Deck 4: The World Market-Place: Business Without Borders

Question 1

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

Answer 1

False

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

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 5

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

Question 6

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

Question 7

One of the disadvantages of free trade is that there may be a loss of jobs in one country as jobs move to the country with the lowest paid workers.

Question 8

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 9

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

Question 10

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

Question 11

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

Question 12

As more people get the chance to get connected, better communication will likely feed economic growth.

Question 13

Many Canadian firms locate facilities in foreign markets in order to attract employees at lower wages.

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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 20

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 21

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

Question 22

Possibly, as much as 25 percent of international commerce involves trading products for products rather than trading currency for products.

Question 23

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 24

Barter opportunities tend to increase when economies are strong.

Question 25

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

Question 26

Countertrade is the term used to describe the actions of countries bartering products for products rather than for currency.

Question 27

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

Question 28

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

Question 29

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

Question 30

If during the Christmas season, many Europeans fly to New York and Boston to shop for gifts, claiming that their money seems to go much further in the United States than it does in their own countries, this would suggest that the U.S. dollar was weak relative to the euro.

Question 31

According to Michael Porter, the power of buyers can have an impact on the competitiveness of an industry.

Question 32

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

Question 33

When the American dollar is stronger than the Canadian dollar, Canadian travellers will buy more American goods.

Question 34

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

Question 35

Michael Porter developed a model to help evaluate industries in order to determine the one that will provide a comparative advantage.

Question 36

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

Question 37

The "Threat of Bankruptcy" is one of Michael Porters areas that influence the competitiveness of an industry.

Question 38

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

Question 39

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

Question 40

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

Question 41

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

Question 42

Foreign franchising is a specialized type of licensing.

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

Canada has been running a trade surplus for the last 25 years.

Question 48

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

Question 49

International trade is something every business should pursue as it offers new profit streams.

Question 50

Smaller firms tend to begin with exporting and move along the spectrum as the business develops.

Question 51

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

Question 52

Exporting involves shipping goods abroad that have been produced domestically.

Question 53

Foreign licensing is the most basic level of international market development.

Question 54

Quality control over foreign outsourcing requires detailed specifications and is easily monitored by the contracting firm.

Question 55

Exporting is a low-cost way to reach global markets.

Question 56

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 57

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

Question 58

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

Question 59

When the euro is stronger than the Canadian dollar, Europeans will export more goods and services to Canada.

Question 60

A franchisor grants the rights for another firm to produce and market its products as long as the business agrees to specific operating requirements.

Question 61

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

Question 62

The World Bank influences the global economy by providing financial and technical advice to the governments of developing countries for projects in a range of areas, including infrastructure, communications, health, and education.

Question 63

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

Question 64

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

Question 65

Coca-Cola and Pepsi have licensees worldwide.

Question 66

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

Question 67

The assistance developing countries receive from the World Bank is usually in the form of a monetary grant (gifted money).

Question 68

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 69

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 70

Licensors run the risk that unethical licensees may become their competitors, using information that they gained from the licensing agreement.

Question 71

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

Question 72

The World Bank influences the global economy by providing financial and technical advice to the governments of developing countries.

Question 73

Governments tend to use protective tariffs to raise funds for their countries.

Question 74

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

Question 75

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

Question 76

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

Question 77

Bribery and corruption are technically legal in some countries.

Question 78

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

Question 79

According to a World Bank "Doing Business" report, it is easier to do business in Singapore than it is in Canada.

Question 80

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