D080 UNIT 2 - Study Guide Questions
(GLOBAL) and Answers
- ANSWER-As a free trade agreement, NAFTA countries can establish their own trading
rules for nonmember countries.
________ is an inter-governmental forum for 21 member economies in the Pacific Rim
that promotes free trade throughout the Asia-Pacific region. - ANSWER-Asia-Pacific
Economic Cooperation (APEC)
_________ is comprised of Argentina, Brazil, Paraguay, Uruguay, and Venezuela. They
also recently signed a trade deal with the EU, which could become the largest free trade
agreement in the world if it is ratified. It was established in 1988 and now has both
political and economic goals to keep peace and stimulates economic growth in South
American countries - ANSWER-Mercosur
(Mercado Común del Sur or Mercosur)
__________ are limitations on imported goods (can be a limit on the number of items
that can be imported, or it can be a limit on the value of items that can be imported.) -
ANSWER-quotas
___________ exists when there is only one producer and many consumers. -
ANSWER-monopolies
___________ invest in firms based on the anticipated future exchange rate. -
ANSWER-Portfolio investors
____________ is both an economic and political agreement with the goals of keeping
peace in the Southern cone and promoting economic growth in the region. - ANSWER-
Mercosur
_____________ is an organization of African Union states establishing grounds for
mutual economic development among the majority of African states. (founded 1991) -
ANSWER-The African Economic Community (AEC)
______________ is a currency system in which governments try to maintain a constant
currency value against a specific currency or good. - ANSWER-fixed exchange rate
system, or pegged exchange rate system
,_______________ benefit both developing and developed nations by increasing jobs
and bringing capital to the most successful companies. - ANSWER-Foreign direct
investment
_______________ gives advantages to one nation (or several nations) over others. -
ANSWER-preferential tariffs
(example: When members of the British Commonwealth (countries that are former
British territories) trade with Great Britain, they pay lower tariffs than other nations do.)
________________ is a treaty entered into by the United States, Canada, and Mexico;
it went into effect on January 1, 1994. - ANSWER-The North American Free Trade
Agreement (NAFTA)
________________ is an exchange rate regime, usually seen as a part of fixed
exchange rate regimes, that allows gradual depreciation or appreciation in an exchange
rate. - ANSWER-Crawling peg
________________ was controversial with workers in manufacturing plants and
environmentalists. It was replaced with The United States-Mexico-Canada Agreement. -
ANSWER-NAFTA
________________ was formed in 1973 by countries in the Caribbean with the intent of
creating a single market with the free flow of goods, services, labor, and investment. -
ANSWER-Caribbean Community and Common Market (CARICOM)
_________________ create free trade among geographically close regions, which can
lead to lower prices, higher growth, increased competition, and increased export
potential. - ANSWER-Trading blocs
_________________ involves a central bank undertaking a public obligation to maintain
its country's exchange rate within a wide, publicly-announced, band around a parity that
is periodically adjusted in relatively small steps in a way intended to keep the band in
line with the fundamentals. - ANSWER-crawling bands
generally, these bands are adjusted in response to economic circumstances and
indicators.
_________________ was created in 1967 by five founding-member countries:
Malaysia, Thailand, Indonesia, Singapore, and the Philippines. Since its inception,
Myanmar (Burma), Vietnam, Cambodia, Laos, and Brunei have joined the association. -
ANSWER-The Association of Southeast Asian Nations (ASEAN)
_________________ was created in 1981 by Bahrain, Kuwait, Saudi Arabia, Oman,
Qatar, and the United Arab Emirates (UAE). It has become as much a political
organization as an economic one and calls for the coordination of a unified military
, presence in the form of a peninsula shield force. - ANSWER-The Cooperation Council
for the Arab States of the Gulf.
[also known as the Gulf Cooperation Council (GCC)]
_____________________ is the first free trade agreement between the United States
and a group of smaller developing economies: our Central American neighbors Costa
Rica, El Salvador, Guatemala, Honduras, Nicaragua, as well as the Dominican
Republic. The agreement promotes stronger trade and investment ties, prosperity, and
stability throughout the region and along our Southern border. - ANSWER-The Central
America Free Trade Agreement (CAFTA-DR)
_______________________ is frowned upon by some governments, but is frequently a
way to take advantage of a country that has a competitive advantage in low-cost labor. -
ANSWER-Outsourcing labor
A ______________ rate fluctuates based on supply and demand. - ANSWER-free-
floating exchange
A _______________ rate can be pegged or fixed against gold, or frequently small
countries will peg their currency against a large country with which it does the majority
of its trade. - ANSWER-fixed exchange
A __________________ is an agreement between governments to develop shared
trade policy. Some nations join because they do not want to be left out, some join to
decrease prices between neighboring countries, and some join to attract direct foreign
investment. - ANSWER-trade bloc
A business, operating globally, wants to increase its overall productivity. Which strategy
should the business use? - ANSWER-Increase process technology
A company produces the same product over and over, and it has caused the
manufacturing cost of the product to become cheaper and more competitive in
international markets than similar products in the industry.
Which approach is this company using to achieve this ability? - ANSWER-Economies of
scale
As the company repeatedly produces the same product, the scale (numbers of products
produced) allows the company to make the products cheaper than competitors.
A country produces goods more efficiently than all other countries in the same industry.
Which type of advantage does this country have? - ANSWER-absolute
A country with a new economy implemented trade protectionism in relation to countries
with more developed economies.
(GLOBAL) and Answers
- ANSWER-As a free trade agreement, NAFTA countries can establish their own trading
rules for nonmember countries.
________ is an inter-governmental forum for 21 member economies in the Pacific Rim
that promotes free trade throughout the Asia-Pacific region. - ANSWER-Asia-Pacific
Economic Cooperation (APEC)
_________ is comprised of Argentina, Brazil, Paraguay, Uruguay, and Venezuela. They
also recently signed a trade deal with the EU, which could become the largest free trade
agreement in the world if it is ratified. It was established in 1988 and now has both
political and economic goals to keep peace and stimulates economic growth in South
American countries - ANSWER-Mercosur
(Mercado Común del Sur or Mercosur)
__________ are limitations on imported goods (can be a limit on the number of items
that can be imported, or it can be a limit on the value of items that can be imported.) -
ANSWER-quotas
___________ exists when there is only one producer and many consumers. -
ANSWER-monopolies
___________ invest in firms based on the anticipated future exchange rate. -
ANSWER-Portfolio investors
____________ is both an economic and political agreement with the goals of keeping
peace in the Southern cone and promoting economic growth in the region. - ANSWER-
Mercosur
_____________ is an organization of African Union states establishing grounds for
mutual economic development among the majority of African states. (founded 1991) -
ANSWER-The African Economic Community (AEC)
______________ is a currency system in which governments try to maintain a constant
currency value against a specific currency or good. - ANSWER-fixed exchange rate
system, or pegged exchange rate system
,_______________ benefit both developing and developed nations by increasing jobs
and bringing capital to the most successful companies. - ANSWER-Foreign direct
investment
_______________ gives advantages to one nation (or several nations) over others. -
ANSWER-preferential tariffs
(example: When members of the British Commonwealth (countries that are former
British territories) trade with Great Britain, they pay lower tariffs than other nations do.)
________________ is a treaty entered into by the United States, Canada, and Mexico;
it went into effect on January 1, 1994. - ANSWER-The North American Free Trade
Agreement (NAFTA)
________________ is an exchange rate regime, usually seen as a part of fixed
exchange rate regimes, that allows gradual depreciation or appreciation in an exchange
rate. - ANSWER-Crawling peg
________________ was controversial with workers in manufacturing plants and
environmentalists. It was replaced with The United States-Mexico-Canada Agreement. -
ANSWER-NAFTA
________________ was formed in 1973 by countries in the Caribbean with the intent of
creating a single market with the free flow of goods, services, labor, and investment. -
ANSWER-Caribbean Community and Common Market (CARICOM)
_________________ create free trade among geographically close regions, which can
lead to lower prices, higher growth, increased competition, and increased export
potential. - ANSWER-Trading blocs
_________________ involves a central bank undertaking a public obligation to maintain
its country's exchange rate within a wide, publicly-announced, band around a parity that
is periodically adjusted in relatively small steps in a way intended to keep the band in
line with the fundamentals. - ANSWER-crawling bands
generally, these bands are adjusted in response to economic circumstances and
indicators.
_________________ was created in 1967 by five founding-member countries:
Malaysia, Thailand, Indonesia, Singapore, and the Philippines. Since its inception,
Myanmar (Burma), Vietnam, Cambodia, Laos, and Brunei have joined the association. -
ANSWER-The Association of Southeast Asian Nations (ASEAN)
_________________ was created in 1981 by Bahrain, Kuwait, Saudi Arabia, Oman,
Qatar, and the United Arab Emirates (UAE). It has become as much a political
organization as an economic one and calls for the coordination of a unified military
, presence in the form of a peninsula shield force. - ANSWER-The Cooperation Council
for the Arab States of the Gulf.
[also known as the Gulf Cooperation Council (GCC)]
_____________________ is the first free trade agreement between the United States
and a group of smaller developing economies: our Central American neighbors Costa
Rica, El Salvador, Guatemala, Honduras, Nicaragua, as well as the Dominican
Republic. The agreement promotes stronger trade and investment ties, prosperity, and
stability throughout the region and along our Southern border. - ANSWER-The Central
America Free Trade Agreement (CAFTA-DR)
_______________________ is frowned upon by some governments, but is frequently a
way to take advantage of a country that has a competitive advantage in low-cost labor. -
ANSWER-Outsourcing labor
A ______________ rate fluctuates based on supply and demand. - ANSWER-free-
floating exchange
A _______________ rate can be pegged or fixed against gold, or frequently small
countries will peg their currency against a large country with which it does the majority
of its trade. - ANSWER-fixed exchange
A __________________ is an agreement between governments to develop shared
trade policy. Some nations join because they do not want to be left out, some join to
decrease prices between neighboring countries, and some join to attract direct foreign
investment. - ANSWER-trade bloc
A business, operating globally, wants to increase its overall productivity. Which strategy
should the business use? - ANSWER-Increase process technology
A company produces the same product over and over, and it has caused the
manufacturing cost of the product to become cheaper and more competitive in
international markets than similar products in the industry.
Which approach is this company using to achieve this ability? - ANSWER-Economies of
scale
As the company repeatedly produces the same product, the scale (numbers of products
produced) allows the company to make the products cheaper than competitors.
A country produces goods more efficiently than all other countries in the same industry.
Which type of advantage does this country have? - ANSWER-absolute
A country with a new economy implemented trade protectionism in relation to countries
with more developed economies.
