Business 102 Exam 1 Questions and
Answers
importing - correct answer-Buying goods from another country
Exporting - correct answer-Selling to another country
free trade - correct answer-the movement of goods and services among nation without
political or economic barriers
Comparative advantage theory - correct answer-Theory that states 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
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 trade - correct answer-the total value of a nation's exports compared to its
imports measured over a particular period
trade surplus - correct answer-a favorable balance of trade; occurs when the value of a
country's exports exceeds that of its imports
trade deficit - correct answer-an unfavorable balance of trade; occurs when the value of
trade exceeds that of its exports
balance of payments - correct answer-the difference between money coming into a
country (from exports) and money leaving the country (for imports) plus money flows
from other factors such as tourism, foreign aid, military expenditures, and foreign
investment
dumping - correct answer-selling products in a foreign country at a lower price than
those charged in the producing country.
Licensing - correct answer-a global strategy in which a firm allows a foreign company to
produce its product in exchange for royalties
, 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
joint venture - correct answer-a partnership in which two or more companies join to
undertake a major project
strategic alliance - correct answer-a long term partnership between two or more
companies established to help each company build competitive advantages.
foreign direct investment - 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
multinational corporation - correct answer-an organization that manufactures and
markets products in many different countries and has multinational stock ownership and
multinational management
Sovereign wealth funds - correct answer-investment funds controlled by governments
holding large stakes in foreign companies
exchange rate - correct answer-the value of one nation's currency relative to the
currencies of other countries
devaluation - correct answer-lowering the value of a nation's currency relative to other
currencies
countertrading - correct answer-a complex form of bartering in which several countries
may be involved , each trading goods for goods or services for services
trade protectionism - correct answer-the use of government regulations to limit the
import of goods and services
tariff - correct answer-a tax imposed on imports
import quota - correct answer-a limit on the number of products in certain categories
that a nation can import
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
General agreement on tariffs and trade - correct answer-a 1948 agreement that
established an international forum for negotiating mutual reductions in trade restrictions
Answers
importing - correct answer-Buying goods from another country
Exporting - correct answer-Selling to another country
free trade - correct answer-the movement of goods and services among nation without
political or economic barriers
Comparative advantage theory - correct answer-Theory that states 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
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 trade - correct answer-the total value of a nation's exports compared to its
imports measured over a particular period
trade surplus - correct answer-a favorable balance of trade; occurs when the value of a
country's exports exceeds that of its imports
trade deficit - correct answer-an unfavorable balance of trade; occurs when the value of
trade exceeds that of its exports
balance of payments - correct answer-the difference between money coming into a
country (from exports) and money leaving the country (for imports) plus money flows
from other factors such as tourism, foreign aid, military expenditures, and foreign
investment
dumping - correct answer-selling products in a foreign country at a lower price than
those charged in the producing country.
Licensing - correct answer-a global strategy in which a firm allows a foreign company to
produce its product in exchange for royalties
, 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
joint venture - correct answer-a partnership in which two or more companies join to
undertake a major project
strategic alliance - correct answer-a long term partnership between two or more
companies established to help each company build competitive advantages.
foreign direct investment - 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
multinational corporation - correct answer-an organization that manufactures and
markets products in many different countries and has multinational stock ownership and
multinational management
Sovereign wealth funds - correct answer-investment funds controlled by governments
holding large stakes in foreign companies
exchange rate - correct answer-the value of one nation's currency relative to the
currencies of other countries
devaluation - correct answer-lowering the value of a nation's currency relative to other
currencies
countertrading - correct answer-a complex form of bartering in which several countries
may be involved , each trading goods for goods or services for services
trade protectionism - correct answer-the use of government regulations to limit the
import of goods and services
tariff - correct answer-a tax imposed on imports
import quota - correct answer-a limit on the number of products in certain categories
that a nation can import
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
General agreement on tariffs and trade - correct answer-a 1948 agreement that
established an international forum for negotiating mutual reductions in trade restrictions
