Business Chapter 1 Quiz

Business Fundamentals

• Business refers to organizations involved in various commercial, industrial, or professional activities.
• A transaction involves the exchange of goods, services, or money between parties.

Domestic and International Business

• Domestic business operates within a country's borders, while international business involves transactions across countries.
• Trade denotes the buying and selling of goods and services, fostering economic interdependence between entities.

Trade Dynamics

• Trading partners are countries or organizations engaged in mutual trade.
• Imports are goods/services received from abroad, while exports are sent to other countries.
• Balance of trade indicates the difference between a nation's imports and exports.
• A trade surplus occurs when exports exceed imports, providing economic advantages, while a trade deficit signifies higher imports than exports.

Market Structures

• The domestic market comprises goods/services produced within the country.
• A duty (tariff) is a tax levied on imported goods to protect domestic industries.
• Foreign markets represent opportunities for selling goods/services outside the home country.

Investment Types

• Foreign direct investment (FDI) involves controlling interests in a foreign business; contrasting with portfolio investment, which is passive and doesn’t involve control.
• Globalization signifies increased international integration of products, ideas, and culture.

Policies and Agreements

• Protectionism refers to government actions that limit trade to benefit local industries.
• CETA (Canada-European Union Comprehensive Economic and Trade Agreement) reduces tariffs on 98% of EU tariff lines for Canadian exports.
• CKFTA (Canada-Korea Free Trade Agreement) aims to reduce trade barriers across multiple sectors.

Economic Indicators

• Gross Domestic Product (GDP) measures a nation's total production of goods and services.
• Exchange rates reflect the value of one currency relative to another, influencing trade competitiveness.

Business Models and Agreements

• Licensing agreements allow one party to use another's intellectual property.
• Franchises grant rights to use a brand/business model, seen in global names like McDonald’s and Starbucks.
• Joint ventures combine resources from multiple parties for specific projects, such as Bombardier and Airbus's collaboration on the A220.

Trade Regulations

• Trade quotas place limits on the volume of goods imported, controlling market supply.
• Trade embargoes impose bans on exchanges with specific nations, such as the U.S. embargo on Cuba.
• The World Trade Organization (WTO) facilitates and regulates international trade agreements.

Currency and Economic Factors

• Floating exchange rates fluctuate based on market demand and supply.
• Currency devaluation intentionally lowers the exchange rate to enhance export competitiveness.
• Hard currencies are stable and widely accepted, while soft currencies are less stable and harder to exchange internationally.

Canadian Business Context

• Canadians invest abroad to gain access to larger markets and diverse resources, yet face risks like political instability.
• Retaining R&D in Canada encourages innovation and competitive advantage, essential for long-term growth in a global market.

This quiz covers essential concepts from Chapter 1 of Business, including definitions of business, transactions, and the distinctions between domestic and international activities. Test your understanding of key terms like trade and interdependence within the commercial landscape.