Chapter 5 and 12 International Trade

Chapter 5 International Trade 1) International trade is the purchase, sale, or exchange of goods and services across national borders. Answer: TRUE 2) The value of trade passing through the borders of all countries exceeds the amount of goods and services they produce. Answer: FALSE 3) Most of the world’s merchandise trade is composed of trade in agricultural products. Answer: FALSE 4) Trade in services tends to be relatively more important for the world’s richest countries. Answer: TRUE 5) When a country’s currency is weak relative to other nations, domestic products are more expensive than imports. 6) Trade between most nations is presently characterized by a certain degree of isolationism. Answer: FALSE 7) Mercantilism states that nations should only concern themselves with accumulating financial wealth. Answer: TRUE 8) Mercantilist countries used to amass wealth by acquiring less-developed territories around the world. Answer: TRUE 9) Trade deficit occurs when the value of a country’s imports is greater than the value of its exports. Answer: TRUE 10) Mercantilism views competition for the world’s wealth as a positive-sum game. Answer: F 11) According to Adam Smith, international trade should be restricted by tariffs and quotas in order to give a country an absolute advantage. Answer: FALSE 12) The theory of absolute advantage destroys the mercantilist idea that international trade is a zero-sum game. Answer: TRUE 13) The theory of absolute advantage measures a nation’s wealth by the standard of living of its people. Answer: TRUE 14) Economist David Ricardo developed the theory of comparative advantage. Answer:TRUE 15) The ability of a nation to produce a good more efficiently than any other nation is called its comparative advantage. Answer: FALSE 16) The theories of comparative advantage and absolute advantage assume that countries are driven only by the maximization of production and consumption. Answer: TRUE 17) The theories of comparative and absolute advantage assume that specialization in the production of one particular good results in efficiency gains. Answer: FALSE 18) Factor proportions theory states that factors in great supply relative to demand will be more costly than factors in short supply relative to demand. Answer: FALSE 19) Factor proportions theory states that a country will produce and export those goods that require resources abundantly available within the country. Answer: TRUE 20) The factor proportions theory of international trade was developed by Wassily Leontief. Answer: FALSE 21) In the maturing product stage of the international product life cycle theory, production facilities are introduced in countries with the highest demand. Answer: TRUE 22) An absolute advantage is the economic and strategic advantage gained by being the first company to enter an industry. Answer: FALSE 23) National competitive advantage theory states that a nation’s competitiveness in an industry depends on the capacity of the industry to innovate and upgrade. Answer: TRUE 24) According to Michael Porter, advanced factors account for the sustained competitive advantage a country enjoys in a product. Answer: TRUE 25) Companies that belong to a nation’s internationally competitive industries exist in isolation from supporting industries. Answer: FALSE 26) ________ refers to the purchase, sale, or exchange of goods and services across national borders. A) Domestic trade B) Foreign direct investment C) International trade D) Mercantilism 27) The importance of trade for a nation can be measured by ________. A) examining the amount of wealth acquired by the national government through restrictive trade policies B) the living standards of people involved in only trade activities C) the number of acquired territories the nation has that serves as sources of inexpensive raw materials D) examining the volume of its trade relative to its total output 28) Most of the world merchandise trade is composed of trade in ________. A) minerals B) services C) manufactured goods D) agricultural products 29) A majority of the total world merchandise trade occurs among ________. A) middle-income and low-income economies B) high-income economies C) newly industrialized countries D) emerging markets 30) The smallest portion of the total world trade comprises trade between ________. A) high-income and middle-income nations B) low-income and middle-income nations C) developed countries D) First World member countries 31) The danger of trade dependency is that ________. A) it often leads to the exploitation of developed countries B) political turmoils in a country might affect all dependent countries C) the countries involved in trade often get into rivalry over trade tariff issues D) it is difficult to end trade activities with current trade partners and find new trade partners 32) ________ says that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports. A) Absolute advantage theory B) Factor proportions theory C) Mercantilism D) Communism 33) The measures of a nation’s well-being other than the financial wealth accumulated through exports are irrelevant according to ________. A) mercantilism B) absolute advantage theory C) factor proportions theory D) new trade theory 34) Which of the following was a prominent mercantilist nation? A) U.S. B) China C) Britain D) Japan 35) One of the major pillars upon which the practice of mercantilism rested was ________. A) economies of scale B) pricing mechanism C) excessive imports D) trade surpluses 36) The condition that results when the value of a nation’s exports is greater than the value of its imports is called _______. A) a trade deficit B) a trade surplus C) mercantilism D) dumping 37) The condition that results when the value of a country’s imports is greater than the value of its exports is called ________. A) a trade deficit B) economies of scale C) a break-even point D) absolute advantage 38) According to mercantilism, the accumulation of national wealth depended on the ________. A) increase in a nation’s trade surplus B) increase in a nation’s trade deficit C) expansion of a nation’s total value of trade D) expansion of a nation’s total volume of trade 39) Which of the following statements is incorrect with regard to the importance of colonies for mercantilist nations? A) They served as sources of inexpensive raw materials. B) They served as markets for higher-priced finished goods. C) They served as a source of military protection. D) They served as a source of profits for mercantilist power. 40) Nations following the theory of ________ believed that the world’s wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors A) absolute advantage B) comparative advantage C) mercantilism D) factor proportions 41) Today, countries seen by others as trying to maintain a trade surplus and expand their national treasures at the expense of other nations are accused of practicing ________. A) totalitarianism B) anti-mercantilism C) social stratification D) economic nationalism 42) Another term for neomercantilism is ________. A) new trade B) free trade C) economic nationalism D) political nationalism 43) Which of the following refers to the ability of a nation to produce a good more efficiently When a country's currency is weak relative to other nations, domestic products are more expensive than imports? FALSE Hàng NK sẽ đắt hơn (dùng nhiều tiền hơn để NK 1 lượng hàng tương tự) The value of trade passing through the borders of all countries exceeds the amount of goods and services they produce? FALSE According to mercantilism, the accumulation of national wealth depended on the increase in a nation's trade surplus A product's components are manufactured in a country that can produce them at a very low cost while maintaining its quality. These components are then assembled in another country where productivity in assembly is high. This process resembles the theory of? CHAP 12 Assessing potential in emerging markets by ranking locations using market-potential indicators is useful only for companies involved in exporting. Which of the following steps of the market screening process involves the analysis of the quality of workforce, materials, and infrastructure? Measure market or site potential (commercial infrastructure) Small and medium-sized companies often find trade missions very appealing because it provides access to important business officials and executives. Consumer products such as toothpaste and soft drinks undergo extensive adaptation to suit local preferences?? FALSE A typical industry analysis includes the structure of the wholesale and retail distribution networks Industry data cannot indicate how individuals feel about a company or its products 1. Why is it important to avoid ethnocentricity and gain cultural literacy? - Ethnocentricity is the belief that one’s culture is superior to that of others. Important to avoid because + Cause to overlook beneficial aspects of other cultures (we view other cultures in terms of our own) + Harm int business projects if we ignore local culture => provoke backlash - Cultural literacy is the detailed knowledge of a culture that enables people to work happily and effectively within it. Need to gain because + Closer to customers + increase competitiveness (change some aspect of a business to suit local tastes and preferences) + Manage better employees, market products, conduct negotiations 2. Three major components of culture? - Aesthetic: + Definition: good tastes in the art, imagery evoked by expressions, symbolism of colors + Choose appropriate colors for advertising, packaging, even work uniforms can improve the odds of success. Eg: Pepsi đổi màu xanh đậm thành xanh băng (icy blue) khi hướng đến Đông Nam Á -> sale giảm mạnh vì màu xanh băng đc coi là sorrow, death + Music is deeply embedded in culture - a clever and creative addition to a promotion. - Values & Attitudes + Values: ideas, beliefs – emotionally attached  affect work ethic and desire to own material Eg: Sing value hard work and material success, Greece value relaxed lifestyle. + Attitudes: positive or negative evaluations, feelings towards an object/concept  learned from role models (parents, teachers, and religious leaders) - Personal communication + Definition: system of conveying thoughts, feelings, infor through speech, writing, actions + Language blunders + Lingua franca + Body language 3. Contry image: + Hình ảnh quốc gia thể hiện trong mọi khía cạnh KD “Made in China”? => labels present positive or negative images and increase or decrease sales + Products made in developed countries tend to be evaluated more positively than products from less-developed countries (nghĩ là nhân công nc đó skill hơn) Eg: Ng Việt nghĩ hàng Nhật hoặc hàng Sing là rất tốt, hoặc nghĩ nước xả xải Tide sx ở Thái thơm hơn sx ở VN + Good for certain products but unfavorable for others Eg: Beer sản xuất ở Mexico hảo hạng nhưng nếu Rolls-Royce cũng đc sx ở đó? + Can change over time Eg: “Made in India” only to textiles => quality software products