MGT 100 - Exam 2 UPDATED Exam
Questions and CORRECT Answers
absolute advantage - CORRECT ANSWER - The situation when a country can produce
and sell a product at a lower cost than any other country or when it is the only country that can
provide the product.
balance of payments - CORRECT ANSWER - A summary of a country's international
financial transactions showing the difference between the country's total payments to and its total
receipts from other countries.
balance of trade - CORRECT ANSWER - The difference between the value of a country's
exports and the value of its imports during a specific time.
buy-national regulations - CORRECT ANSWER - Government rules that give special
privileges to domestic manufacturers and retailers.
contract manufacturing - CORRECT ANSWER - The practice in which a foreign firm
manufactures private-label goods under a domestic firm's brand name.
countertrade - CORRECT ANSWER - A form of international trade in which part or all of
the payment for goods or services is in the form of other goods and services.
devaluation - CORRECT ANSWER - A lowering of the value of a nation's currency
relative to other currencies.
direct foreign investment - CORRECT ANSWER - Active ownership of a foreign
company or of manufacturing or marketing facilities in a foreign country.
dumping - CORRECT ANSWER - The practice of charging a lower price for a product in
foreign markets than in the firm's home market.
,embargo - CORRECT ANSWER - A total ban on imports or exports of a product.
European integration - CORRECT ANSWER - The delegation of limited sovereignty by
European Union member states to the EU so that common laws and policies can be created at the
European level.
European Union - CORRECT ANSWER - Trade agreement among 28 European nations.
exchange controls - CORRECT ANSWER - Laws that require a company earning foreign
exchange (foreign currency) from its exports to sell the foreign exchange to a control agency,
such as a central bank.
exporting - CORRECT ANSWER - The practice of selling domestically produced goods
to buyers in another country.
exports - CORRECT ANSWER - Goods and services produced in one country and sold to
other countries.
floating exchange rates - CORRECT ANSWER - A system in which prices of currencies
move up and down based upon the demand for and supply of the various currencies.
free trade - CORRECT ANSWER - The policy of permitting the people and businesses of
a country to buy and sell where they please without restrictions.
free-trade zone - CORRECT ANSWER - An area where the nations allow free, or almost
free, trade among each other while imposing tariffs on goods of nations outside the zone.
G20 - CORRECT ANSWER - Informal group that brings together 19 countries and the
European Union—the 20 leading economies in the world.
, global vision - CORRECT ANSWER - The ability to recognize and react to international
business opportunities, be aware of threats from foreign competition, and effectively use
international distribution networks to obtain raw materials and move finished products to
customers.
import quota - CORRECT ANSWER - A limit on the quantity of a certain good that can
be imported.
imports - CORRECT ANSWER - Goods and services that are bought from other countries.
infrastructure - CORRECT ANSWER - The basic institutions and public facilities upon
which an economy's development depends.
International Monetary Fund (IMF) - CORRECT ANSWER - An international
organization, founded in 1945, that promotes trade, makes short-term loans to member nations,
and acts as a lender of last resort for troubled nations.
joint venture - CORRECT ANSWER - An agreement in which a domestic firm buys part
of a foreign firm or joins with a foreign firm to create a new entity.
licensing - CORRECT ANSWER - The legal process whereby a firm agrees to allow
another firm to use a manufacturing process, trademark, patent, trade secret, or other proprietary
knowledge in exchange for the payment of a royalty.
Mercosur - CORRECT ANSWER - Trade agreement between Peru, Brazil, Argentina,
Uruguay, and Paraguay.
multinational corporations - CORRECT ANSWER - Corporations that move resources,
goods, services, and skills across national boundaries without regard to the country in which their
headquarters are located.
Questions and CORRECT Answers
absolute advantage - CORRECT ANSWER - The situation when a country can produce
and sell a product at a lower cost than any other country or when it is the only country that can
provide the product.
balance of payments - CORRECT ANSWER - A summary of a country's international
financial transactions showing the difference between the country's total payments to and its total
receipts from other countries.
balance of trade - CORRECT ANSWER - The difference between the value of a country's
exports and the value of its imports during a specific time.
buy-national regulations - CORRECT ANSWER - Government rules that give special
privileges to domestic manufacturers and retailers.
contract manufacturing - CORRECT ANSWER - The practice in which a foreign firm
manufactures private-label goods under a domestic firm's brand name.
countertrade - CORRECT ANSWER - A form of international trade in which part or all of
the payment for goods or services is in the form of other goods and services.
devaluation - CORRECT ANSWER - A lowering of the value of a nation's currency
relative to other currencies.
direct foreign investment - CORRECT ANSWER - Active ownership of a foreign
company or of manufacturing or marketing facilities in a foreign country.
dumping - CORRECT ANSWER - The practice of charging a lower price for a product in
foreign markets than in the firm's home market.
,embargo - CORRECT ANSWER - A total ban on imports or exports of a product.
European integration - CORRECT ANSWER - The delegation of limited sovereignty by
European Union member states to the EU so that common laws and policies can be created at the
European level.
European Union - CORRECT ANSWER - Trade agreement among 28 European nations.
exchange controls - CORRECT ANSWER - Laws that require a company earning foreign
exchange (foreign currency) from its exports to sell the foreign exchange to a control agency,
such as a central bank.
exporting - CORRECT ANSWER - The practice of selling domestically produced goods
to buyers in another country.
exports - CORRECT ANSWER - Goods and services produced in one country and sold to
other countries.
floating exchange rates - CORRECT ANSWER - A system in which prices of currencies
move up and down based upon the demand for and supply of the various currencies.
free trade - CORRECT ANSWER - The policy of permitting the people and businesses of
a country to buy and sell where they please without restrictions.
free-trade zone - CORRECT ANSWER - An area where the nations allow free, or almost
free, trade among each other while imposing tariffs on goods of nations outside the zone.
G20 - CORRECT ANSWER - Informal group that brings together 19 countries and the
European Union—the 20 leading economies in the world.
, global vision - CORRECT ANSWER - The ability to recognize and react to international
business opportunities, be aware of threats from foreign competition, and effectively use
international distribution networks to obtain raw materials and move finished products to
customers.
import quota - CORRECT ANSWER - A limit on the quantity of a certain good that can
be imported.
imports - CORRECT ANSWER - Goods and services that are bought from other countries.
infrastructure - CORRECT ANSWER - The basic institutions and public facilities upon
which an economy's development depends.
International Monetary Fund (IMF) - CORRECT ANSWER - An international
organization, founded in 1945, that promotes trade, makes short-term loans to member nations,
and acts as a lender of last resort for troubled nations.
joint venture - CORRECT ANSWER - An agreement in which a domestic firm buys part
of a foreign firm or joins with a foreign firm to create a new entity.
licensing - CORRECT ANSWER - The legal process whereby a firm agrees to allow
another firm to use a manufacturing process, trademark, patent, trade secret, or other proprietary
knowledge in exchange for the payment of a royalty.
Mercosur - CORRECT ANSWER - Trade agreement between Peru, Brazil, Argentina,
Uruguay, and Paraguay.
multinational corporations - CORRECT ANSWER - Corporations that move resources,
goods, services, and skills across national boundaries without regard to the country in which their
headquarters are located.
