Business Chapter 1 Quiz
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Questions and Answers

What is one of the purposes of the Canada-Korea Free Trade Agreement (CKFTA)?

  • To regulate foreign investments exclusively
  • To eliminate all tariffs on goods
  • To reduce barriers to various trade sectors (correct)
  • To promote Canadian cultural activities only

    • How does Foreign Direct Investment (FDI) differ from portfolio investment?

  • FDI requires no control over foreign businesses
  • FDI is not regulated by the Investment Canada Act
  • FDI involves passive investments in financial assets
  • FDI involves a controlling interest in foreign businesses (correct)

    • What is a requirement of the Investment Canada Act (ICA) for non-Canadians?

  • They must invest in Canadian real estate
  • They must submit notifications for significant investments (correct)
  • They must only focus on portfolio investments
  • They are exempt from national security reviews

    • Why is retaining R&D departments important for Canadian businesses?

    <p>It helps in maintaining competitive advantage and innovation</p> Signup and view all the answers

    What is the MAPL system used for in Canada?

    <p>To determine Canadian content in music</p> Signup and view all the answers

    What is a primary effect of international business on the Canadian economy?

    <p>Creating jobs and boosting trade</p> Signup and view all the answers

    What does outsourcing refer to in a business context?

    <p>Hiring external parties to perform specific functions</p> Signup and view all the answers

    What does Brexit represent?

    <p>The United Kingdom's exit from the European Union</p> Signup and view all the answers

    What is a trade surplus?

    <p>When a country's exports exceed its imports in value</p> Signup and view all the answers

    What does foreign direct investment (FDI) involve?

    <p>Investment in business interests located in another country</p> Signup and view all the answers

    Which term describes the mutual reliance between two or more entities in economic contexts?

    <p>Interdependence</p> Signup and view all the answers

    What is the primary effect of protectionism?

    <p>To restrict international trade to help domestic industries</p> Signup and view all the answers

    Which of the following represents a market for goods and services in countries other than one's own?

    <p>Foreign markets</p> Signup and view all the answers

    What does the term 'balance of trade' refer to?

    <p>The difference between a country's imports and exports</p> Signup and view all the answers

    What does a tariff represent?

    <p>A tax imposed on imported goods</p> Signup and view all the answers

    What is meant by the term 'globalization'?

    <p>The process of international integration arising from the interchange of world views, products, and ideas</p> Signup and view all the answers

    What is the purpose of adding value to a product or service?

    <p>To attract more customers</p> Signup and view all the answers

    What is a licensing agreement?

    <p>A contract that allows one party to use another party's intellectual property</p> Signup and view all the answers

    Which of the following best defines a franchise?

    <p>A business model where a company allows others to use its brand</p> Signup and view all the answers

    What characterizes a joint venture?

    <p>An agreement to pool resources for a specific project</p> Signup and view all the answers

    What is the main difference between a tariff and a trade quota?

    <p>Tariffs are taxes, while quotas restrict quantity</p> Signup and view all the answers

    Which scenario best illustrates the concept of protectionism?

    <p>A government implementing tariffs and quotas to support local industries</p> Signup and view all the answers

    Which factor does NOT influence exchange rates?

    <p>Consumer behavior in retail markets</p> Signup and view all the answers

    What does an embargo entail?

    <p>A ban on trade with a specific country</p> Signup and view all the answers

    What is a licensing agreement?

    <p>A contract allowing the use of someone else's intellectual property.</p> Signup and view all the answers

    Which term describes a business model where a company allows others to use its brand?

    <p>Franchise</p> Signup and view all the answers

    What does a tariff represent in international trade?

    <p>A tax imposed on imported goods.</p> Signup and view all the answers

    What are trade sanctions primarily aimed at?

    <p>Influencing the behavior of another country.</p> Signup and view all the answers

    What does currency devaluation refer to?

    <p>A deliberate reduction in the exchange rate of a currency.</p> Signup and view all the answers

    Which of the following describes hard currencies?

    <p>Currencies that are widely accepted and stable.</p> Signup and view all the answers

    What is meant by terms of trade?

    <p>The ratio of export prices to import prices.</p> Signup and view all the answers

    What is a common disadvantage of investing outside one's home country?

    <p>Increased exposure to foreign economic risks.</p> Signup and view all the answers

    Study Notes

    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.

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    Business Unit - 1 (1) PDF

    Description

    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.

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