Question 1

The form of economic integration where countries remove all barriers to trade among themselves, erect a common trade policy against non-members and allow free movement of capital and labour is called:
(a) A free trade area
(b) A customs union
(c) A Maquiladora
(d) An economic union
(e) A common market

Accepted Answer

A customs union involves the removal of trade barriers between member countries and the adoption of a common external trade policy.

Question 2

Which of the following (if any) is a disadvantage of economic integration?
(a) Trade diversion
(b) Loss of sovereignty
(c) Loss of jobs to low wage countries
(d) All of the above
(e) None of the above

D

Accepted Answer

Trade diversion can occur when a country starts trading with a less efficient member of its trading bloc instead of a more efficient non-member. Loss of sovereignty can happen as a result of agreeing to common trade policies, laws, and regulations. Loss of jobs to low wage countries can occur when firms relocate to countries with cheaper labour costs. All of these can be significant disadvantages of economic integration, making D) the correct answer.

Question 3

What is the law of one price?

Accepted Answer

Not Answer

Question 4

How does exchange rate instability impact the operations of the global marketing firm?

Accepted Answer

The answer of How does exchange rate instability impact the...

Question 5

Jane had finally convinced the Board of Directors to pursue international marketing activities in the developing world. While the Board agreed Jane was told that in order to limit the risk of failure she had to focus on those countries with higher levels of social and economic development. In order to identify such countries Jane should use:
(a) The Purchasing Power Parity index
(b) The Aggregate Welfare Measurement index
(c) The Physical Quality of Life Index
(d) The difference between consumer and producer surplus

Accepted Answer

The Physical Quality of Life Index (PQLI) is a measure that evaluates the level of social and economic development in a country. It includes indicators such as literacy rates, infant mortality rates, and life expectancy, which are relevant for assessing a country's development status in terms of social and economic conditions.

Question 6

___________________ is one of the benefits of economic integration. It is defined as the substitution of imports from a beneficiary country within the bloc for domestic production from some other country within the bloc.
(a) Trade expansion
(b) Trade diversion
(c) Trade creation
(d) Trade inclusion
(e) Trade symmetry

Accepted Answer

Trade creation refers to the situation where a country can import goods more cheaply from a member of the common market than it can from a non-member. This results in the redistribution of production within the bloc which makes it easier, faster, and cheaper to do business with other member countries in the bloc.

Question 7

How is income distribution measured? In assessing countries for foreign market expansion why is an analysis of income distribution important to the global marketer?

Accepted Answer

The answer of How is income distribution measured? In assessing...

Question 8

Opponents of Base of the Pyramid marketing argue that:
(a) The poor spend most of their money on basic needs and have little left over for other products.
(b) The poor are difficult to reach because they are geographically dispersed and culturally heterogeneous.
(c) Firms need very high penetration rates to be successful.
(d) All of the above
(e) (a) and (c) only

Accepted Answer

All of the choices listed are arguments made by opponents of Base of the Pyramid (BoP) marketing. They highlight the challenges in targeting the poor, such as their limited disposable income, logistical difficulties due to their dispersion and cultural diversity, and the need for high penetration rates for business success.

Question 9

What is the rationale for global marketers targeting consumers at the base of the income pyramid?

Accepted Answer

The answer of What is the rationale for global marketers...

Question 10

The form of economic integration where countries remove all barriers to trade among themselves, erect a common trade policy against non-members and allow free movement of capital and labour is called:
(a) A free trade area
(b) A customs union
(c) A Maquiladora
(d) An economic union
(e) A common market

Accepted Answer

A common market is a form of economic integration where countries remove all barriers to trade among themselves, erect a common trade policy against non-members and allow free movement of capital and labor. In a common market, there is free movement of factors of production such as labor and capital, and there is a coordinated macroeconomic policy among the member countries. A good example of a common market is the European Union.

Question 11

When evaluating countries for market entry why should the global marketer be concerned about excessive levels of national and household debt?

Accepted Answer

The answer of When evaluating countries for market entry why...

Deck 3: The Economic Financial Environments