends to be inexpensive,but it gives companies very little control of business operations in a foreign country.

Question 49

Coca-Cola and Pepsi have licensees worldwide.

Question 50

Bribery and corruption are technically legal in some countries.

Question 51

A key advantage of exporting is that it allows firms to enter global markets while avoiding issues such as documentation requirements,content regulations,and shipping standards.

Question 52

Importing is the buying of products from overseas markets that have already been produced.

Question 53

Countries with the highest trade barriers often have the least competition.

Question 54

Infrastructure refers to a country's physical facilities supporting economic activity including transportation,power generation,and banking.

Question 55

Foreign franchising is a specialized type of licensing.

Question 56

The licensee is the company granting the right to produce and market its product overseas.

Question 57

Joint ventures,as partnerships,allow companies to share the risks of new business development.

Question 58

A franchisor offers other businesses the right to produce and market its products within specific guidelines.

Question 59

One of the main drawbacks small firms face when they seek to enter foreign markets by exporting is that the Canadian government offers virtually no assistance in these efforts.

Question 60

Smaller firms are better able to increase global reach than larger businesses.

Question 61

Which statement best describes the number of cell phones in India?

A)It is currently much lower than in China, but has been growing rapidly in recent years-a trend that is likely to continue.
B)It is the largest in the world, and is expected to continue growing rapidly.
C)It is extremely low, and unlikely to increase.
D)It is the fifth largest among the world's nations, but the growth rate is expected to slow considerably over the next few years.

Question 62

Voluntary export restraints are the most popular way to protect domestic firms from foreign competition.

Question 63

GATT,the General Agreement on Tariffs and Trade,was established to help nations raise more revenue from tariffs.

Question 64

Protectionism is the use of national policies designed to restrict international trade while protecting interests of domestic business.

Question 65

After the implementation of NAFTA,the Canadian economy experienced a serious decline in its rate of economic growth.

Question 66

All businesses encounter some barriers in their operations,whether they have foreign trade or not.

Question 67

The International Monetary Fund (IMF)has been especially aggressive in recent years in its efforts to force poor nations to repay the money they owe on IMF loans.

Question 68

Which of the following best describes how the economies of China and India compare to that of Canada?

A)They are more developed but growing more slowly.
B)They are less developed but growing more rapidly.
C)They are less developed and growing more slowly.
D)They are more developed and growing more rapidly.

Question 69

Many use the protection of domestic industries and national security as reasons for the erection of trade barriers.

Question 70

According to the textbook,what effect will the increased interdependence of economies around the world have?

A)Socialism will make a comeback.
B)Canadian firms will have more competition and more market opportunities.
C)Canada will experience persistent balance of payments surpluses.
D)Barriers to trade will become more common in the future.

Question 71

What country has the highest number of cell phone users?

A)United States
B)Russia
C)Japan
D)China

Question 72

An attempt to build exporting opportunities abroad through better relationships with other countries is called protectionism.

Question 73

The government of Simmonovia,a developing country,wants to build several new healthcare facilities in rural areas.Based on the mission,the World Bank might lend money to help the country finance these construction projects.

Question 74

How do China and India compare to Canada?

A)They have larger populations and more rapid economic growth.
B)They have higher per capita GDPs.
C)They have much larger populations, but are lagging in terms of economic growth.
D)They have very limited market potential.

Question 75

The World Bank was established to reduce poverty on a global scale.

Question 76

Which of the following would be classified as a developing country?

A)Turkey
B)Canada
C)Ireland
D)Japan

Question 77

Based on the size of its population and its recent rate of economic growth,which of the following countries presents the most attractive market opportunities?

A)Brazil
B)China
C)Indonesia
D)United States

Question 78

Many Canadian firms want to expand their sales in nations with high populations.What challenges will they face in dealing with these nations?

A)Their governments strongly favour socialist economic policies.
B)Their citizens aren't as interested in material goods as Canadian citizens are.
C)The purchasing power of most citizens is very low.
D)The rate of economic growth is much slower than that of less populous nations.

Question 79

The Uruguay Round of GATT negotiations created the World Trade Organization to promote international trade and to settle international trade disputes.

Question 80

Based on the GDP figures for the five most populous nations as shown in the textbook,which of the following statements is true?

A)The size of the Chinese economy is the second largest, but it is growing very slowly.
B)Brazil has the fastest rate of economic growth.
C)The U.S. has by far the largest per capita GDP.
D)The U.S. has the fastest rate of economic growth.