Free Trade Area Flashcards, test questions and answers
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We've found 9 Free Trade Area tests
Business Management
European Free Trade Association
Free Trade Area
International Business
Regional Economic Integration
BUS 280 q.9 – Flashcards 90 terms

Kevin Stewart
90 terms
Preview
BUS 280 q.9 – Flashcards
question
The country of Argonia and the country of Berylia imposed tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Argonia now begins to import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a higher cost. Thus, Argonia benefits from this transaction. This is known as _____.
answer
Correct trade creation
question
Which of the following is true of the criteria to qualify for membership to the European Union (EU)?
answer
Correct The applicants were required to tame inflation.
question
_____ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within a free trade area.
answer
Correct Trade diversion
question
Which of the following is true of the Andean Pact of 1969?
answer
Correct Political and economic problems seem to have hindered cooperation among member-countries of the Andean Pact.
question
Which of the following is the goal of the Caribbean Single Market and Economy?
answer
Correct To harmonize macroeconomic and monetary policy between member states
question
A(n) _____ is defined as a central political apparatus that coordinates the economic, social, and foreign policy of the member states.
answer
Correct political union
question
Which of the following is a solution to the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations?
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Correct Establishment of a political union
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The European Community was established with the signing of the _____ in 1957.
answer
Correct Treaty of Rome
question
Which of the following refers to an association of English-speaking Caribbean states that are attempting to establish a customs union?
answer
Correct CARICOM
question
Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement?
answer
Correct Customs union
question
Which of the following is a reason why Mercosur was temporarily suspended in 2001?
answer
Correct An economic crisis in Argentina
question
Which of the following is a drawback of adopting the euro?
answer
Correct Loss of control over national monetary policy
question
The _____ refers to a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war.
answer
Correct Central American Common Market
question
Which of the following is a reason for Great Britain, Denmark, and Sweden to stay out of the euro zone?
answer
Correct The implied loss of national sovereignty to the European Central Bank
question
_____ occurs when high-cost domestic producers are replaced by low-cost producers within a free trade area.
answer
Correct Trade creation
question
Which of the following is true about how the euro will impact the pan-European capital market?
answer
Correct It will increase efficiency with which investment funds are allocated.
question
Which of the following is true about the European Commission?
answer
Correct The European Union's competition commissioner has been gaining influence as the chief regulator of competition policy in the member-nations of the European Union.
question
Which of the following levels of economic integration involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy?
answer
Correct Economic union
question
Which of the following entails a closer economic integration and cooperation than a common market?
answer
Correct Economic union
question
Which of the following is an issue confronting the North American Free Trade Agreement?
answer
Correct Expanding the membership of the agreement
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The _____ is composed of one representative from the government of each member-state, and whose membership depends on the topic being discussed.
answer
Correct European Council
question
Which of the following is true of the Single European Act?
answer
Correct The act provided the impetus for the restructuring of substantial sections of European industry.
question
Which of the following comprises the euro zone?
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Correct The 17 member nations who use euro as its currency
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Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)?
answer
Correct It was founded in 1990 at the suggestion of Australia.
question
An argument against the North American Free Trade Agreement centered on the fear that ratification would result in:
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Correct mass exodus of jobs from the United States into Mexico.
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The European Council considered to be the ultimate controlling authority within the European Union (EU) because:
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Correct draft legislation from the European Commission can become EU law only if the council agrees.
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The _____ is responsible for proposing European Union legislation, implementing it, and monitoring compliance with European Union laws by member states.
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Correct European Commission
question
Which of the following is a consequence of the implementation of the North American Free Trade Agreement?
answer
Correct Some U.S. and Canadian firms would move production to Mexico to take advantage of lower labor costs.
question
Which of the following led to the collapse of the Central American Common Market in 1969?
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Correct War between Honduras and El Salvador after a riot at a soccer match between teams from the two countries
question
Which of the following is true of regional economic integration?
answer
Correct By creating a single market, the EU aimed to lower the price for goods and services across the bloc.
question
Which of the following is true of the Treaty of Lisbon that was signed in 2007?
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Correct It created the position of the president of the European Council.
question
The _____ refers to a 1969 agreement among Bolivia, Chile, Ecuador, Colombia, and Peru to establish a customs union.
answer
Correct Andean Pact
question
In the context of international labor relations, which of the following is a concern of organized labor?
answer
Correct An international business keeps highly skilled tasks in its home country and farms out only low-skilled tasks to foreign plants.
question
Which of the following is an advantage of an ethnocentric staffing policy?
answer
Correct It helps transfer core competencies to a foreign operation.
question
According to the survey undertaken by Towers Perrin, which of the following countries provides the highest pay to HR executives?
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Correct The United States
question
In firms following a(n) _____ staffing policy, the lack of managers' mobility among national operations implies that the pay for expatriates should be kept country specific.
answer
Correct polycentric
question
Firms that use an ethnocentric staffing policy consider it to be:
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Correct the best way to maintain a unified corporate culture.
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Which of the following is a disadvantage of adopting a geocentric staffing approach?
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Correct Training and relocation costs increase when transferring managers from country to country.
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A(n) _____ staffing policy seeks the best people for key jobs throughout the organization, regardless of nationality.
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Correct geocentric
question
Which of the following staffing policies relies extensively on the use of expatriate managers?
answer
Correct Ethnocentric staffing policy
question
A firm's ability to reduce its use of expatriates may be limited, particularly if it is pursuing a(n) _____ staffing policy.
answer
Correct geocentric
question
Broadly speaking, a(n) _____ staffing approach is compatible with an international strategy.
answer
Correct ethnocentric
question
Which of the following is a major obstacle to the establishment of the Free Trade Area of the Americas?
answer
Correct The United States wants its southern neighbors to agree to tougher enforcement of intellectual property rights, which they do not want to embrace.
question
A(n) _____ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members.
answer
Correct common market
question
Which of the following is true with regard to establishment of the euro?
answer
Correct It required participating national governments to give up control over monetary policy.
question
Which of the following are the two impediments to regional economic integration?
answer
Correct Costs and national sovereignty
question
Which of the following is true of the euro since its establishment in 1999?
answer
Correct The euro has had a volatile trading history against the U.S. dollar.
question
Which of the following is true of the Andean Pact during the mid-1980s?
answer
Correct The Pact had failed to achieve the objective of a common external tariff.
question
The _____ proposed that all impediments to the formation of a single market be eliminated by December 31, 1992. The result was the Single European Act.
answer
Correct Delors Commission
question
_____ are the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements.
answer
Correct Free trade agreements
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_____ refers to the pact among Argentina, Brazil, Paraguay, and Uruguay that originated in 1988 to establish a free trade area.
answer
Correct Mercosur
question
Which of the following is the economic level corresponding to the least integration?
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Correct A free trade area
question
The _____, which has 754 members as of 2012, is directly elected by the populations of the member-states.
answer
Correct European Parliament
question
The _____ refers to an attempt to establish a free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
answer
Correct Association of Southeast Asian Nations
question
_____ occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area?
answer
Correct Trade creation
question
The agreement of the member-states of the Central American Common Market joined by the Dominican Republic to trade freely with the United States is known as _____.
answer
Correct Central American Free Trade Agreement
question
Which of the following organizations, established in 1951, was the forerunner of the European Union?
answer
Correct European Coal and Steel Community
question
Which of the following is true of the Court of Justice?
answer
Correct It is the supreme appeals court for European Union law.
question
Which of the following is true with regard to an economic union?
answer
Correct It involves the free flow of products and factors of production among member-countries.
question
Which of the following is a feature of a common market?
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Correct Allows free movement of factors of production between member nations
question
Which of the following was a change proposed by the Single European Act?
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Correct Apply the principle of "mutual recognition" to product standards
question
Which of the following countries has adopted the euro as its currency?
answer
Correct France
question
A(n) _____ is defined as a group of countries committed to removing all barriers to the free flow of goods and services between each other, but pursuing independent external trade policies.
answer
Correct free trade area
question
Which of the following is the aim of the Central America Free Trade Agreement?
answer
Correct Lowering of trade barriers between the United States and the Central American Common Market countries
question
Which of the following is true of the East African Community (EAC)?
answer
Correct Their program includes cooperation on immigration, road and telecommunication networks, investment, and capital markets.
question
Which of the following changes were proposed by the Single European Act?
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Correct Open public procurement to nonnational suppliers
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Which of the following is a benefit of adopting the euro?
answer
Correct The adoption of a common currency makes it easier to compare prices across Europe.
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A key advantage of adopting the euro is that it:
answer
Correct lowers foreign exchange and hedging costs in Europe.
question
_____ refers to agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other.
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Correct Regional economic integration
question
The European Community became the European Union in 1993 following the ratification of the _____.
answer
Correct Maastricht Treaty
question
Which of the following is a factor that resulted in the establishment of the European Union (EU)?
answer
Correct The devastation of Western Europe during two world wars and the desire for a lasting peace
question
Which of the following is true of the provisions of the North American Free Trade Agreement?
answer
Correct It seeks the removal of most barriers on the cross-border flow of services.
question
Suppose the country of Ceria and Lithinia imposed tariffs on imports from all countries, and then they set up a free trade area, scrapping all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Now, Ceria begins to import sugar from Lithinia. However, Ceria had previously been importing sugar from another country, Cadnia, which produced sugar more cheaply than Ceria or Lithinia. This is known as _____.
answer
Correct trade diversion
question
Which of the following principles did the Single European Act propose to apply to product standards?
answer
Correct The principle of "mutual recognition"
question
Which of the following is true regarding the establishment of the euro?
answer
Correct By adopting the euro, the European Union has created the second most widely traded currency in the world after that of the U.S. dollar.
question
Which of the following supports the economic case for regional economic integration?
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Correct Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
question
The right of foreign truckers to pick up and deliver goods within another member-state's borders is known as _____.
answer
Correct cabotage
question
Which of the following is true of the political case for regional economic integration?
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Correct Countries can enhance their political weight in the world by grouping their economies.
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Which of the following is true about the European Parliament?
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Correct It is directly elected by the populations of the member-states.
question
Which of the following institutions has a monopoly in proposing European Union legislation?
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Correct European Commission
question
Which of the following is considered to be the ultimate controlling authority within the European Union?
answer
Correct European Council
question
Which of the following is true of Alexander Yeats' criticism of the Andean Pact?
answer
Correct He pointed out that Mercosur countries were insulated from outside competition by tariffs that run as high as 70 percent of value.
question
The _____ refers to a permanent bailout fund, worth about €500 billion, set up by the euro zone nations to restore confidence in the euro.
answer
Correct European Stability Mechanism
question
Which of the following is an example of concerns over national sovereignty acting as an impediment to regional economic integration?
answer
Correct Great Britain refusing to adopt the common currency of the European Union, the euro
question
Which of the following are significant trade blocs in Europe?
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Correct The European Union and the European Free Trade Association
question
Concerns about _____ arise because close economic integration demands that countries give up some degree of their control over such key policy issues as monetary policy, fiscal policy, and trade policy.
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Correct national sovereignty
question
The movement toward regional economic integration has been most successful in _____.
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Correct Europe
question
The Andean Community now operates as a _____.
answer
Correct customs union
question
Which of the following is true with regard to regional economic integration?
answer
Correct Regional economic integration is good for consumers because it lowers prices.
question
Which of the following is true of the theoretically ideal free trade area?
answer
Correct No discriminatory tariffs, quotas, subsidies, or administrative impediments are allowed to distort trade between members.
Business Management
European Free Trade Association
Free Trade Area
International Business
IB Chapter 9 – Flashcards 15 terms

Joseph Fraser
15 terms
Preview
IB Chapter 9 – Flashcards
question
A _____ has no barriers to trade among member-countries, includes a common external trade policy, and allows factors of production to move freely among members, but does not have a common currency.
answer
Common market
question
The ultimate controlling authority within European Union is the European Commission.
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false
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Regional economic integration and the consequent increase in increased dependence on each other creates incentives for political cooperation between the neighboring states and reduces the potential for violent conflict.
answer
true
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Which feature of an economic union differentiates if from a common market?
answer
Harmonization of tax rates of member-countries
question
Collectively, the member-states of the _____ account for about 55 percent of the world's GNP, 49 percent of world trade, and much of the growth in the world economy.
answer
The Asia-Pacific Economic Cooperation
question
Which of the following is an argument against economic integration?
answer
It reduces degree of control over certain issues such as monetary and fiscal policy.
question
In addition to NAFTA, the only other significant trade bloc in the Americas is Free Trade Area of the Americas (FTAA).
answer
true
question
Two countries, Cadmia and Palladia, have formed a free trade agreement. This has resulted in Cadmia importing sugar from Palladia which it previously did from another country at a lower cost. This agreement has led to:
answer
trade diversion.
question
The lowering of barriers to trade and investment among countries has led to decreased price competition throughout the EU and NAFTA.
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false
question
Which of the following trade pact collapsed due to a war?
answer
Central American Common Market
question
Free trade agreements are the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements.
answer
true
question
Which of the following is true with regard to NAFTA?
answer
Many observers credit NAFTA with helping to create the background for increased political stability in Mexico.
question
Which treaty committed EC members to adopting a common currency by January 1, 1999?
answer
The Maastricht Treaty
question
Which feature of a customs union differentiates it from a free trade area?
answer
Adoption of a common external trade policy
question
Identify the correct sequence of economic integration starting from the least integrated to the most integrated.
answer
Free trade area, Customs Union, Common Market, Economic Union, and Political Union.
Countries
Economics
Free Trade Area
International Economics
Principles Of Marketing
3.4 Economic Integration – Flashcards 46 terms

James Storer
46 terms
Preview
3.4 Economic Integration – Flashcards
question
Economic integration
answer
Economic co-operation between countries and co-ordination of their economic policies.
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Internal rules
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Rules that members follow for behaviour among themselves.
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External rules
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Rules that members follow for behaviour with non-members.
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Preferential trade agreement
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o Where members lower, but do not eliminate, barriers among themselves. o An agreement between two or more countries to lower trade barriers between each other on particular products. Trade barriers may remain on the rest of the products and on imports from non-member countries. o Dealings with non-members are not addressed so member countries maintain policies of their own choosing with regard to non-member countries. o Gives preferential access to certain products from certain countries by reducing or eliminating tariffs, or by other agreements relating to trade.
question
Free trade area
answer
Consists of a group of countries that agree to gradually eliminate trade barriers between themselves. In trade relations between members, there may be free trade in some products and some protection in other products. This is the most common type of trading bloc. Each member country retains the right to pursue its own trade policy towards other non-member countries. Members have the freedom to choose how they wish to deal with non-member countries. Example = NAFTA and ASEAN
question
Customs union
answer
Occurs where member countries not only eliminate internal trade barriers, but they also adopt common policies for dealings with any non-members. All the member countries of the customs union act as a group in all trade negotiations and agreements with non-members. Each country in a customs union is no longer free to determine its own trade policy towards non-member countries, but must adopt the policy agreed upon by the customs union.
question
Common market
answer
Members eliminate internal trade barriers, adopt common external trade barriers and allow free movement of resources among member countries. Resources are factors of production such as labour, or capital. Example = Mercosur
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Economic union
answer
o Members eliminate internal barriers. o Members adopt common external barriers. o Members allow free movement of resources among member countries. o Members also adopt a uniform set of economic policies. Example = European Union and the Euro
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Bilateral trade agreement
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An agreement between two countries.
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Multilateral trade agreement
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Involves an agreement between many countries.
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Regional trade agreement
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Involves agreements between a group of countries that are within a geographical region.
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What is the main objective of trade agreements?
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The main objective of bilateral, regional and multilateral trade agreements is to promote trade liberalization.
question
What is trade liberalization?
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This is an increase in free trade achieved by the reduction or elimination of trade barriers between members.
question
Trade agreements reached under the WTO are regional, multilateral or bilateral? Why?
answer
Trade agreements reached under the World Trade Organization (WTO) are multilateral, because they include WTO member countries around the world. They require all member countries to reduce trade barriers at the same time.
question
One of the fundamental principles of the WTO is non-discrimination. What does this mean and what it its significance?
answer
o This means that a country cannot discriminate between any WTO members. o Countries cannot impose high barriers on imports from one member country and lower barriers on imports from another country. o This is a fundamental principle for the development of free trade globally.
question
What is a trading bloc?
answer
A trading bloc is a group of countries that have agreed to reduce tariffs and other barriers to trade amongst themselves for the purpose of encouraging free trade and co-operation between them.
question
From a lower to a higher level of economic integration there the following types of trading blocs:
answer
• Free trade area • Customs union • Common market
question
Economic integration over the long term can be expected to bring about many of the benefits of free trade, including:
answer
o Increased competition o Expansion into larger markets
question
What is a big problem that happens with free trade areas? Why does this problem arise? How is this problem solved?
answer
A product may be imported into the FTA by the country that has the lowest external trade barriers and then sold to countries within the FTA that have higher external barriers. This creates difficulties for the countries with higher trade barriers because they may end up importing more goods from countries outside the trade bloc than they would like. This problem arises because each country has its own individual barriers toward non-members. Because of this, FTA's generally make rules that prevent goods from entering countries with lower external barriers. These are sometimes known as country of origin rules. Summary: In order for an FTA to function properly, member countries must establish rules of origin for all third-party goods entering the free trade area. Goods produced within the free trade area may cross borders tariff-free, but rules of origin requirements must be met to prove that the good was in fact produced in the exporting country. In the absence of rules of origin, third-party countries seeking trade access to the FTA area will choose the path of least resistance in order to gain effective entry to the entire FTA region. This means that they will enter the FTA through the country where they face the lowest barriers to entry.
question
Why do customs unions have an advantage over free trade areas?
answer
Members of a customs union avoid having to create complicated internal rules for imports. This is because they all have the same common external barriers.
question
What is a problem with customs unions?
answer
Customs unions must co-ordinate their policies toward non-members and this gives rise to the possibility of disagreements. It might be difficult for all countries to agree on what are appropriate levels of trade barriers for non-members, especially if the level of development of the countries is different.
question
What are the main factors of production benefitted from being in a common market?
answer
The factors of production of importance are labour and capital. In a common market they are free to cross all borders so they can move, travel and find employment freely within the member countries. Workers are free to move and work in any member country without restrictions. Capital can also flow from country to country without restrictions.
question
What are the advantages of a common market over a customs union?
answer
Members enjoy free trade and all its advantages, such as: o Lower prices o Greater consumer choice = There is a greater variety of goods for consumers to choose from. Factor mobility across countries promotes a better use of factors of production. o There can be more specialization so there is an improved global allocation of resources. o For example, there may be high unemployment in a particular industry in one country and a high demand for labour in another country. This encourages unemployed workers to seek work in the country facing labour shortages. o If the profitability of investing is greater in one country than in another, capital gravitates to the more profitable country, making better use of capital resources. The principal advantage of establishing a common market is the expected gains in economic efficiency. o With unrestricted mobility, labour and capital can more easily respond to economic signals within the common market, resulting in a more efficient allocation of resources.
question
A common market requires the willingness of member governments to give up some of their policy-making authority to an organisation with powers over all the member governments. Is this easy? What are the consequences of this?
answer
This can be difficult to accomplish. It may take a long time for all countries to make the necessary policy changes to achieve co-ordination. For these reasons, there are far fewer common markets in the world than free trade areas and customs unions.
question
Economic integration will increase competition among producers within the trading bloc.
answer
With low or no barriers to trade, imports increase. This forces domestic producers to compete with lower cost producers from other countries. Trade barriers would have protected inefficient domestic producers, which does not promote a good global allocation of resources.
question
Increased competition offers major advantages in terms of:
answer
o Production by more efficient producers o Lower prices for consumers o Improved allocation of resources.
question
As the size of the market they supply expands, firms can achieve:
answer
o Lower costs of production on average, known as economies of scale. o Lower prices for consumers. o Greater export competitiveness.
question
Advantages of trading blocs:
answer
• Lower prices for consumers and greater consumer choice. • Increased investment. • Better use of factors of production/improved resource allocation. • Improved efficiency in production and greater economic growth. • Political advantages.
question
Disadvantages of trading blocs:
answer
• Trading blocs may not be the best way to achieve trade liberalization. • Trading blocs may create obstacles to the achievement of free trade on a global scale. • Unequal distribution of gains and possible losses in terms of the member countries. Countries forming a trading bloc are unlikely to gain equally from the operation of the trading bloc, creating the potential for conflicts between the member countries. This makes it difficult for agreements to be reached and means that some countries may actually lose from being in a trading bloc.
question
The IB syllabus refers specifically to trade creation and trade diversion as arising in customs unions. Is this necessarily true?
answer
No! They can arise in any type of trading bloc.
question
Trade creation:
answer
Trade creation refers to the situation where higher cost products (imported or domestically produced) are replaced by lower cost imports after the formation of a trading bloc.
question
Benefits of trade creation:
answer
Since trade creation involves the removal of tariffs, its benefits include getting rid of the disadvantages that come with imposing tariffs.
question
Trade diversion:
answer
Trade diversion refers to the situation where lower cost imports are replaced by higher cost imports from a member after the formation of a trading bloc. Trade diversion occurs when an importing country is forced to import from a higher cost producer within a trading bloc, whereas before it joined the trading bloc it was importing from a lower cost producer elsewhere.
question
The possibility of trade diversion resulting from a trading bloc is an additional argument against trading blocs and in favour of multilateral (WTO) trade liberalization. Why?
answer
The reason is that trade diversion cannot occur with multilateral reduction or elimination of trade barriers.
question
Does trade creation increase or decrease social welfare? What about trade diversion? What does this mean in terms of resource allocation?
answer
Trade creation has the effect of increasing social welfare, while trade diversion reduces it. Therefore, whereas a trading bloc creates free trade for the members, it may or may not improve the allocation of resources. Resource allocation will improve only if trade creation effects are larger than trade diversion effects.
question
Trade creation and trade diversion occur in the short-term or in the long-term?
answer
Trade creation and trade diversion refer to short-term (static) benefits and costs of trading blocs. This is because in the long-term the countries that are harmed by trade diversion can change their consumption patterns so that they will import less of the good in question.
question
Long-term benefits for the members of trading blocs are more important than short-term effects that may arise.
answer
Therefore, even if a trading bloc leads to trade diversion over the short term, it is possible that the long-term positive effects will more than compensate countries for possible short-term losses.
question
Different forms of economic integration allow member countries to gain from economies of scale.
answer
Economies of scale are one of the major benefits of free trade. In a small market, a firm cannot take advantage of economies of scale since a firm cannot grow large enough so that its long-run average costs begin to fall substantially. When an economy opens itself up to free trade with other countries, its exports are likely to increase, assuming that it is a relatively efficient producer.
question
Monetary union
answer
A common market with a common currency and a common central bank. Involves a far greater degree of integration than a common market.
question
What happens when countries decide to adopt a single common currency?
answer
In adopting a common currency, countries give up a significant part of their economic sovereignty to a supranational body. In terms of the European Union, the European Central Bank is responsible for the monetary policy for all the member countries. Following the adoption of a common currency, member countries give up control of their monetary supply and their ability to carry out their own monetary policy. These powers are transferred from each of their national central banks to a single institution (the European Central Bank in the case of the EU).
question
Advantages of a monetary union:
answer
• A single currency eliminates exchange rate risk and uncertainty, brining benefits to importers, exporters, consumers and investors. This encourages trade and investments across boundaries, contributing to achieving a more efficient allocation of resources. • A single currency eliminates transaction costs. Whenever there is a conversion of one currency into another, fees are charged for the conversion. A single currency eliminates these transaction costs, resulting in significant savings that have the effect of encouraging trade and investments. • A single currency encourages price transparency. This makes it easier for all economic decision-makers to see price differences quickly and accurately across countries, which has the effect of promoting competition and therefore of promoting more efficient production. • A single currency promotes a higher level of inward investment. This type of investment can be expected to rise because of the absence of currency risk, resulting in greater economic growth. • Low rates of inflation give rise to low interest rates, more investment and increased output. A single currency under the control of a single central bank committed to maintaining price stability results in low rates of inflation.
question
What is price transparency?
answer
Price transparency refers to the ability of consumers and firms to compare prices in all the countries that have adopted a common currency without having to make exchange rate calculations and conversions.
question
What is inward investment?
answer
Inward investment refers to investments from outsiders towards the member countries with a common currency.
question
What is the main problem with a monetary union?
answer
It is a system in which there is no possibility of changing the value of one currency in relation to another. There is no possibility of revaluing or devaluing the currency.
question
Disadvantages of a monetary union:
answer
• A single currency involves loss of exchange rates as a mechanism for adjustment. • A single currency involves loss of monetary policy as an instrument of economic policy. • Fiscal policy is constrained by the convergence requirements. • Monetary policy pursued by the single central bank impacts differently on each member country, depending on its own particular circumstances. Since countries are likely to differ from each other with respect to degrees of inflation and unemployment or their position in the business cycle, the single monetary policy pursued by the single central bank is unlikely to suit every country's needs. It may even harm some of the member countries, as is the case with the ECB not wanting to lower interest rates two years ago. This would have favored Greece but could have caused inflation in Germany so the interest rates were left the same.
question
What does not being able to change its exchange rate do to a country?
answer
If a member country has a trade deficit with another member country, it no longer has its own national currency that could depreciate (in a flexible exchange rate system) or devalue (in a fixed exchange rate system) to correct the imbalance.
Business Law
European Free Trade Association
Free Trade Area
Free Trade Association
International Business
Mergers And Acquisitions
MGT 302 Ch. 9 – Flashcards 84 terms

Marie Florence
84 terms
Preview
MGT 302 Ch. 9 – Flashcards
question
Regional economic integration involves agreements among countries in a geographic region to reduce, and ultimately remove, tariff and non tariff barriers to the free flow of goods, services, and factors of production between each other. TRUE or FALSE
answer
TRUE
question
The movement toward regional economic integration has been most successful in Asia. TRUE or FALSE
answer
FALSE
question
In a customs union, trade barriers are eliminated among member countries, and each country maintains its own external trade polices with nonmember countries. TRUE or FALSE
answer
FALSE
question
A common market has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members. TRUE or FALSE
answer
TRUE
question
A common market entails even closer economic integration and cooperation than an economic union. TRUE or FALSE
answer
FALSE
question
The European Union is an example of a perfect economic union. TRUE or FALSE
answer
FALSE
question
Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement. TRUE or FALSE
answer
TRUE
question
Linking neighboring countries economically and making them interdependent creates incentives to increase political cooperation as well. TRUE or FALSE
answer
TRUE
question
Because of the fact that everyone benefits from economic integration, it is easy to achieve and sustain. TRUE or FALSE
answer
FALSE
question
A major impediment to economic integration is the loss of sovereignty it entails. TRUE or FALSE
answer
TRUE
question
Trade diversion occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area. TRUE or FALSE
answer
FALSE
question
In theory, WTO rules should ensure that a free trade agreement results in trade diversion. TRUE or FALSE
answer
FALSE
question
A regional free trade agreement will benefit the world only when the amount of trade it creates exceeds the amount of trade it diverts. TRUE or FALSE
answer
TRUE
question
There are two main trading blocs in Europe, the European Union and the European Free Trade Association. TRUE or FALSE
answer
TRUE
question
The Treaty of Rome, signed in 1957, established the European Free Trade Association. TRUE or FALSE
answer
FALSE
question
A central reason for the establishment of the EU was the devastation of Western Europe during two world wars and the desire for a lasting peace. TRUE or FALSE
answer
TRUE
question
The Council of the European Union is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states. TRUE or FALSE
answer
FALSE
question
The ultimate controlling unit within the EU is the European Council. TRUE or FALSE
answer
TRUE
question
The European Parliament is primarily a consultative rather than legislative body. TRUE or FALSE
answer
TRUE
question
The judges of the European Court of Justice are required to act as representatives of national interests, rather than as independent officials. TRUE or FALSE
answer
FALSE
question
The establishment of the euro required participating countries to give up their monetary policy. TRUE or FALSE
answer
TRUE
question
The Single European Act committed EU countries to adopting a common currency by January 1, 1999. TRUE or FALSE
answer
FALSE
question
Establishment of the euro created the largest currency zone in the world, replacing the position the U.S. dollar had held for decades. TRUE or FALSE
answer
FALSE
question
Great Britain, Sweden, and France have led the push toward adopting the euro. TRUE or FALSE
answer
FALSE
question
A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets. TRUE or FALSE
answer
TRUE
question
The implied loss of national sovereignty to the ECB underlies the decision by Great Britain, Denmark, and Sweden to stay out of the euro zone for now. TRUE or FALSE
answer
TRUE
question
Since its establishment, the euro has had a stable trading history. TRUE or FALSE
answer
FALSE
question
On average, studies indicate that NAFTA's overall impact has been small but positive. TRUE or FALSE
answer
TRUE
question
The governments of both Canada and the United States are keen on adding other Latin American countries to NAFTA. TRUE or FALSE
answer
FALSE
question
The Andean Pact is a highly successful common market modeled after the EU. TRUE or FALSE
answer
FALSE
question
According to Alexander Yeats, the trade diversion effects of Mercosur outweigh its trade creation effects. TRUE or FALSE
answer
TRUE
question
The Free Trade Area of the Americas that was established in 2005 has thus far proven to be a success. TRUE or FALSE
answer
FALSE
question
The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an ASEAN preferential trade arrangement. TRUE or FALSE
answer
TRUE
question
The Asia-Pacific Economic Cooperation was established to increase multinational cooperation in view of the economic rise of the Pacific nations and the growing interdependence within the region. TRUE or FALSE
answer
TRUE
question
Political turmoil in several African nations has persistently impeded any meaningful progress in economic integration. TRUE or FALSE
answer
TRUE
question
The East African Community (EAC) has been a successful integration effort in Africa during the last three decades. TRUE or FALSE
answer
FALSE
question
To exploit the opportunities presented by the EU, non-EU firms must establish EU subsidiaries. TRUE or FALSE
answer
TRUE
question
A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs. TRUE or FALSE
answer
TRUE
question
Once barriers to trade and investment are removed, companies can treat a group of integrated countries like the EU as a single market and produce standardized products for it. TRUE or FALSE
answer
FALSE
question
The emerging role of the European Commission in competition policy suggests the EU is increasingly willing and able to intervene and impose conditions on companies proposing mergers and acquisitions. TRUE or FALSE
answer
TRUE
question
From least integrated to most integrated, the levels of economic integration are: A. a common market, a free trade area, an economic union, a customs union, and a political union. B. a free trade area, a customs union, a common market, an economic union, and a political union. C. a customs union, a free trade area, a common market, a political union, and an economic union. D. a common market, an economic union, a customs union, a free trade area, and a political union.
answer
B. a free trade area, a customs union, a common market, an economic union, and a political union.
question
Which level of economic integration eliminates trade barriers between member countries and adopts a common external trade policy? A. Political union B. Customs union C. Common market D. Economic union
answer
B. Customs union
question
Country X and Country Y reach an agreement to boost bilateral trade. They agree to remove all barriers to the trade of goods and services. They, however, are free to determine their own trade policies with regard to nonmembers. Which level of economic integration is this an example of? A. A customs union B. An economic union C. A common market D. A Free trade area
answer
D. A Free trade area
question
Which feature of a customs union differentiates it from a free trade area? A. Harmonization of members' tax rates B. A common currency C. A common external trade policy toward nonmembers D. Ability of factors of production to move freely between members
answer
C. A common external trade policy toward nonmembers
question
A _____ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members. A. common market B. customs union C. free trade area D. bonded market
answer
A. common market
question
Three countries agree to remove barriers to trade between member countries and adopt a common external trade policy toward nonmembers. They also agree to allow people and other factors of production to move freely across their borders. Which level of economic integration is this an example of? A. Bonded market B. Customs union C. Free trade area D. Common market
answer
D. Common market
question
Which feature of a common market differentiates it from a customs union? A. Harmonization of members' tax rates B. A common currency C. A common external trade policy toward nonmembers D. Ability of factors of production to move freely between members
answer
D. Ability of factors of production to move freely between members
question
A(n) _____ involves the free flow of products and factors of production between member countries, the adoption of a common external trade policy, a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy. A. economic union B. common market C. customs union D. free trade area
answer
A. economic union
question
Which feature of an economic union differentiates it from a common market? A. Free flow of products and factors of production between member countries B. A common monetary and fiscal policy C. A common external trade policy toward nonmembers D. Ability of factors of production to move freely between members
answer
B. A common monetary and fiscal policy
question
Which of the following is a reason why the European Union is considered an imperfect economic union? A. Factors of production are not allowed to move freely between member countries. B. Not all members of the union have adopted the euro. C. Almost all markets are heavily regulated. D. Products and services are not allowed to move freely between member countries.
answer
B. Not all members of the union have adopted the euro.
question
The move toward economic union raises the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations. Which of the following offers a solution to this problem? A. A common market B. A free trade area C. A customs union D. A political union
answer
D. A political union
question
What is the most enduring free trade area in the world? A. NAFTA B. EFTA C. ASEAN D. Mercosur
answer
B. EFTA
question
Why doesn't Great Britain use the euro as its national currency? A. Would have to convert its economic structure to the euro B. Would have to relinquish control of its monetary policy to the EU C. Would have to change its financial markets operations D. Would have to obtain approval from the U.S. Federal Reserve
answer
B. Would have to relinquish control of its monetary policy to the EU
question
A political benefit of economic integration is that: A. it enables participants to achieve gains from the free flow of trade. B. it enables participants to achieve gains from the free flow of investment. C. it allow countries to specialize in the production of goods and services that they can produce most efficiently. D. it reduces the potential for violent conflict.
answer
D. it reduces the potential for violent conflict.
question
Which of the following explains why economic integration has never been easy to achieve or sustain, despite the strong economic and political arguments in support? A. No country has shown significant improvement because of economic integration. B. Countries fear a reduction of their political weight in the world because of economic integration. C. Linking neighboring economies and making them increasingly dependent on each other creates little incentives for political cooperation. D. While a nation as a whole may benefit significantly, certain groups may lose.
answer
D. While a nation as a whole may benefit significantly, certain groups may lose.
question
_____ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area. A. Trade deficit B. Trade diversion C. Trade creation D. Trade distortion
answer
C. Trade creation
question
Which of the following occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area? A. Efficiency gain B. Trade diversion C. Trade deficit D. Trade creation
answer
B. Trade diversion
question
Country A and Country B entered into a free trade agreement recently. After this, Country A starts importing heavy machinery from Country B. Country A used to previously import such machinery at lower rates from another country. Which of the following has occurred in this scenario? A. Trade creation B. Efficiency gain C. Trade deficit D. Trade diversion
answer
D. Trade diversion
question
To ensure that a free trade agreement does not result in trade diversion, which of the following has to come within the scope of WTO? A. Nontariff barriers B. Services C. Energy markets D. Tax rates
answer
A. Nontariff barriers
question
The European Community was established by: A. the Treaty of Rome signed in 1957. B. the Maastricht Treaty signed in 1991. C. the Maastricht Treaty of 1994. D. the Single European Act of 1987.
answer
A. the Treaty of Rome signed in 1957.
question
The _____ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states. A. European Parliament B. European Commission C. Council of the European Union D. Court of Justice
answer
B. European Commission
question
Why is the European Council said to be the ultimate controlling authority within the EU? A. Since it is responsible for implementing EU legislation and monitoring compliance with EU laws by member states B. Since its role in setting competition policy is becoming increasingly important to business C. Since it has the right to vote on the appointment of commissioners D. Since draft legislation from the commission can become EU law only if the council agrees
answer
D. Since draft legislation from the commission can become EU law only if the council agrees
question
Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body? A. The European Parliament B. The European Commission C. The Council of the European Union D. The Court of Justice
answer
A. The European Parliament
question
Which of the following was the outcome of the Treaty of Lisbon signed in 2007? A. It established the European Community. B. It resulted in the adoption of the Euro. C. It changed the name of the European Community to the European Union. D. It increased the power of the European Parliament.
answer
D. It increased the power of the European Parliament.
question
Which of the following observations pertaining to the EU's Court of Justice is incorrect? A. It is comprised of one judge from each country. B. It is the supreme appeals court for EU law. C. Its judges are required to act as representatives of national interests. D. A member country can bring other members to the court for failing to meet EU treaty obligations.
answer
C. Its judges are required to act as representatives of national interests.
question
Which of the following observations is not true of the euro? A. It is used by all member states of the European Union. B. It required participating countries to give up their own currencies. C. It required participating countries to give up control over monetary policy. D. By adopting it, the EU created the second most widely traded currency in the world.
answer
A. It is used by all member states of the European Union.
question
Which treaty, signed in December 1991, committed EC members to adopting a common currency by January 1, 1999? A. The Maastricht Treaty B. The Treaty of Rome C. The Single European Act D. The Treaty of Lisbon
answer
A. The Maastricht Treaty
question
Which of the following is seen as a benefit of the euro? A. Governments gaining greater control over their monetary policies B. Reduced competition in most industries C. Zero interest expense for businesses D. Lower foreign exchange and hedging costs
answer
D. Lower foreign exchange and hedging costs
question
Which of the following is seen as a disadvantage of the euro? A. Higher foreign exchange and hedging costs B. National authorities losing control over monetary policy C. It becomes difficult to compare prices across Europe D. It undermines the development of a pan-European capital market
answer
B. National authorities losing control over monetary policy
question
In a(n) ____, similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy. A. optimal currency area B. unified economic area C. uniform currency zone D. monetary zone
answer
A. optimal currency area
question
Which of the following was required for new applicants to qualify for EU membership? A. Minimum economy size of €1 trillion B. Nationalization of private assets C. Deregulation of markets D. Sustained GDP growth of 10 percent for five years
answer
C. Deregulation of markets
question
Which of the following is seen to be a consequence of the size of the EU from 15 nations to 27 nations? A. Delays in the decision-making processes B. Elimination of the sovereign debt crisis C. Euro becoming the most traded currency in the world D. Huge initial impact on the overall economic welfare
answer
A. Delays in the decision-making processes
question
Which of the following is a reason why Turkey is not yet a member of the EU? A. Because only about 10 percent of Turkey's international trade is with the EU. B. Because of concerns over human rights issues in the country. C. Because the country has yet to form a customs union with the EU. D. Because of Turkey's weak economy.
answer
B. Because of concerns over human rights issues in the country.
question
How does the NAFTA seem to increase the international competitiveness of U.S. and Canadian firms? A. It gives them access to scarce natural resource hitherto unavailable. B. It increases tariff barriers making the North American market less attractive to Asian companies. C. It allows them to take advantage of lower labor costs in Mexico. D. It gives them production bases in South American markets like Brazil and Argentina.
answer
C. It allows them to take advantage of lower labor costs in Mexico.
question
What was the main objection raised by those in the United States and Canada who opposed the ratification of the NAFTA? A. Job losses B. Balance of payment problems C. Threat of competition from Asian companies D. Threat of a loss of national sovereignty
answer
A. Job losses
question
Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of: A. Mercosur. B. NAFTA. C. APEC. D. the Andean Pact.
answer
D. the Andean Pact.
question
Mercosur originated as a(n) _____ between Brazil and Argentina in 1988. A. common market B. free trade pact C. customs union D. economic union
answer
B. free trade pact
question
According to Alexander Yeats: A. the trade diversion effects of Mercosur outweigh its trade creation effects. B. the fastest growing items in intra-Mercosur trade were capital-intensive goods produced efficiently in the member countries. C. Mercosur countries will be able to compete globally once the group's external trade barriers come down. D. the customs union is becoming more perfect over time.
answer
A. the trade diversion effects of Mercosur outweigh its trade creation effects.
question
In early 2006, six CARICOM members and the United States established the ____, which was modeled on the EU's single market. A. Central American Common Market B. Central America Free Trade Agreement C. Caribbean Single Market and Economy D. North American Free Trade Area
answer
C. Caribbean Single Market and Economy
question
What has been the most significant impact of NAFTA? A. Its economic effects B. Its political effects C. Its psychological effects D. Its social effects
answer
B. Its political effects
question
Which of the following is true of ASEAN? A. China, India, South Korea, and Singapore are among its members. B. Collectively, the member states account for about 55 percent of world trade. C. It is slowly progressing toward establishing a free trade zone. D. It has been successful in fulfilling its basic objective of fostering freer trade between member countries.
answer
C. It is slowly progressing toward establishing a free trade zone.
question
Which of the following accounts for about 55 percent of the world's GNP and 49 percent of world trade? A. NAFTA B. APEC C. ASEAN D. EFTA
answer
B. APEC
question
Which of the following is the most frequently aired objection to free trade in Africa? A. These economies are too small for free trade to exist. B. These countries are not ready for a full-fledged political union with a common currency. C. They need to be "protected" by tariff barriers from unfair foreign competition. D. The larger nations like South Africa and Kenya stand much to lose from free trade and competition.
answer
C. They need to be "protected" by tariff barriers from unfair foreign competition.
question
The lowering of barriers to trade and investment between countries is likely to lead to _____ throughout the EU. A. higher costs of borrowing B. increase prices C. increase in hedging costs D. increased price competition
answer
D. increased price competition
Advertising And Marketing
Free Trade Area
Regional Economic Integration
BUSA 3000 Chapter 9 – Flashcards 50 terms

Mary Browning
50 terms
Preview
BUSA 3000 Chapter 9 – Flashcards
question
REGIONAL INTEGRATION AND ECONOMIC BLOCS 1. National economic integration refers to the economic interdependence experienced by closely associated countries that have formed an alliance.
answer
False p. 228
question
2. The European Union, formerly the European Economic Community, is the world's oldest, largest, and most advanced economic bloc.
answer
True p. 229
question
TYPES OF REGIONAL INTEGRATION 3. Countries in free trade areas only import and export products and services within the regional economic bloc.
answer
False p. 229
question
4. An exporter from Canada would face the same tariff if importing into either Argentina or Brazil.
answer
True p. 229
question
5. In economic unions, member countries often adopt standardized tax rates and exchange rates.
answer
True p. 230
question
LEADING ECONOMIC BLOCS 6. Belgium, France, Germany, Italy, and Spain signed the Treaty of Rome in 1957, which eventually led to the establishment of the EU.
answer
False p.
question
7. The introduction of the euro in 2002 meant that the monetary power of national governments within the EU was taken over by the European Central Bank.
answer
True p.234 - p.235
question
8. Western European members of the EU are expanding their economies at a rate twice as fast as Eastern European members due to the collapse of communism.
answer
False p. 236
question
WHY COUNTRIES PURSUE REGIONAL INTEGRATION 9. Regional integration enables firms to efficiently utilize labor and resources, which ultimately leads to competitive product pricing
answer
True. p
question
10. Foreign firms typically prefer investing in nations that are not part of economic blocs because of the additional regulations and restrictions.
answer
False
question
SUCCESS FACTORS FOR REGIONAL INTEGRATION 11. The most notable characteristic of economic blocs is that the member countries generally share a similar language and culture.
answer
False. Economic Similarity p. 242
question
12. Canadian companies enjoy more trade and investment relationships with U. S. firms than with Mexican firms because of language barriers between Canada and Mexico.
answer
True. p. 243
question
DRAWBACKS AND ETHICAL DILEMMAS OF REGIONAL INTEGRATION 13. The term trade creation refers to trade generated between nations of different economic blocs.
answer
False. Means Trade is generated among the countries inside the economic bloc because, as barriers fall, each member country tends to begin trading more with members than with nonmembers. p.243
question
14. Countries which join economic blocs must sacrifice control of their own economic destiny by submitting to the laws and regulations of the bloc's central authority.
answer
True p.
question
15. Rationalization after regional integration reduces redundancy in a firm by lowering costs and improving the efficiency of company operations.
answer
True
question
REGIONAL INTEGRATION AND ECONOMIC BLOCS 16. The intended purpose of regional integration is to ________. a. increase the mobility of workers among the member countries in a bloc b. reduce trade and investment barriers within the bloc c. streamline customs agency regulations within the bloc d. encourage foreign investment into the bloc
answer
b. reduce trade and investment barriers within the bloc p.
question
17. Which of the following terms is used to refer to two or more geographically connected nations in pursuit of freer trade relations? a. trade organization b. economic union c. economic bloc d. free trade agreement
answer
c. economic bloc
question
18. Which of the following organizations exemplifies regional integration?
answer
a. EU
question
19. Which of the following is favored by the World Trade Organization?
answer
d. multilateral trading system
question
TYPES OF REGIONAL INTEGRATION 20. The common market is categorized as which of the following levels of regional integration? a. free trade area b. free trade area and common external tariffs c. free trade area, common external tariffs and free movement of production factors d. free trade area, common external tariffs, free movement of production factors, and unified fiscal and monetary policies
answer
c. free trade area, common external tariffs and free movement of production factors
question
21. Members of ________ agree to the tariffs and non-tariff barriers that are applied to imports from nonmember countries. a. free trade areas b. customs unions c. economic blocs d. regional alliances
answer
b. customs unions
question
22. All of the following nations are members of MERCOSUR except ________. a. Paraguay b. Uruguay c. Mexico d. Argentina
answer
c. Mexico
question
23. Which of the following is the way in which common markets differ from customs unions? a. Products, services, and factors of production are allowed to move freely between member countries. b. Tariffs and non-tariff trade barriers are eliminated when trade and business investments occur between member nations. c. Member nations share a regulated system of tariff rates and equally distribute tax revenue received from non-member countries. d. The monetary, tax, and fiscal policies of member nations are overseen by a central authority.
answer
a. Products, services, and factors of production are allowed to move freely between member countries.
question
24. A firm's freedom to transfer funds to subsidiaries within a bloc characterizes which of the following levels of regional integration? a. customs union b. common market c. free trade area d. all of the above
answer
b. common market
question
25. At least some EU countries have established all of the following levels of regional integration except ________.
answer
d. political union
question
26. Economic unions are characterized by all of the following except ________. a. reduced border controls b. consistent labeling standards c. shared government institutions d. standardized merger laws
answer
c. shared government institutions
question
LEADING ECONOMIC BLOCS 27. Switzerland is a member of which of the following economic blocs? a. EU b. EFTA c. CAN d. APEC
answer
b. EFTA
question
28. Which of the following has the longest experience with regional integration? a. the Americas b. Asia c. Europe d. the Middle East
answer
c. Europe
question
29. Which of the following is responsible for determining the admission of new member countries to the EU? a. Council of the European Union b. European Parliament c. European Court of Justice d. European Commission
answer
a. Council of the European Union
question
30. The two EU institutions that oversee banking and legal issues are based in which of the following cities? a. Brussels b. Strasbourg c. London d. Luxembourg
answer
d. Luxembourg
question
31. Which of the following industries has experienced rapid expansion in Eastern Europe?
answer
c. automobile
question
32. What is the most likely reason that some Western European countries are concerned about the addition of Eastern European countries to the EU? a. fear of draining EU funds and outgrowing the current infrastructure b. concern about losing employment opportunities and foreign investment c. lack of public roads and transportation systems needed for manufacturing d. inability to provide necessary training and education to poor nations
answer
b. concern about losing employment opportunities and foreign investment
question
33. Countries such as Poland and Hungary have most likely attracted business investment because of ________. a. low wages b. uncomplicated business regulations c. inexpensive land d. few restrictions
answer
a. low wages
question
34. Which of the following has occurred as a result of NAFTA? a. Workers at maquiladoras have instigated union strikes. b. Working conditions in member nations have improved. c. Canadian exports to Europe and Asia have doubled. d. Foreign investors have been replaced by U.S. firms.
answer
b. Working conditions in member nations have improved.
question
35. Associate members of MERCOSUR enjoy which of the following benefits? a. legal waivers b. low cost labor c. preferential trade d. tariff exemption
answer
c. preferential trade
question
36. Which of the following economic blocs will most likely merge with MERCOSUR? a. CER b. NAFTA c. CARICOM d. CAN
answer
d. CAN
question
37. Which of the following members of ASEAN trades more products than it manufactures? a. Singapore b. Malaysia c. Philippines d. Indonesia
answer
a. Singapore
question
38. Which of the following is the primary reason for the lack of success seen by APEC? a. lack of strong industrial nations b. disagreement on economic issues c. language and cultural differences d. insufficient geographical proximity
answer
b. disagreement on economic issues
question
39. Member nations of CER seek to reduce trade dependence on which of the following countries? a. Australia b. Asia c. United States d. Great Britain
answer
d. Great Britain
question
40. All of the following most likely explain the lack of success by economic blocs in Africa except ________. a. tariff restrictions b. political unrest c. infectious diseases d. corruption
answer
a. tariff restrictions
question
WHY COUNTRIES PURSUE REGIONAL INTEGRATION 41. All of the following characterize benefits of regional integration to firms except ________. a. free-trade access within an economic bloc b. widened access to other economic blocs c. increased efficiency in production and marketing d. expanded marketplace for goods and services
answer
b. widened access to other economic blocs
question
42. One of the reasons for the establishment of the European Community was to ________. a. broaden the power of communism within East Germany b. create fair standards of trade and international business c. combine forces against the powerful former Soviet Union d. establish judicial procedures to handle trade violators
answer
c. combine forces against the powerful former Soviet Union
question
SUCCESS FACTORS FOR REGIONAL INTEGRATION 43. The success of which of the following blocs was most dependent on a shared language and culture? a. NAFTA b. MERCOSUR c. EU d. EFTA
answer
b. MERCOSUR
question
44. Which of the following factors has affected Sweden's success in the EU? a. high unemployment b. infrastructure c. cultural issues d. tax policies
answer
d. tax policies
question
DRAWBACKS AND ETHICAL DILEMMAS OF REGIONAL INTEGRATION 45. Which of the following terms is used to refer to a nation in an economic bloc ceasing to trade with a non-member nation? a. trade diversion b. trade creation c. trade autonomy d. free trade
answer
a. trade diversion
question
46. Canada restricts U.S. film and television producers from investing in the Canadian film market in order to ________. a. protect the Canadian film culture b. safeguard the Canadian economy c. ensure national film autonomy d. guard the integrity of Canadian actors
answer
a. protect the Canadian film culture
question
47. Regional integration often forces firms to restructure which may lead to ________. a. trade diversion b. trade creation c. reduced global trade d. worker layoffs
answer
d. worker layoffs
question
48. Firms often internationalize within an economic bloc for all of the following reasons except ________. a. gain international experience b. generate new sales and profits c. reduce exposure to competition d. increase source of supplies
answer
c. reduce exposure to competition
question
49. Many European firms gain access to the NAFTA bloc by ________. a. exporting their manufactured goods into Canada b. investing in the creation of Mexican factories c. advertising and marketing through U.S. media d. establishing political connections through U.S. firms
answer
b. investing in the creation of Mexican factories
question
50. Airbus Industries, the aircraft manufacturer, exemplifies which of the following opportunities created by regional integration? a. joint venture b. collaborative venture c. free trade agreement d. intercontinental bloc
answer
b. collaborative venture
East And South
Economic Activity
Free Trade Area
Northern European Plain
Traits
World Geography
Europe’s Land Regions – Flashcards 18 terms

Brandon Ruffin
18 terms
Preview
Europe’s Land Regions – Flashcards
question
Western Uplands
answer
Scandinavian Peninsula, Scotland, Ireland, Iceland, Portugal, and Spain
question
Northern European Plain
answer
England, Northern France, Northern Germany, and Southeastern Europe
question
Central Uplands
answer
Eastern Europe, Luxembourg, southern Germany
question
Alpine Mountain Region
answer
Mountains of Spain, Switzerland, Italy, Greece, and Southeastern Europe
question
Alpine Mountain Region
answer
Mountains dominate this region
question
Western Uplands
answer
Rugged highlands as the result of glaciers
question
Northern European Plain
answer
Rivers are plentiful
question
Western Uplands
answer
Poor soil
question
Northern European Plain
answer
Most populated
question
Central Uplands
answer
Hills and forests
question
Western Uplands
answer
Lakes and marshlands
question
Northern European Plain
answer
Soil ideal for farming
question
Western Uplands
answer
Coldest Region
question
Northern European Plain
answer
Land is mostly flat
question
Western Uplands
answer
Livestock, hydroelectric power
question
Northern European Plain
answer
Farming, trade
question
Central Uplands
answer
Livestock, farming
question
Alpine Mountain Region
answer
Olive groves, vineyards, and orchards
Business Management
Carbon Dioxide Emissions
Encoding And Decoding
Free Trade Area
International Business
International Marketing
Global Business Test 1 Multiple Choice – Flashcards 80 terms

Elizabeth Hill
80 terms
Preview
Global Business Test 1 Multiple Choice – Flashcards
question
When museums and monuments are built in order to preserve legacies of important events or people, it promotes which of the following? a. Cultural diffusion b. Caste system c. National culture d. Social mobility
answer
c. National culture
question
The United Kingdom and United states value ______, whereas Japan and South Korea value ________. a. caste system; class system b. aesthetics; ethnocentricity c. individual freedom; group consensus d. quality of life; quantity of life
answer
c. indivual freedom; group consensus
question
People from which of these cultures are casual about time and maintain flexible schedules? a. Japan b. The United States c. Northern Europe d. Latin America
answer
d. Latin America
question
Bowing to show respect in Japan is an example of which of these cultural traits? a. Tradition b. Concept c. Gesture d. Material object
answer
c. Gesture
question
Which of the following describes a behavior, often dating back several generations, that is practiced within a homogenous group of people? a. Manners b. Attitude c. Popular custom d. Folk custom
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d. Folk custom
question
A ___________ is a system of social stratification in which people are born into a social ranking, with no opportunity for social mobility. a. moksha b. class system c. caste system d. kosher
answer
c. caste system
question
Which of these religions is the world's single largest religion? a. Jewish b. Christianity c. Islamic d. Confucianism
answer
b. Christianity
question
Which of these, according to Hofstede, describes the degree of inequality between people in different occupations? a. Power distance b. Uncertainty avoidance c. Individualism d. Collectivism
answer
a. Power distance
question
An autocratic style of management would be best received by which of the following situations? a. Low power-distance countries b. High power-distance countries c. Uncertainty avoiding countries d. Countries with high individualism
answer
b. High power-distance countries
question
An agreement in which one company provides a foreign company with a complete package of materials and service including advice and standardized operating procedures is called? a. outsourcing. b. licensing. c. direct investment. d. franchising.
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d. franchising.
question
Which of the following is an example of paralanguage? a. Widening your eyes b. Moving closer to the listener c. Speaking faster d. Touching while you speak
answer
c. Speaking faster
question
An arrangement in international business in which two companies, a foreign company and a local firm, invest together to create a local business is called a. joint venture. b. local assembly. c. indirect exporting. d. licensing.
answer
a. joint venture.
question
Two carmaker have developed a strange, but successful partnership. Ford, a U.S. automaker, and Mazda, an Asian carmaker, have collaborated on several models including the Explorer, the Probe, the Mazda 323, and the MX-6. The U.S. automaker has supplied Mazda with help in marketing, finance, and styling. In return, Mazda has provided manufacturing and product development expertise with Ford. Both companies have worked together toward a common goal and both have benefited as a result of their ______. a. international savvy b. international competitive expertise c. strategic alliance d. knowledge of global competition
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c. strategic alliance
question
Which of the following is not an advantage of licensing? a. Capital-free entry b. Low risk c. Can obtain information about the dynamics of the market d. Increased employment in the company licensing its brand or technology
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d. Increased employment in the company licensing its brand or technology
question
Companies which contract with a foreign firm to make products according to stated specifications are using a. direct exporting. b. indirect exporting. c. licensing. d. local manufacturing.
answer
d. local manufacturing.
question
As a firm exporting to direct investment, the relative amount of a firm's financial commitment, risk, and profit potential a. increases. b. decreases. c. remains the same. d. the risks decrease and potential for profit increases.
answer
a. increases.
question
The practice of international management is best approached from which of the following perspectives? a. historical b. Human relations c. Contingency d. Systems approach
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c. Contingency
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The rules of the game for the international manager are set by a. multinational corporations. b. international trade associations. c. international political associations. d. individual countries and cultures.
answer
d. individual countries and cultures.
question
What is perhaps the most likely reason why McDonald's has expanded internationally? a. Cut costs b. find new sources of financing c. Overcome limited expansion opportunities at home d. Establish economies of scale.
answer
c. Overcome limited expansion opportunities at home
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The entry strategy of _________ provides the least amount of risk and resource costs, but also the least control. a. exporting b. licensing c. franchising d. a joint venture
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a. exporting
question
An MNC that is host-country oriented is called a. ethnocentric. b. polycentric. c. geocentric. d. localcentric.
answer
b. polycentric.
question
The emergence of a largely borderless economic world has created a _______ for markets of all shapes and sizes. a. condition of chaos b. terrible business climate c. paradigm shift d. new reality
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d. new reality
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A manager in Japan should realize that Japanese are motivated a. by time off. b. in groups. c. by money only. d. by public praise only.
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b. in groups.
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A key to successfully implementing a "push" promotion strategy abroad is a. to create a brand loyal consumer b. a company's sales force. c. creating consumer demand through mass-media advertising. d. all of the above.
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b. a company's international sales force.
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Which of the following best describes the global economy? a. Trade b. Diversity c. Interdependency d. Multinational corporation
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c. Interdependency
question
_____ are imitation products passed off as legitimate trademarks, patents, or copyrighted works. a. Brand name goos b. Counterfeit goods c. Foreign goods d. Intangible goods
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b. Counterfeit goods
question
The TRIAD market consists of which regions? a. Western Europe, Eastern Europe, and North America b. Western Europe, Asia, and the United States c. Western Europe, Asia, and North America d. Europe, Southeast Asia, and the Americas
answer
c. Western Europe, Asia, and North America
question
The risk of expropriation is highest in countries that a. have a large number of MNC's operating. b. experience continuous political upheaval. c. have low levels of education and economic development. d. have unstable economies.
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b. experience continuous political upheaval.
question
All of the following are examples of domestic economic conditions except a. size of population. b. economic growth over the last five years. c. availability of energy resources. d. legal protection of brands.
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d. legal protection of brands.
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A country's ability or intention to meet its financial obligations determines its a. economic risk. b. political risk. c. expropriation risk. d. appropriability risk.
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a. economic risk.
question
Which of these is essential to production in any country? a. Availability of labor b. Tariffs and quotas c. Governmental control d. Local financing
answer
a. Availability of labor
question
Governmental regulation and government bureaucracy are important factors evaluated in which of these steps of the market / site screening process? a. Identify basic appeal b. Measure market / site potential c. Assess the infrastructure d. Assess the national business environment
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d. Assess the national business environment
question
Tariff serve primarily to a. encourage foreign trade. b. equalize production capacity. c. raise prices on imports. d. limit the amount of goods leaving the domestic market.
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c. raise prices on imports.
question
Limits placed on foreign producers which guarantee that approximately 50 percent of the U.S. sugar market be reserved for American sugar growers is an example of a. tariffs. b. blocked currency. c. quotas. d. excise taxes.
answer
c. quotas.
question
The use of the Internet raises difficult questions about a. ownership of intellectual property. b. taxation. c. residence location. d. all of the above.
answer
d. all of the above.
question
Which of these is the main political motive behind government intervention in trade? a. Promotion of a strategic trade policy b. Protecting jobs c. Protection of national identity d. Protecting young industries from competition
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b. Protecting jobs
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Which of these industries is typically protected for national security reasons? a. Agriculture b. Textile c. Cosmetic d. Housing
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a. Agriculture
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A tariff levied by the government of a country that a product is passing through on its way to a final destination is called a _____ tariff. a. transit b. domestic c. export d. import
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a. transit
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A ban on trade in one or more products with a particular country is called a(n) a. embargo. b. tariff-quota. c. tariff. d. export restraint.
answer
a. embargo.
question
Fluctuations in _______ among the world's currencies are of critical importance in global marketing. a. immigration b. reciprocity c. exchange rates d. equity
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c. exchange rates
question
If a U.S. dollar had been worth 2 German marks in 1999 and 4 German marks in 2000, then American goods would have been _______ expensive in Germany in 1999 than in 2000. a. more b. less c. equally as d. cannot be determined with the information given
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b. less
question
Personnel directors typically select potential expatriates on the basis of a. their ability to speak more than one language. b. their ability to adapt to different cultures. c. their desire to learn another culture. d. their domestic track record and technical expertise
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d. their domestic track record and technical expertise
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Managers prefer that exchange rates be a. stable. b. freely floated. c. volatile. d. unpredictable.
answer
a. stable.
question
Which is the final stage of the culture shock process? a. Gradual adjustment b. The honeymoon stage c. Biculturalism d. Irritation and hostility
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c. Biculturalism
question
When a country has a weak currency relative to other nations, it makes imports ___________ relative to domestic products. a. more expensive b. equitable in price c. more attractive d. less expensive
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a. more expensive
question
All of the following a barriers to a global staffing policy, except a. staff availability. b. corporate strategy. c. cost constraints. d. host government requirements.
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b. corporate strategy.
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Among older Japanese women, a management position a. was a great honor. b. caused her husband loss of face. c. was common for college educated women. d. All of the above
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b. caused her husband loss of face.
question
What is the term for a firm selling a product in a foreign country below its domestic price or below its actual cost? a. Competition b. Monopolistic practice c. Globalization d. Dumping
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d. Dumping
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European nations are most likely to use which type of law? a. Common b. International c. Statutory d. Civil
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d. Civil
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Under what form of law are past court decisions used as precedents? a. Religious law b. Civil law c. Common law d. Statutory law
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c. Common law
question
The modern Western system of _________ is technically illegal in Moslem nations.` a. steel b. consumer products c. textiles d. banking
answer
d. banking
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Seizure of assets falls into all of these categories except a. confiscation. b. local content requirements. c. expropriation. d. nationalization.
answer
b. local content requirements.
question
Which of these is the policy of hiring people to represent a company's views on political manners? a. Partnership b. Lobbying c. Bilateral agreement d. Localization
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b. Lobbying
question
The Foreign Corrupt Practices Act forbids U.S. companies from ____________ government officials or political candidates in other nations. a. lobbying b. politically influencing c. bribing d. contacting
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c. bribing
question
A ____________ is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention. a. patent b. trademark c. civil right d. copyright
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a. patent
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The Nike "Swoosh" is a a. patent. b. fad. c. copyright. d. trademark.
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d. trademark.
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The main of privatization is to a. lower the responsibility and accountability. b. increase economic efficiency. c. increase subsidiaries to companies. d. slow the economic growth.
answer
b. increase economic efficiency
question
In 1999, the U.S. government brought charges against Microsoft for which of these? a. To enforce antitrust laws b. For having too much money c. To reduce competition d. For laying off too many people
answer
a. To enforce antitrust laws
question
When one company is able to control a product's supply-and therefore its price-it is considered a(n) a. government-owned company. b. monopoly. c. underground-controlled company. d. supply-driven company.
answer
b. monopoly.
question
In a countertrade exchange, PepsiCo trades soft drink concentrate with Russia for a. exclusive rights to future Pizza Hut and Taco Bell franchises. b. information of MIA's from the war in Vietnam. c. Stolichnaya Vodka. d. Beluga Caviar.
answer
c. Stolichnaya Vodka.
question
A process that involves the study of similarities and differences among consumers in two or more nations or societies a. international attitude evaluation. b. multigraphic societal scanning. c. polyphasic anthropology d. cross-cultural analysis
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d. cross-cultural analysis
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The reverence that Japan shows towards its elderly is an example of the nation's a. values. b. beliefs c. customs. d. religion.
answer
a. values.
question
The number 13 is considered "unlucky" in America whereas the number 4 is considered "unlucky" in Japan. This is an example of differences in a. cultural symbols. b. values. c. ethics. d. morals.
answer
a. cultural symbols.
question
If you were responsible for marketing communications a Paper Mate, the pen manufacturing company, and had to provide product literature to distributed in France, you would be wise use what is called "___________", whereby you have your literature translated from American English into French, and then from French into American English by someone in France. a. back talk b. back translation c. double talk d. double indemnity
answer
b. back translation
question
Since global marketing is affected by economic consideration, a scan of the global marketing should include a. a comparative analysis of the economic development in different countries. b.an assessment of the economic infrastructure in the countries. c. consumer income in different countries. d. all of the above.
answer
d. all of the above.
question
Wrigley's Gun distributes its products in identical form in all the countries in which it markets. This is an example of which type of international marketing strategy? a. Extension b. Customized c. Adaptation d. Invention
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a. Extension
question
The majority of the total world merchandise trade occurs a. between high-income countries and low- and middle-income nations. b. among world's high-income economies. c. among low- and middle-income nations. d. among the emerging markets.
answer
b. among world's high-income economies.
question
An institution that sets rules governing trade between its members through a panel of trade experts who decide on trade disputes between members and issue binding decisions is the a. World Health Organization. b. World Trade Organization. c. International Cooperation Organization. d. League of Nations.
answer
b. World Trade Organization.
question
Just as countries and regions can discourage international trade through trade barriers, they can also encourage it through offering ______, helping on site location, and providing other services. a. lavish parties and entertainment b. bribes placed in numbered Swiss bank accounts c. prison labor d. investment incentives
answer
d. investment incentives
question
Hungary has offered a five-year "tax holiday"-a period during which no corporate taxes will be assessed-to encourage foreign firms to develop manufacturing facilities there. What is the term for this in international business. a. Global cooperation b. Trade incentive c. Bribery d. Countertrade
answer
b. Trade incentive
question
When a country is not able to produce a good more efficiently than another, but produces the good more efficiently than any other goods, it is said to have a(n) a. absolute advantage. b. resource problem. c. zero-sum game. d. comparative advantage.
answer
d. comparative advantage.
question
Which of these is not a problem associated with the infant industry argument? a. It can cause domestic companies to become overly innovative. b. Once protection of an industry is given, it can be politically difficult to eliminate it. c. Protection can do more economic harm than good. d. Governments are required to distinguish between industries that are worth protecting and those that are not.
answer
a. It can cause domestic companies to become overly innovative.
question
The Uruguay Round of negotiations modified the original GATT treaty in all of the following way except a. intellectual property rights were clearly defined. b. the WTO was established to enforce the new GATT. c. tariffs and nontariff barriers in trade in telecommunications were reduced significantly. d. international trade in services was included in the GATT for the first time.
answer
c. tariffs and nontariff barriers in trade in telecommunications were reduced significantly.
question
A key component of the WTO that was carried over from the GATT is the principle of non-discrimination called a. normal trade relation. b. equality of all nations. c. equity exchange. d. fairness principle.
answer
a. normal trade relation.
question
Which form of entry into a foreign market requires the greatest commitment? a. Direct exporting b. Direct investment c. Joint venture d. Licensing
answer
b. Direct investment
question
The world's three most important financial centers are a. Bonn, Zurich, and New York. b. London, Amsterdam, and Sydney. c. New York, Tokyo, and Bombay. d. Tokyo, London, and New York.
answer
d. Tokyo, London, and New York.
question
Which of these is the market consisting of all stocks bought and sold outside the issuer's home country? a. The Eurocurrency market b. The international equity market c. The foreign exchange market d. The international bond market
answer
b. The international equity market
question
When goods are stored in a commercial warehousing facility the parties to the contract have entered into what type of agreement? a. A bailor-benefit bailment b. A bailee-benefit bailment c. A mutual benefit bailment d. A commercial benefit
answer
c. A mutual benefit bailment
question
A _____ is a system of social stratification in which people are born into a social ranking, with no opportunity for social mobility. a. moksha b. class system c. caste system d. kosher
answer
c. caste system
question
Foreign countries with very low per capita incomes may, nonetheless, be attractive markets for expensive goods. Mexico, for example, has an average income of less than $1,000 but is a good market for luxury automobiles. The reason is a. consumers spend more than they can afford b. foreign consumers save more than U.S. consumers c. currency exchange rates d. income is unevenly distributed
answer
d. income is unevenly distributed
European Free Trade Association
Free Trade Area
Free Trade Association
Regional Economic Integration
Single European Act
Global 9,10,11 – Flashcards 67 terms

Ray Collins
67 terms
Preview
Global 9,10,11 – Flashcards
question
A regional free trade agreement will benefit the world only if:
answer
The amount of trade it creates exceeds the amount it diverts
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A(n) ____ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members.
answer
Common market
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An agreement between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other is referred to as:
answer
Regional economic integration
question
All of the following were objectives of the Single European Act EXCEPT:
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Increasing the powers of the European Commission in matters of competitive policy
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Bolivia, Chile, Ecuador, Colombia, and Peru signed an agreement in 1969 to create the:
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Andean Pact
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In 1990, the MERCOSUR pact was expanded to include:
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Paraguay and Uruguay
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The most enduring free trade area in the world is the:
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European Free Trade Association
question
The principle argument of those who opposed NAFTA centered on the fear that ratification would result in:
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Mass exodus of jobs from the United States into Mexico
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The two main reasons that have made regional economic integration difficult to achieve are:
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Concerns about costs and national sovereignty
question
There are now two trade blocs in Europe. These are the:
answer
European Union and European Free Trade Association
question
What was the objective of the Single European Act?
answer
It committed member countries to work toward establishment of a single market by December 31 1992.
question
Which of the following countries are currently members of the European Free Trade Association (EFTA)?
answer
Norway, Iceland, Liechtenstein, and Switzerland
question
Which of the following is transacted when it is desirable to move out of one currency into another for a limited period without incurring foreign exchange risk?
answer
Swap
question
Which of the following is a major reason why governments limit convertibility of their currency?
answer
To preserve their foreign exchange reserves
question
How are spot exchange rates in the foreign exchange markets determined?
answer
By the relative demand and supply for different currencies
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Which of the following is a key feature of the foreign exchange market
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The market never sleeps
question
Which of the following refers to the purchase of securities in one market for immediate resale in another to profit from a price discrepancy?
answer
Arbitrage
question
Assume that the yen/dollar exchange rate quoted in London at 3 p.m. is $1 = $100Yen and that the yen/dollar exchange rate quoted in New York at the same time is $1 = 120. Which profit making situation exists here?
answer
Arbitrage
question
Currency carry trade takes advantage of:
answer
Differences in interest rates between countries
question
Which of the following occurs when the quantity of money in circulation rises faster than the stock of goods and services?
answer
Inflation
question
The rapid rise in the value of the dollar on the foreign exchange market in the 1990s hurt the price competitiveness of many U.S. producers in world markets. U.S. manufacturers that relied heavily on exports saw their export volume and world market share decline. This is an example of:
answer
Economic Exposure
question
In 2002-2007, the euro rose in value against the dollar. This boosted the dollar profits of American multinationals with significant operations in Europe. Which of the following is this an example of?
answer
Translation exposure
question
A currency is said to be _____ when only nonresidents may convert it into a foreign currency without any limitations.
answer
Externally convertible
question
A U.S. company that imports laptop computers from Japan knows that in 30 days it must pay yen to a Japanese supplier when a shipment arrives. The company will pay the Japanese supplier ×150,000 for each computer, and the current dollar/yen spot exchange rate is $1 = ×110. The importer knows she can sell the computers the day they arrive for $1,600 each. However, the importer will not have the funds to pay the Japanese supplier until the computers have been sold. The importer enters into a 30-day forward exchange transaction with a foreign exchange dealer at $1 = ×105. Which of the following will happen if the exchange rate after 30 days is $1 = ×90?
answer
The importer will earn a profit of $171 per computer
question
Assume that the exchange rate between the euro and the dollar is € 1 = $1.20. A camera that retails for $300 in New York sells for € 200 in Berlin. Ignoring any transaction costs or barriers, this represents an initial arbitrage profit potential of:
answer
$60
question
You exchanged $1,000 to 105,000 yen for a trip to Japan. During your stay, you spent 50,000 yen. Also, during this period the dollar weakened against the yen to 100 to a dollar. On your return, you went to the bank to exchange the remaining yen. How many dollars did you spend on the trip?
answer
$450
question
A French company has 20 million euros it wants to invest for three months. Investing in a Thai money market account gives the company a higher return than domestic investments. Is this investment risk-free? Why or why not?
answer
No, because foreign currency movements in the intervening period can affect the profitability.
question
A _____ is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates.
answer
Currency swap
question
Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market. Which of the following reflects the foreign exchange dealers' expectations about the dollar over the next 30 days?
answer
The dollar will appreciate against the euro
question
The theory of purchasing power parity (PPP) links changes in the exchange rate between two countries' currencies to:
answer
Changes in the countries' price levels
question
Which is the most important foreign exchange trading center in terms of percentage of activity?
answer
London
question
_____ refers to a range of barter-like agreements by which goods and services can be traded for other goods and services.
answer
Countertrade
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A floating exchange rate is a system under which the exchange rate for converting one currency into another is continuously adjusted depending on the law of supply and demand.
answer
True
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Since the Bretton Woods system of floating exchange rates collapsed in 1973, the world
answer
False
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A dirty float is called so because the central bank of a country will intervene in the foreign exchange market to try to maintain the value of its currency if it depreciates too rapidly against an important reference currency.
answer
True
question
The Central bank is similar to a Currency board and both act as banks of last resort
answer
False
question
The Bretton Woods agreement legalized the use of devaluation as a tool of competitive trade policy.
answer
False
question
A fixed exchange rate regime imposes monetary discipline on countries, thereby curtailing price inflation.
answer
True
question
If the IMF agrees that the country's balance of payments is in "fundamental disequilibrium," the system of adjustable parities allows for the devaluation of a country's currency by more than 10 percent.
answer
True
question
One criticism of the IMF is that its traditional policy prescriptions represent "one-size-fits-all" approach to macroeconomic policy that is inappropriate for many countries.
answer
True
question
Which of the following refers to the institutional arrangements countries adopt to govern exchange rates? - International Monetary Fund - Global agreement on exchange rates - International monetary system - Bretton Woods Arrangement
answer
International Monetary System
question
When the foreign exchange market determines the relative value of a currency, the country is said to adhere to a _____ exchange rate regime.
answer
Floating
question
The voting rights within the IMF are roughly proportionate to the___________ _________made by member nations. The US has 17% of the vote followed by Japan and Germany. US, Japan and Europe together account for more than 80% of the vote in the IMF. The breakdown of the democratic process becomes clear as the Jamaican people are removed from participation in the decisions that truly affect their lives.
answer
Economic contributions
question
A free trade zone is a:
answer
Geographical area in which commerce can be conducted without tariffs being applied
question
The IMF assumes that the combination of increased interest rates and ________ ______ ________ ________ will shift resources from domestic consumption to private investment. It is further assumed that keeping the price of local labor down will be an incentive for increasing employment and production.
answer
Cutbacks in government spending
question
The central bank is government owned and not separate from the country's finance ministry
answer
False
question
One of the factors that contributed to the Mexican crisis was that the central bank began converting short term debt, denominated in pesos, into dollar- denominated bonds. This conversion resulted in an increase in foreign reserves and a decrease in debt.
answer
False
question
All of the following contributed to the Asian crisis of 1997 except:
answer
Production driven by domestic demand
question
Identify the countries worst affected by the Southeast Asian crisis of 1997?
answer
Indonesia, Thailand, and South Korea
question
The Asian meltdown began in mid-1997 in _____ when it became clear that several key financial institutions were on the verge of default.
answer
Thailand
question
Which of the following actions by the Mexican government in December 1994, exacerbated the sale of the peso and contributed to the rapid 40 percent drop in its value?
answer
Currency devaluation
question
Which of the following economies in Southeast Asia was considered relatively more stable during the crisis on 1997?
answer
Singapore
question
Which of the following was the objective of establishing the International Monetary Fund (IMF)?
answer
Maintain order in the international monetary system
question
In 2001, the WTO launched a new round of talks aimed at further liberalizing the global trade and investment framework. It was held at:
answer
Doha
question
One concern of globalization critics is that a global economy shifts economic power away from _____ and toward _____.
answer
National governments; supranational organizations
question
Many economists and business leaders believe that globalization offers several benefits including:
answer
Rising incomes of consumers
question
One of the consequences of globalization that is appreciated by people from developing countries is that:
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The changes that progress has brought to their standard of living
question
Opponents of outsourcing in advanced economies like the U.S. and Western Europe contend that:
answer
Falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower.
question
Supporters of globalization insist that dislocation in the form of lost jobs is a trade-off that will ultimately lead to the economy being better off. What are they justifying in this case?
answer
Free trade
question
The principle argument of those who opposed NAFTA centered on the fear that ratification would result in:
answer
Mass exodus of jobs from the United States into Mexico
question
Which three countries implemented the NAFTA?
answer
Canada, Mexico, and the United States
question
When is capital flight most likely to occur?
answer
When domestic currency depreciates rapidly because of hyperinflation
question
The absence of a legal system that protects property rights and the machinery to enforce that system usually results in:
answer
A reduction in the incentive to engage in productive economic activity
question
Five of the fastest-growing economies of the past 30 years—China, South Korea, Taiwan, Singapore, and Hong Kong—had one thing in common at the start of their economic growth:
answer
Undemocratic governments
question
Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until:
answer
Property rights are better defined and protected
question
What happens when governments control or dominate a national economy?
answer
Businesses are greatly restricted with the government doing most of the controlling and siphoning.
question
Is there a relationship between open markets and political freedom?
answer
It is true that some totalitarian governments can have open markets
Five Forces Model
Free Trade Agreement
Free Trade Area
International Marketing
Key Success Factors
Value Chain Analysis
World Trade Organization
ISDS 3115 Kelle Chapter 2 – Flashcards 85 terms

Noel Macdonald
85 terms
Preview
ISDS 3115 Kelle Chapter 2 – Flashcards
question
maquiladoras
answer
Mexican factories located along the U.S. Mexican border that receive preferential tariff treatment
question
World trade organization
answer
an international organization that promotes world trade by lowering barriers to the free flow of goods across borders
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North American Free Trade Agreement
answer
a free trade agreement between Canada, Mexico, and the US
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European Union
answer
a European trade group that has 27 member states
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Mission
answer
the purpose or rationale for an organization's existance
question
Strategy
answer
how an organization expects to achieve its missions and goals
question
competitive advantage
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the creation of a unique advantage over competitors
question
differentiation
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distinguishing the offerings of an organization in a way that the customer perceives as adding value
question
experience differentiation
answer
engaging a customer with a product through imaginative use of the five senses, so the customer "experiences" the product
question
low-cost leadership
answer
achieving maximum value, as perceived by the customer
question
Response
answer
a set of values related to rapid, flexible, and reliable performance
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resource view
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method managers use to evaluate the resources at their disposal and manage or alter them to achieve a competitive advantage
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value-chain analysis
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a way to identify those elements in the product/service chain that uniquely add value
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five forces model
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a method of analyzing the five forces in the competitive environment
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SWOT analysis
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a method of determining internal strengths and weaknesses and external opportunities and threats
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Key Success Factor (KSFs)
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activities or factors that are key to achieving competitive advantage
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Core competencies
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a set of skills, talents, and capabilities in which a firm is particularly strong
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activity map
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a graphical link of competitive advantage, KSFs, and supporting activities
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outsourcing
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transferring a firm's activities that had traditionally been internal to external suppliers
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theory of comparative advantage
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a theory which states that countries benefit from specializing in (and exporting) goods and services in which they have relative advantage, and they benefit from importing goods and services in which they have a relative disadvantage
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international business
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a business that engages in cross-border transactions
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Multinational corporation (MNC)
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a firm that has extensive involvement in international business, owning or controlling facilities in more than one country
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international strategy
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a strategy in which global markets re penetrated using exports and licenses
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multi-domestic strategy
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a strategy in which operating decisions are decentralized to each country to enhance local responsiveness
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global strategy
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a strategy in which operating decisions are centralized and headquarters coordinates the standardization and learning between facilities
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transnational strategy
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a strategy that combines the benefits of global-scale efficiencies with the benefits of local responsiveness
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which of the following international operations strategies involves a high degree of centralization?
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global
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impacts changes in laptop computer design that builds in wireless technology might have on OM strategy
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new human resource skills inventory needs to be revised capital investment is added for new equipment or processes
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impacts technology innovation in the manufacturing process might have on OM strategy
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new human resource skills quality standards need o be revised inventory needs to be adjusted
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What is the difference between a multinational corporation and an international business?
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For the multinational firm, the business done outside the country is especially significant
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The stated purposed of NAFTA is to
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phase out all trade and tariff barriers among Canada, Mexico and the U.s
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what are the reasons why domestic business operations decide to change to some form of international operation?
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improve operations improve products improve the supply chain
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A strategy is
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an action plan to achieve a mission
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what is the purpose or rationale for an organizations existence?
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mission
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example of differentiation
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Hunter fan as its a premier maker of quality ceiling fans that lower heating and cooling costs for its customers
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example of cost leadership
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wal mart, as it has the low overhead and huge buying power to pressure its suppliers into concessions
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example of response
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johnson electric, as it competes on speed - speed design, productivity , and delivery
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competing on differentiation is
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concerned with uniqueness
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IS NOT one of the 10 strategic OM decisions listed in the text
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finance/accounting ---- this is a primary function to an organization
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which is an OM strategy / issue during the growth stage of the product life cycle?
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forecasting critical shift towards product focus enhance distribution
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SWOT analysis refers to
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strengths opportunities weaknesses threats
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Advantages of outsourcing
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accessing outside technology gaining outside expertise cost savings
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An international business is a firm that
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engages in international trade or investment
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which of the following international operations strategies uses decentralized authority with substantial autonomy at each business?
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multidomestic
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globalization strategies could simplify the operations managers job T>F
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True
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3 strategic approaches =
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differentiation response cost leadership
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What is a graphical link of competitive advantage, KSF's , and supporting activities?
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activity map
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the creation of a unique advantage over competitors is referred to as
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competitive advantage
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what is an international strategy that involves a high degree of centralization?
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global
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a method managers use to evaluate the resources at their disposal and mange or alter them to achieve competitive advantage is referred to as
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resources view
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DISADVANTAGES of outsourcing
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negative impact on employees loss of control risks may not manifest themselves for years
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the OM strategy issues during the introduction stage of the product life cycle
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frequent product and process design changes limited models high production costs
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competing on cost is
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achieving maximum value as perceived by the customer
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A strategy is established prior to establishing a mission the purpose for which an organization is established an action plan to achieve a mission a functional area of the firm
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an action plan to achieve a mission
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Which of the following is NOT one of the three strategic approaches to competitive advantage? cost leadership differentiation response innovation
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innovation
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Which of the following is the purpose of rationale for an organizations existence? articles of incorporation strategy charter mission
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mission
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Which of the following is NOT one of the 10 strategic OM decisions listed in the text? location layout quality finance/accounting
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finance/accounting
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Which of the following is NOT an OM strategy/issue during the introduction stage of the product life cycle? frequent product and process design changes high production costs limited models long production runs
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long production runs
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Which of the following is NOT an OM strategy/issue during the growth stage of the product life cycle? reduce capacity shift towards product focus forecasting critical enhance distribution
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reduce capacity
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A method managers use to evaluate the resources at their disposal and manage or alter them to achieve competitive advantage is referred as resources view competitive advantage value chain analysis five forces analysis
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resources view
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value chain analysis is a way to identify those elements in the product/service chain that uniquely add value
answer
question
What impacts the maturing of a product might have on OM strategy below purchasing needs to be revised product changes decrease cost cutting is instituted capital investment is added for new equipment or processes optimum capacity may be achieved new human resources skills
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product changes decrease cost cutting is instituted optimum capacity may be achieved longer production runs are used optimum capacity may be achieved design compromises are instituted
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what impacts technology innovation in the manufacturing process might have on OM strategy quality standards need to be revised product design needs to be revised labor skills decrease cost cutting instituted inventory needs to be revised manufacturing process stabalizes
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quality standards need to be revised product design needs to be revised inventory needs to be revised product designs needs to be revised purchasing needs to be revised inventory needs to be revised
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which impacts in laptop computer design that bulds in wireless technology might have on OM strategy manufacturing process stabalizes product changes decrease purchasing needs to be revised longer production runs are used inventory needs to be revised maintenance procedures need to be revised
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purchasing needs to be revised inventory needs to be revised maintenance procedures need to be revised
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correct impacts that major increases in oil prices might have on OM strategy for the energy inefficient company, change in competitive position for a producer with high energy costs change in the competitive position for the energy inefficient company , change in the cost structure , result in higher selling prices for a producer with high energy costs, change in the cost structure, result in higher selling prices
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for the energy inefficient company, change in competitive position for a producer with high energy costs, change in the cost structure, result in higher selling prices
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what impacts the OM strategy if there are correct impacts on water and air quality legislation difficulty in using the specific technologies increasing production cost closing of numerous plants including paper mills and steel mills difficulty in predicting both the cost of production and the market demand
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difficulty in using the specific technologies increasing production cost closing of numerous plants including paper mills and steel mills
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what impacts that fewer young prospectie employees entering the labor market might have on OM strategy high unemployment rates tighter job market change in the income of employees in the lower pay classifications added capital investment for new equipment or processes
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tighter job market
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impacts that inflation versus stable prices have on OM change in the income of employees in the lower pay classifications the manufacturing process stabilizes OM function focuses more on standardization difficulty in predicting both the cost of production and the market demand
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difficulty in predicting both the cost of production and the market demand
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impacts legislation moving health insurance from a pretax benefit to taxable income change in the income of employees in the lower pay classifications increase in the take home pay of employees by the amount of the taxes operations managers get pressure to in crease wages of employees in the lower pay classifications decrease in the take home pay of employees by the amount of taxes
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change in the income of employees in the lower pay classifications operations managers get pressure to in crease wages of employees in the lower pay classifications decrease in the take home pay of employees by the amount of taxes
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SWOT analysis refers to strengths , opponents , weaknesses, and threats support opponents weaknesses and threats strengths , opportunities , weaknesses, and threats
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strengths , opportunities , weaknesses, and threats
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What is a graphical link of competitive advantage , KSF's , and supporting activities
answer
activity map
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A set of skills , talents, and capabilities in which a firm is particularly strong is referred to as core competencies differentiation key success factors experience differentiation
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core competencies
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KSF are defined as activities or factors that are key to achieving competitive advantage
answer
question
Which of the following is the core competence for Honda? product flexibility gas powered engines sustainable design advertising
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gas powered engines
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Parent company of ARROW SHIRTS AND COUNTRY
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bidermann International france
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Parent company of Braun Household Appliences
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Proctor and Gamble U.S
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Parent company of Volvo autos
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Geely china
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Parent company of Firestone Tires
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bridgestone japan
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godiva chocolate
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campbell soup u.s
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haagen dazs ice cream
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nestle switzerland
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jaguar autos
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tata india
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MGM movies
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credit lyonnais France
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lamborghini Autos
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volkswagen germany
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good rich tires
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michelin france
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alpo pet foods
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nestle switzerland