Globalization and Economic Concepts Quiz

The view that globalization has always existed, in some form, throughout human history.

The benefit a firm gains by entering a market before others in the same segment.

The potential benefit lost from choosing one activity over another.

Reasons why multinational enterprises (MNEs) engage in foreign direct investment, as outlined by John Dunning; often involve having advantages related to ownership, location, and internalization.

A strategy appropriate when both industry pressure to globalize is low, and competitive assets are customized to home markets.

A view of globalization as a cyclical trend with periods of globalization and subsequent reversals.

A view of globalization prioritizing business concerns and practices over cultural differences.

A view of globalization where it holds a unique role in shaping human society.

Formal rules and regulations enforced by a governing body, often with penalties for violations.

Informal, unwritten rules of behavior within a society or group, often learned through socialization.

Shared beliefs, values, customs, and practices of a group of people, influencing their way of life.

Moral principles that guide behavior and decision-making, often influenced by personal values and societal norms.

Making decisions based on limited information and cognitive abilities, often leading to 'good enough' solutions.

Firms operate within a framework of formal and informal institutions, influencing their behavior and choices.

A form of government where citizens have the power to choose their leaders through free and fair elections.

Features of a democracy include free and fair elections, respect for human rights, rule of law, and citizen participation in government.

Characteristics of industries that make it easier for firms to work together and set prices, potentially harming competition.

The theory encourages industries to declare themselves strategic, leading to inefficient resource allocation and potentially reducing national wealth in the long run.

The tendency of investors to move in the same direction at the same time, possibly driven by market trends or fear.

A decrease in inflation generally leads to an increase in a country's currency exchange rate.

Spot transactions are one of the primary types of foreign exchange transactions, involving the immediate exchange of currencies.

The primary and largest participants in the foreign exchange market are banks and financial institutions.

Companies with assets that can be easily moved to other countries have increased pressure to globalize, as those assets can be valuable in other markets.

Industries with high pressure to globalize and transferable assets are prime candidates to internationalize.

A market structure where a single firm dominates, offering a unique product with no close substitutes and facing barriers to entry.

In a monopoly, the marginal revenue (additional revenue from selling one more unit) is always less than the price, unlike in perfect competition where they are equal.

A market structure characterized by many sellers offering differentiated products, with free entry and exit.

In an oligopoly, a firm motivated by self-interest may deviate from an agreement to maximize total profit, even if it means lowering prices and causing a price war.

Factors that make it difficult or impossible for new firms to enter a market. These can include legal restrictions, high startup costs, or control over essential resources.

A situation where two individuals acting in their own self-interest result in a worse outcome for both compared to cooperating.

A market structure with a few dominant firms, where each firm's actions significantly impact the market and others.

A graph showing combinations of goods that provide the same level of utility (satisfaction) to a consumer.

Represents a higher level of utility, meaning the consumer prefers any point on this curve to a point on a lower indifference curve.

Two indifference curves cannot intersect because it would imply that a consumer is indifferent between two different levels of utility at the same point.

Factors that shift the demand curve to the right, leading to a higher quantity demanded at every price.

Goods that can be used in place of each other. When the price of one rises, demand for the other increases.

Goods that are often used together. A decrease in the price of one leads to an increase in demand for the other.

A situation where the quantity supplied exceeds the quantity demanded at a given price. This results in a downward pressure on prices as sellers compete for buyers.

When demand decreases and supply remains constant, the equilibrium price and quantity both decrease. This is because the reduced demand leads to lower prices to stimulate sales and reduce surplus.

A situation where the quantity demanded changes very little, or not at all, in response to price changes. This means people are still willing to buy the product even at higher prices.

The Federal Reserve (Fed) can increase the money supply by buying bonds from the public. This injects money into the economy, making it easier for businesses and individuals to borrow and spend.

When the Fed increases the money supply, it typically causes the aggregate demand curve to shift to the right. This is because the increased money supply leads to lower interest rates and encourages borrowing and spending, boosting demand for goods and services.

The Fed can lower the federal funds rate, which is the interest rate banks charge each other for overnight loans, by injecting more reserves into the banking system. This encourages banks to lend more money to each other and lower their borrowing costs.

The Federal Reserve (Fed) plays a crucial role in managing the money supply and influencing interest rates. Its actions can impact the economy through changes in inflation, economic growth, and unemployment.