BMGT 110F FINAL EXAM REVIEW
questions with verified answers
absolute advantage - correct answer ✔✔The advantage that exists when a country has a
monopoly on producing a specific product or is able to produce it
more efficiently than all other countries.
balance of payments - correct answer ✔✔The difference between money coming into a country
(from exports) and money leaving the country (for im- ports) plus money flows from other
factors such as tourism, foreign aid, military expenditures, and foreign investment
balance of trade - correct answer ✔✔The total value of a nation's exports compared to its
imports over a particular period.
common market - correct answer ✔✔A regional group of countries that have a common
external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a
trading bloc. An example is the European Union.
comparative advantage theory - correct answer ✔✔Theory that states that a country should sell
to other countries those products that it produces most effectively and efficiently, and buy from
other countries those products that it cannot produce as effectively or efficiently.
contract manufacturing - correct answer ✔✔A foreign country's production of private-label
goods to which a domestic company then attaches its brand name or trademark; part of the
broad category of outsourcing.
countertrading - correct answer ✔✔A complex form of bartering in which several countries may
be involved, each trading goods for goods or services for services.
,devaluation - correct answer ✔✔Lowering the value of a nation's currency relative to other
currencies.
dumping - correct answer ✔✔Selling products in a foreign country at lower prices than those
charged in the producing country.
embargo - correct answer ✔✔A complete ban on the import or export of a certain product, or
the stopping of all trade with a particular country.
exchange rate - correct answer ✔✔The value of one nation's currency relative to the currencies
of other countries.
exporting - correct answer ✔✔Selling products to another country.
foreign direct investment (FDI) - correct answer ✔✔The buying of permanent property and
businesses in foreign nations.
foreign subsidiary - correct answer ✔✔A company owned in a foreign country by another
company, called the parent company.
free trade - correct answer ✔✔The movement of goods and services among nations without
political or economic barriers.
General Agreement on Tariffs and Trade (GATT) - correct answer ✔✔A 1948 agreement that
established an international forum for negotiating mutual reductions in trade restrictions.
importing - correct answer ✔✔Buying products from another country.
, import quota - correct answer ✔✔A limit on the number of products in certain categories that a
nation can import.
joint venture - correct answer ✔✔A partnership in which two or more companies (often from
different countries) join to undertake a major project.
licensing - correct answer ✔✔A global strategy in which a firm (the licensor) allows a foreign
company (the licensee) to produce its product in exchange for a fee (a royalty).
multinational corporation - correct answer ✔✔An organization that manufactures and markets
products in many different countries and has multinational stock ownership and multinational
management.
North American Free Trade Agreement (NAFTA) - correct answer ✔✔Agreement that created a
free-trade area among the United States, Canada, and Mexico.
sovereign wealth funds (SWFs) - correct answer ✔✔Investment funds controlled by
governments holding large stakes in foreign companies.
strategic alliance - correct answer ✔✔A long-term partnership between two or more companies
established to help each company build competitive market advantages.
tariff - correct answer ✔✔A tax imposed on imports.
trade deficit - correct answer ✔✔An unfavorable balance of trade; occurs when the value of a
country's imports exceeds that of its exports.
trade protectionism - correct answer ✔✔The use of government regulations to limit the import
of goods and services.
questions with verified answers
absolute advantage - correct answer ✔✔The advantage that exists when a country has a
monopoly on producing a specific product or is able to produce it
more efficiently than all other countries.
balance of payments - correct answer ✔✔The difference between money coming into a country
(from exports) and money leaving the country (for im- ports) plus money flows from other
factors such as tourism, foreign aid, military expenditures, and foreign investment
balance of trade - correct answer ✔✔The total value of a nation's exports compared to its
imports over a particular period.
common market - correct answer ✔✔A regional group of countries that have a common
external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a
trading bloc. An example is the European Union.
comparative advantage theory - correct answer ✔✔Theory that states that a country should sell
to other countries those products that it produces most effectively and efficiently, and buy from
other countries those products that it cannot produce as effectively or efficiently.
contract manufacturing - correct answer ✔✔A foreign country's production of private-label
goods to which a domestic company then attaches its brand name or trademark; part of the
broad category of outsourcing.
countertrading - correct answer ✔✔A complex form of bartering in which several countries may
be involved, each trading goods for goods or services for services.
,devaluation - correct answer ✔✔Lowering the value of a nation's currency relative to other
currencies.
dumping - correct answer ✔✔Selling products in a foreign country at lower prices than those
charged in the producing country.
embargo - correct answer ✔✔A complete ban on the import or export of a certain product, or
the stopping of all trade with a particular country.
exchange rate - correct answer ✔✔The value of one nation's currency relative to the currencies
of other countries.
exporting - correct answer ✔✔Selling products to another country.
foreign direct investment (FDI) - correct answer ✔✔The buying of permanent property and
businesses in foreign nations.
foreign subsidiary - correct answer ✔✔A company owned in a foreign country by another
company, called the parent company.
free trade - correct answer ✔✔The movement of goods and services among nations without
political or economic barriers.
General Agreement on Tariffs and Trade (GATT) - correct answer ✔✔A 1948 agreement that
established an international forum for negotiating mutual reductions in trade restrictions.
importing - correct answer ✔✔Buying products from another country.
, import quota - correct answer ✔✔A limit on the number of products in certain categories that a
nation can import.
joint venture - correct answer ✔✔A partnership in which two or more companies (often from
different countries) join to undertake a major project.
licensing - correct answer ✔✔A global strategy in which a firm (the licensor) allows a foreign
company (the licensee) to produce its product in exchange for a fee (a royalty).
multinational corporation - correct answer ✔✔An organization that manufactures and markets
products in many different countries and has multinational stock ownership and multinational
management.
North American Free Trade Agreement (NAFTA) - correct answer ✔✔Agreement that created a
free-trade area among the United States, Canada, and Mexico.
sovereign wealth funds (SWFs) - correct answer ✔✔Investment funds controlled by
governments holding large stakes in foreign companies.
strategic alliance - correct answer ✔✔A long-term partnership between two or more companies
established to help each company build competitive market advantages.
tariff - correct answer ✔✔A tax imposed on imports.
trade deficit - correct answer ✔✔An unfavorable balance of trade; occurs when the value of a
country's imports exceeds that of its exports.
trade protectionism - correct answer ✔✔The use of government regulations to limit the import
of goods and services.
